WORLD TRADE  
ORGANIZATION  G/SCM/N/123/EEC/Add.17 
26 August 2005 
 
 (05-3602) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
New and Full Notification Pursuant to Article XVI:1  
of the GATT 1994 and Article 25 of the Agreement  
on Subsidies and Countervailing Measures  
 
EUROPEAN COMMUNITIES 
 
Addendum  
 
  The following addendum to the notification of the European Community relates to subsidy 
programmes of Malta
. 
 
_______________ 
 
 G/SCM/N/123/EEC/Add.17 
Page 2  
 
 MALTA 
 
TABLE OF CONTENTS 
 
Page  
INTRODUCTION ............................................................................................................................... 3 
 A. Manufacturing  ...................................................................................................................... 3 
 
 (i) Title 1   Reduced rates of Income Tax..................................................................... 3 
 (ii) Title 2   Inv estment Tax Credits .............................................................................. 4 
 (iii) Title 3   Value Added Incentive Scheme ................................................................. 4 
 (iv) Title 4   Reduced Rates of Tax on Reinvested Profits ............................................ 5 
 (v) Title 5   Inv estment A llowances ............................................................................... 6 
 (vi)  Title 6   Transition al Assistance fo r Enterprises ................................................... 7 
 (vii) Title 7   In vestment In centives ................................................................................ 8 
 (viii) Title 8   Tr aining Assistance .................................................................................... 8 
 (ix) Title 9   MEDA Programme .................................................................................... 9 
 (x) Title 10  Food Pro cessing Scheme for SME’s ...................................................... 10 
 (xi) Title 11  SME Compliance Scheme ....................................................................... 11 
 (xii) Title 12  ERDF Schemes ........................................................................................ 12 
 (xiii) Title 13  Trade Fair and Trade Mission Support ................................................ 12  G/SCM/N/123/EEC/Add.17 
 Page 3 
 
 
 INTRODUCTION  
 
 This report covers state aid programmes and schemes that were in operation between 2003 
and 2004.  The amounts stated in this report are in Maltese Pounds (LM).  The average exchange 
rate between the Maltese Lira and the € was LM 1= €2.346 in 2003 and LM1= €2.336 in 2004. 
 
A. Manufacturing  
 
(i) Reduced Rates of Income Tax  
 
1. Title of Subsidy  
 
 Reduced Rates of Income Tax  2. Period covered by the notification
 
 
Years 2003-2004 
 3. Policy objectives
 
  Attraction of Investment for the Creation of Employment   
4. Authority of subsidy
 
  Malta Enterprise - Business Promo tion Act and Regulations (Cap. 325)  
 5. Form of subsidy
 
 
 Fiscal  6. To whom and how the subsidy is paid
 
  Companies carrying out one of the activities listed in the Business Promotion Regulations 
(primarily manufacturing companies in NACE 15 to 37) may benefit from reduced rates of income 
tax, up to 15%, charged on their profits.  7. Amount of subsidy
 
 
 2003/2004 – approximately yearly figure Lm 6,014,200 
 8. Duration of subsidy
 
  Valid until end of December 2008 
 
9. Trade effects of the subsidy
 
  No effects on international trade   G/SCM/N/123/EEC/Add.17 
Page 4  
 
 (ii)   Investment Tax Credits 
 
1. Title of the subsidy
 
  Investment Tax Credits 
 
2. Period covered by the notification
 
  Years 2003-2004  
3. Policy objective
 
  To stimulate investment   4. Authority of subsidy
 
 
 Malta Enterprise - Business Promotion Act and Regulations (Cap. 325)  5. Form of subsidy
 
  Tax Credit 
 
6. To whom and how the subsidy is paid
 
 
 Companies eligible for Reduced rates of Income Tax are entitled to a tax credit equivalent to 
a percentage of the capital investment undertaken 
 
7.  Amount of subsidy  
  2003/2004 – approximately yearly figure Lm 4,112,600  8. Duration of subsidy
 
 
 No fixed duration  
  
9. Trade effects of the subsidy  
 
 No effects on international trade 
 
 
(iii) Value Added Incentive Scheme  
 1.   Title of subsidy
 
  Value Added Incentive Scheme  2. Period covered by the notification
 
 
 Years 2003-2004  3. Policy objective
 
 
 To stimulate employment  G/SCM/N/123/EEC/Add.17 
 Page 5 
 
 
  
4.  Authority of subsidy  
  Malta Enterprise - Business Promotion Act and Regulations (Cap. 325) 
 
5. Form of subsidy
 
 
 Fiscal  6. To whom and how the subsidy is paid
 
 
 This incentive is applicable to compani es carrying out a manufacturing activity which 
includes the production, manufacture, improvement, assembly, processing, repair, preservation or maintenance of any goods, materials, commodities, e quipment, plant or machinery, or the rendering 
of services of an industrial nature analogous to th ese activities.  Such companies are charged tax at a 
reduced rate  of up to 15% on part of their profits.   
 7. Amount of subsidy
 
