- Access to finance
- Employment incentive
- Fostering innovation
- Start-up support
- Support of companies' growth
- Support of SMEs
Micro Invest Scheme
Micro Invest Scheme
The scheme is available for companies that from 1 January 2018 do not employ more than 50 employees (but have at least one employee) and whose annual turnover does not exceed €10 million. Applicants must be duly registered with the VAT department (unless exempted) and must not be engaged in activities specifically excluded under the regulations.
The scheme aims to encourage undertakings (including start-ups, family businesses, and self-employed) to invest in their business, to innovate, expand, and develop their operations. Beneficiaries are selected following the submission of an official application with all the requested supporting documentation. Eligible applicants will be given a certificate that enables them to benefit from a tax credit.
Eligible costs under the scheme include an increase in wage costs; furbishing and refurbishing of business premises; investment costs; and motor vehicles costs.
Successful applications are awarded a tax credit representing a percentage of the eligible expenditure and wages of newly recruited employees. A tax credit equivalent to 45% of the eligible expenditure may be approved for companies operating from Malta while a higher tax credit of 65% may be approved for companies operating from Gozo. The tax credit is capped at a maximum of €50,000 over three consecutive years. There is a higher capping set at €70,000 for companies established in Gozo and female-owned companies. The scheme was first implemented in 2011 and the current version was revised during the 2018 budget. The 2018 revision of this scheme increased assistance from €30,000 to €50,000 and now enterprises with 50 employees instead of 30 are eligible to apply. Since 2018 there was only a minor amendment to this scheme, this change allows applicants to claim more than one vehicle as long as the vehicle complies to the latest European emission standards.
- National funds
The large number of companies that have been assisted by this scheme, together with its substantial allocated budget, indicate its importance. It was revealed in Parliament (through Parliamentary Question 22403 from 8 August 2016) that 897 and 1,193 companies benefited from this scheme in 2014 and 2015 respectively. The total number of beneficiaries from January 2014 to October 2017 was 4,695 (Parliamentary Question 1242 from 2 October 2017). Besides, in 2016 there were 1,538 applications for costs incurred in 2015, while in 2017 there were 2,026 applications for costs incurred in 2016 (data derives from private correspondence with Malta Enterprise). The financial assistance provided in 2014 amounted to €5,736,658, while in 2015 the assistance provided amounted to €9,285,657. The latest supplied figures show that in 2018 there were 2,377 applications, followed by 2,934 in 2019, these figures indicate that this scheme has gradually increased in popularity from year to year. Applications for 2020 are still being processed.
Employer associations had expressed support for this scheme. For example, in 2013, the Malta Chamber for Small and Medium Enterprise (GRTU) pressured the government to reactivate the scheme which had been stopped after the general elections. When the government acceded to such demands and the scheme was announced in Parliament, this was welcomed by various social partners, including the GRTU and the Malta Employers’ Association (MEA).
This scheme has been successful in helping thousands of companies get access to financial assistance meant to contribute to their performance and growth. Considering that the large majority of enterprises in Malta employ fewer than 10 people, this scheme targets a very important employment sector in Malta. Besides, it facilitates entrepreneurship in a country which does not have a strong entrepreneurial culture. The extra financial assistance provided to companies operating from the island of Gozo is especially useful, since Gozo suffers from double insularity, and companies in Gozo tend to experience greater financial burdens. Besides, the extra assistance given to female entrepreneurs is also important as entrepreneurship is particularly low among women.
The main weakness of this scheme is its potential deadweight. Not all companies might need financial assistance from the government. However, these end up receiving the same benefits as companies with greater needs.