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Malta Government Increases Support Package to Businesses Hit by COVID-19 Slowdown

24 March 2020

The Government of Malta announced new financial measures intended to keep individuals in employment so businesses can recover quickly once the medical situation changes thereby permitting businesses to reopen. The new economic package will support businesses to retain their employees and be able to start operating straightaway after they are permitted to reopen.

 

All measures mentioned below are applicable retrospectively from 9th March 2020.

 

The new incentives are split into two: a) those applicable to industries which have been impacted severely by the medical emergency and in particular where required to close the business; and b) those applicable to industries which suffered a significant downturn in business. The new economic package will be in place for three months, however, this can change depending on the medical situation development.

 

In both cases the benefits will be paid to the employer (to guarantee the payment of such amount as a salary to the applicable employees) and will be based on the NACE code applicable to the industry where the entity operates.

 

  1. Sectors severely impacted by Covid19
  • The main industries (which employ 60,000 employees) mentioned during the press conference include the following: certain wholesale operations, certain retail operations, accommodation, Food and Beverage, employment agencies, transport, personal activities, building activities, cleaning, security and investigation activities, entertainment services and motor vehicle renting. Annex A contains the list of sectors by NACE code, which is available on https://covid19.maltaenterprise.com/employe-wage-support/.

 

  • The Government will pay a benefit of €800 per month per employee (budget to cost €44m per month). This benefit will be applicable also to self-employed individuals. This is equivalent to the minimum salary (in the first year of employment) plus an additional €23 per month to each individual employed or self-employed in the above mentioned sectors.

 

  • The measure will also apply retrospectively from the 9th March to enterprises which had sacked employees, as long as and to the extent that the employer re-employs such individuals.

 

  • In the case of employees on salaries higher than the minimum salary, the balance of the salary but up to €1,200 (that is an additional €400 salary by month) will need to be covered by the employers.

 

  • However, depending on the circumstances of the employee, the Government expects flexibility from both employees and employers, especially in the cases where individuals earn more than €1,200 per month.

 

  • In exceptional cases where employer’s circumstances do not permit such employer to top up by the additional €400, a mechanism will be set up whereby unions, employers and industrial tribunals would agree on the salary top up, on a case by case basis.

 

  • Part timers will benefit from the same benefit but pro rata, which will be based and pegged on a monthly salary of €500.
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  1. Sectors which suffered a downturn due to the Covid19
  • The main industries mentioned during the press conference include the following: certain manufacturing operators, certain wholesale operators, some retail operators, warehousing and the information sector. This measure will impact around 50,000 workers and will cost the Government €17million per month. Annex B contains the list of sectors by NACE code, which is available on https://covid19.maltaenterprise.com/employe-wage-support/.

 

  • In this case the Government will pay the equivalent of 1 day per week (based on a monthly salary of €800) with a possibility to be increased to 2 days per week on the basis of conditions still to be announced. Part-time employees will be eligible to one day’ salary per week, equivalent to €100 per month. In the case of Gozo based enterprises this will increase to two days’ salary per week equivalent to €320 per month for full time employees, and €200 per month for part time employees.

 

  • The 1 day per week benefit is applicable also in the case of self- employed and is increased to 2 days per week if the self-employed employs individuals. The amount of benefit is respectively €160 for the ones without employees and €320 per month if the self-employed employs individuals. Self-employed based in Gozo will be entitled to 2 days’ salary per week equivalent to €320 per month. This will increase to 3 days salary, equivalent to €480, for those self-employed who employ staff, and the employees will be entitled to two days’ salary per week.

 

 

The Government will put pressure on commercial banks to reduce residential and commercial interest rates. At this stage the Government excludes the imposition of new or top-up taxes.

 

BDO will be updating this article, as further information will be provided and will include a link to further guidelines and the actual application form for such benefits.  

 

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