  2003/2004 – approximately yearly figure Lm 528,700   
8. Duration of subsidy
 
  Until end December 2008  9. Trade effects of the subsidy
 
 
 No effects on international trade  
 
 
(iv) Reduced Rates of Tax on Reinvested Profits  
 
1. Title of subsidy  
 
 Reduced Rates of Tax 
 2. Period covered by the notification
 
  Years 2003-2004 
 
3. Policy objectives
 
  To stimulate investment  
4. Authority for the subsidy
 
  Malta Enterprise - Business Promotion Act and Regulations (Cap. 325)  5. Form of subsidy
 
 
 Fiscal 
 G/SCM/N/123/EEC/Add.17 
Page 6  
 
 6. To whom and how the subsidy was paid
 
  Companies engaged in the manufacturing and hotels sectors may benefit from reduced rates 
of tax on set aside profits for purposes of reinvestment.   
7. Amount of subsidy
 
  2003/2004 – approximately yearly figure Lm 79,500   8. Duration of subsidy
 
 
 No fixed duration  9. Trade effects of the subsidy
 
 
 No effects on international trade  
  
(v) Investment Allowances  
  
1.   Title of subsidy
 
 
 Investment Allowances  2. Period covered by the notification
 
 
 Years 2003-2004 
 3. Policy objective
 
  To stimulate investment 
 
4. Authority of subsidy
 
  Malta Enterprise - Business Promotion Act and Regulations (Cap. 325) 
 
5. Form of subsidy
 
 
 Fiscal  6. To whom and how the subsidy is paid
 
  Companies carrying out a manufacturing activ ity may benefit from a deductible allowance 
equivalent to a percentage (50% plant and machinery and 20% land and buildings) of their 
investment from the taxable profits arising during the year in which the investment is made.  
 7. Amount of subsidy
 
 
 2003/2004 – approximately yearly figure Lm 1,143,100 
 8. Duration of subsidy
 
  No fixed duration  G/SCM/N/123/EEC/Add.17 
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9. Trade effects of the subsidy  
  No effects on international trade   (vi) Transitional Assistance for Enterprises  
 
1.   Title of subsidy
 
 
 Tax Credits for Large Companies 
  Special Incentives for Small and Medium Sized Enterprises  2. Period covered by the notification
 
 
 Years 2003-2004 
 3. Policy objective
 
  Companies set up in Malta before 1 November  2000 had a legitimate expectation to continue 
to benefit from fiscal incentives.  When these sch emes were repealed, transitional measures were 
introduced to make up for the comp anies’ legitimate expectations. 
 
4.  Authority of subsidy
 
  Malta Enterprise - Business Promotion Act and Regulations (Cap. 325) 
 
5. Form of subsidy
 
  Fiscal  6. To whom and how the subsidy is paid
 
 
 These incentives are only applicable to compan ies that were set up in Malta before the 
1 November 2000 and that were eligible for fiscal incentives schemes.  The companies whose 
entitlement to these incentives was cu rtailed with effect from 2003 are eligible to tax credits based 
upon the investments undertaken by them between 1995 and 2006.  These tax credits may be utilized 
during the remaining years for each company’s orig inal entitlement to benefit from these schemes. 
 7. Amount of subsidy
 
  2003/2004 – approximately yearly figure Lm 933,630   
8. Duration of subsidy
 
  Varies from company to company, last availa ble for large companies in 2020, last available 
for SME’s 2011.  
9. Trade effects of the subsidy
 
  No effects on international trade   G/SCM/N/123/EEC/Add.17 
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 (vii)  Investment Incentives  
 
1. Title of subsidy
 
  Soft Loans 
 Loan Interest Subsidy 
 
2. Period
 
  2003-2004 
 
3. Policy objective
 
  To stimulate capital investment  
4. Authority of subsidy
 
  Malta Enterprise    5. Form of subsidy
 
 
 Loan at low interest rate / Interest rate subsidy 
 6. To whom and how the subsidy is paid
 
  Eligible companies engaged in the manufact uring or analogous services sectors, research 
and development and biotechnology may obtain a soft loan or a loan subsidy to finance investment.  
 7. Amount of subsidy
 
  2003 – Lm 953,800  2004 – Lm 355,000 
 
8.  Duration of subsidy
 
  No fixed duration   
9. Trade effects of the subsidy
 
  No effects on international trade 
  
(viii)  Training Assistance  
 
1. Title of subsidy
 
  Training Assistance  
2. Period
 
  Years 2003-2004   G/SCM/N/123/EEC/Add.17 
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 3. Policy objective 
  Improvement of workers’ skills  4. Authority of subsidy
 
 
 Employment and Training Corporation - Mini stry of Education, Youth and Employment 
 5. Form of subsidy
 
