Country Focus: Malta
Malta 2007 - Oliver Mallia, Director of Malta Film Commission, and the fiscal Incentives
by Valerio Caruso
01/02/2007 - Oliver Mallia, director of the Malta Film Commission, gives Cineuropa a quick overview of the fiscal and financial incentives available in Malta, a new, very dynamic European Member State, offering highly qualitative services and shooting opportunities.
Cineuropa: What was the intent of the law that regulates the setting up of the Malta Film Commission?
Oliver Mallia: The Malta Film Commission is a government body established by CHAPTER 478 (Act No. 7 of 2005) of the Laws of Malta, consisting of an advisory body responsible for advising the Minister who heads the film sector on policies pertaining to the promotion, development and support of the audiovisual and film servicing industry. The board is composed of a chairman and four board members, including the Film Commissioner, who is responsible for the implementation of Malta’s audiovisual policy.
The board of the Malta Film Commission has a largely non-executive function except for the approval of applications for both fiscal and financial incentives. The Film Commissioner has the responsibility of assisting film production and the setting up of film production industries in Malta, and to market the locations, facilities, skills, talent and expertise available in the country in order to attract inward investment in the form of international audiovisual productions shooting on the island. It is also the Commissioner’s function to analyse, assess and certify the eligibility of projects and/or beneficiaries for tax or other incentives provided by the government of Malta, to approve co-productions and represent Malta and its audiovisual industry in international film bodies.
Are the regulations aimed at offering incentives to invest in and boost the audiovisual sector in Malta reaching your expectations?
Since the introduction of the Financial Incentives for the Audiovisual Industry in 2006, the Malta Film Commission approved 10 projects and awarded over €2m in cash rebates. Apart from making Malta a more lucrative film location, the cash rebates are also encouraging productions to use local talent and crew and feature stories that are set in Malta. Two out of the ten projects approved featured stories set in Malta whereas the rest made extensive use of locations and facilities found on the islands. The MFC is working to increase the number of productions days, which currently stand at 180 days per year, to around 250.
1. The Tax Relief Scheme in Malta
Companies or individuals investing in audiovisual infrastructure in Malta can qualify for tax credits of up to 50% of their investment on the islands. Tax credits constitute a deduction on tax owed on gains and profits derived from approved activities. See more
Who can benefit from the tax credit?
Any audiovisual company that invest on the following activities:
• the building and management of sound stages and other production facilities
• post-production services
• rental of filming, light and grip equipment
• investment in film laboratories
Who can benefit from the tax credits on infrastructure and labour costs?
Any company investing in infrastructure and services directly related to the audiovisual industry can claim a tax credit of 20% on the acquisition, construction, development or improvement of any industrial building or structure including a warehouse, and including related labour costs. An additional tax credit of 40% on expenditure on plant and machinery is obtainable.
Which is the maximum aid allowed?
The maximum aid allowed to small or medium sized enterprises is up to 50% of the total cost of an approved project. Larger firms are entitled to receive up to 40% of their total eligible investment. Each investment has to create at least four new jobs
2. Fiscal Incentives, The Business Promotion Act of Malta
Maltese companies producing and / or distributing feature films, television drama, documentaries and commercials can benefit from a reduced rate of tax at 5% as opposed to the 35% corporate tax rate. Companies Act in Malta allows for straightforward process of setting up Maltese companies.
Who can benefit from the incentive?
Maltese or foreign companies are eligible for the support scheme. A newly-formed Maltese company will be entitled to benefit from a substantial reduction in the tax payable on its taxable income. Up to 31st December 2008 such company will be taxable at the reduced rate of 5% up to maximum profits of Lm25,000 (€58,000) per employee. This is currently the lowest available corporate tax rate in the EU. ITC’s – until 31 December 2008 companies registered in Malta but operating overseas can avail of a lucrative corporate tax rate of 4.17%.
3. Fiscal Incentives, Value Added Rebates in Malta
Malta has a Value Added Tax charge of 18% on all goods and services supplied in Malta and on all taxable importations. On the majority of goods and services supplied a VAT refund is given to the person/company acquiring the service or good.
Foreign film productions shooting in Malta can also claim refunds for hotel accommodation, restaurant bills, fuel, taxis, car hire and cost of materials used for the purpose of the film production which would not be otherwise recoverable.
The interaction of the above incentives would normally result in minimal or no taxes being paid for a number of years.