Grant Thornton’s Austin Demajo highlights business-friendly budget measures, in particular assistance offered to SMEs
● Raises concerns over sustainability of social benefits should an economic down-turn take place
Discussing how the 2017 budget is expected to impact businesses, Tax Services Partner of Grant Thornton Malta Austin Demajo spoke with The Malta Independent.
The main areas of interest highlighted by Mr Thornton refer to the tax consolidations being introduced, access to the alternative trading platform known as ‘prospects’ for SMEs and a reduction in the duty paid for the transfer of businesses to the next generation.
“Small businesses or start-ups are going to have access to the socalled accelerator programme (a programme which provides access to expertise and knowledge). The incentives for these companies to raise finance on the alternative trading platform known as prospects could go a long way, so there is going to be tax incentives introduced for that and also for investors.
“Obviously this is a good way of pushing the area of our business that requires most assistance as they (SMEs) need all the help they can get. Certain incentives are now being extended to SMEs.
“The transfer of business to the next generation is also of great interest, whereby the duty is being reduced from five per cent to 1.5 per cent. In the succession of the business to the next generation this will help a lot.
“Family businesses must be passed on to the next generation, otherwise they will cease to exist. One of the main problems when there is this inheritance is the duty payable, which can be quite hefty and can act as a disincentive to try and pass on the business. It also has a negative impact on liquidity otherwise, so this measure could have a huge impact.
“Another area of great interest is the reduction of the government debt as a percentage of GDP – the lowering of the deficit.
“There are some interesting introductions to the budget like the incentives of the creations of private pension funds and occupation pension schemes. We need to see the regulations to see how they will work out in practice.
Turning to matters of concern, Mr Demajo spoke of the sustainability of social welfare benefits:
“I think it is fair that once the economy is doing well certain social benefits, either new ones or enhanced ones, are dished out to those in need. One must be careful of ensuring the sustainability of increased social welfare payments. It’s quite right at the moment because the economy is doing very well but in the event of a down turn, what will happen? That is the only issue,” he concluded.