 
 Grant 
 6. To whom and how the subsidy is paid
 
  Companies engaged in the manufacturing or analogous services sectors, research and 
development and biotechnology are eligible for training assistance.  Depending on the size of the 
company and on whether the training provided is ge neral or specific, the Employment and Training 
Corporation will approve a grant calculated on the b asis of eligible costs specified in the law, 
incurred by the company in providing training to its employees.  7. Amount of subsidy
 
 
 2003/2004 – approximately yearly figure Lm306,800   8. Duration of subsidy
 
 
 No fixed duration  
 9. Trade effects of the subsidy
 
  No effects on international trade 
 
 
(ix) MEDA Programme  
 
1. Title of subsidy
 
 
 Going for Growth 
 Choosing to Compete  2. Period
 
  Year 2003 
 
3. Policy objective
 
  To enable local enterprises restructure operations  
4. Authority of subsidy
 
  Malta Enterprise   G/SCM/N/123/EEC/Add.17 
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 5. Form of subsidy
 
  Grants and loan guarantees  6. To whom and how the subsidy is paid
 
 
 Beneficiaries from this incentive are comp anies engaged in the manufacturing sector.  
 7. Amount of subsidy
 
 
 2003 – Grants Lm3,118,900, Loan Guarantees Lm 144,700 
 8. Duration of subsidy
 
  Closed on 5 November 2003 
 
9. Trade effects of the subsidy
 
  No effects on international trade   (x) Food Processing Scheme for SME’s 
 
1. Title of subsidy
 
  Food Processing Scheme 
 
2. Period
 
  Year 2004  3. Policy objective
 
 
 To enable local enterprises engaged in the food processing sector to upgrade their operations 
and achieve the standards required in food safety.   4. Authority of subsidy
 
 
 Malta Enterprise   5. Form of subsidy
 
  A one-off grant of Lm5,000 
 
6. To whom and how the subsidy is paid
 
  Beneficiaries under this incentive are co mpanies engaged in the food processing and 
manufacturing sector.  Successful applicants were  approved a grant of up to Lm5,000 representing 
up to 60% of the applicants projected investment.  
 7. Amount of subsidy
 
  2004 – Lm230,600  G/SCM/N/123/EEC/Add.17 
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8. Duration of subsidy  
  Closed on 30 November 2004  
9. Trade effects of the subsidy
 
  No effects on international trade   (xi) SME Compliance Scheme 
 
1. Title of subsidy
 
  Compliance Scheme 
 
2. Period
 
  Year 2004  3. Policy objective
 
 
 To enable local enterprises engaged in the manufacturing and analogous services sectors to 
become compliant with new Regulations and Standards.   4. Authority of subsidy
 
 
 Malta Enterprise   5. Form of subsidy
 
  A one-off grant of Lm2,500 
 
6. To whom and how the subsidy is paid
 
  Following a competitive call, companies engaged in the manufacturing sector could benefit from a grant of up to Lm2,500 representing up to 60 % of the applicants projected investment.  
 
7. Amount of subsidy
 
  2004 – Lm155,000  8. Duration of subsidy
 
 
 Closed on 30 November 2004  9. Trade effects of the subsidy
 
 
 No effects on international trade 
  G/SCM/N/123/EEC/Add.17 
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 (xii) ERDF Schemes 
 
1. Title of subsidy
 
  Operations Upgrade Scheme 
 Market Entry and Internationalization Scheme 
 2. Period
 
  Year 2004 
 
3. Policy objective
 
  To enable local enterprises engaged in the manufacturing and analogous services sectors 
upgrade their operations, participate in fairs and obtain consultancy about new markets.  
   
4. Authority of subsidy
 
  Malta Enterprise   5. Form of subsidy
 
 
 A one-off grant of Lm5,500  6. To whom and how the subsidy is paid
 
  
 Companies engaged in the manufacturing and analogous services sector.  Successful 
applicants were approved a grant of up to Lm 5,500 representing up to 60% of the applicants 
projected investment.   7. Amount of subsidy
 
 
 2004 – Lm387,600 
 8. Duration of subsidy
 
  October 2005 
 
9. Trade effects of the subsidy
 
  No effects on international trade   (xiii) Trade Fair & Trade Mission Support  
 
1. Title of subsidy
 
  Trade Fair and Trade Mission Support 
 
2. Period
 
  Year 2003 - 2004   G/SCM/N/123/EEC/Add.17 
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 3. Policy objective  
  To enable local enterprises engaged in the manufacturing and analogous services sectors to 
participate in trade fairs and missions.   
4. Authority of subsidy
 
  Malta Enterprise  5. Form of subsidy
 
 
 Advice and small grants  6. To whom and how the subsidy is paid
 
 
 Companies engaged in the manufacturing and analogous services sectors can benefit from a 
refund covering part of the expenses  incurred in participating in fa irs and trade missions.  Subsidy 
applied in line with EU de minimis  Regulation. 
 7. Amount of subsidy
 
 
 2003 – Lm54,000 
 2004 – Lm27,400  8. Duration of subsidy
 
 
 No fixed duration  
 9. Trade effects of the subsidy
 
  No effects on international trade  
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