On the 30th of October 2023, Finance Minister Clyde Caruana presented the Malta Budget for 2024.During his speech, the Minister emphasised on the challenges Malta faces as the last few years have been dictated by a pandemic and the wars in Ukraine and the Middle East, which affected lives and economies.
Malta's Economy PerformanceOverall, Malta's economy is forecasted to grow by 4.2% in real terms during 2024. The Government expects that inflation will decrease to 3.7% in 2024 and that increases in prices for food and services will persist, but at a more moderate rate.
Malta's debt to GDP ratio currently stands at 52.8% and it is expected to increase to 55.3% in 2024 and ultimately to 56.9% in 2026, one of the lowest in Europe. The Government is expecting that the deficit will fall to 4.5% in 2024, and will continue to fall by 0.5% each year until at least 2027. Employment is expected to increase by 4.4% with the unemployment rate expected to stand at 2.7%.
From a tax perspective, the highlight was Malta's decision to postpone the introduction of the OECD's Pillar Two Initiative. This means that Malta will be availing itself of the derogation permitted by Council Directive (EU) 2022/2523 and will not introduce the Income Inclusion Rule (IIR), the Undertaxed Profits Rule (UTPR) or the introduction of a qualified domestic top-up tax (QDTT) in 2024.
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