Companies to benefit from 60% tax credit on AI, automation and digitalisation investment, while self-employed workers receive direct support

The Labour Party has announced a package of economic proposals aimed at taking Malta’s economy to the next level, with measures focused on SMEs, self-employed workers, restaurants, tourism operators, digitalisation, innovation, gaming, emerging technologies and the creative sector.

Among the key measures announced by Prime Minister and Labour Leader Robert Abela are:

• SME Boost, a new cash grant for self-employed persons equivalent to 5% of the declared basic wage, together with a 10% reduction in corporate tax (from 35% to 25%)

• A €120 million allocation for a 60% tax credit on investment in digitalisation, automation and AI

• A €30 million fund for restaurants, with support of up to €300,000

• A tax credit scheme for tourism operators investing in renovation, higher standards and better customer experience

• A 175% tax credit on research and innovation expenditure

• A sustained annual €100 million investment in digitalisation and advanced technologies

• A Malta eResidency programme for international digital entrepreneurs

• A new e-sports centre and wider licensing powers for the Malta Gaming Authority

• A Competence Centre for semiconductors

• A 10% cash rebate for local artists, up to a maximum of €50,000

Addressing the press conference, Abela said Malta’s next leap forward depends on taking the economy to the next level. He noted that Malta’s economy grew by around 25% during this legislature, a rate he described as seven times the European average.

He also said Malta achieved not only the highest employment rate in the European Union, but the highest employment rate in the history of the Union, while eight out of every 10 Maltese and Gozitans who found employment entered managerial, professional or technical careers.

Five economic targets for the next phase

Abela said the Int Malta manifesto includes 25 targets, five of which are economic and aimed at reshaping the country’s growth model.

The first target is for Malta to achieve an average real economic growth rate of 4%, well above the projected euro area average.

The second is for Malta to move from its current position of eighth place in national wealth per capita, at the same level as Sweden, to among the top five countries in the euro areaover the next five years.

The third target is to keep unemployment close to 3%, among the lowest rates in the euro area.

The fourth target is for more than two-thirds of economic growth to come from digital sectors, services and high-value manufacturing. Abela noted that last year around 40% of growth came from these sectors, meaning the aim is to increase this to 67%.

The fifth target is for Malta to be among the most advanced countries in the European Innovation Scoreboard and to have one of the highest rates of businesses using artificial intelligence. Abela said Malta is already above the European average when it comes to AI use among workers, at 30%, and businesses, at 17%, but more remains to be done, particularly among smaller enterprises.

SME Boost for the self-employed

One of the measures announced is SME Boost, aimed at self-employed workers.

Abela said self-employed persons have long carried a heavier social security burden, paying a 15% contribution compared to 10% for employees.

Through the new scheme, self-employed persons will be able to apply for a cash grant equivalent to 5% of the basic wage they declare.

At current rates, those paying the lowest contribution would receive a cash grant of €627, while those paying the highest contribution would receive €1,428 per year. The amount will change annually as the wage on which contributions are paid changes.

Abela stressed that the measure would not affect pension rights, saying that “what we give with one hand, we never take back with the other.”

Business tax cut for SMEs to support reinvestment

Abela also referred to the previously announced tax cut for businesses with turnover of less than €1 million per year.

These businesses will benefit from a 10% reduction in corporate tax (from 35% to 25%), as long as profits are reinvested in the company.

He said the aim is to ensure that Maltese and Gozitan businesses have the liquidity and resources needed to invest in the digital and environmental transition.

Tourism quality and restaurant investment

The package also includes measures linked to tourism and catering.

Tourism operators investing in accommodation quality will be supported through a tax credit scheme designed to reward investment in renovation, higher standards and improved customer experience.

Abela also reiterated the creation of a €30 million fund for restaurants. Standalone restaurants will be able to benefit from up to €300,000 to improve their product, enhance customer experience, train workers or renovate their establishments.

He said the restaurant and food sector has developed into a diversified and high-quality market, and that Government wants to ensure it remains competitive.

€120 million for digitalisation, automation and AI

A major proposal focuses on helping businesses carry out their digital transformation.

Government will allocate €120 million to a scheme offering a 60% tax credit on investment in digitalisation, automation and artificial intelligence.

Companies benefiting from the scheme will be able to receive up to €15 million over four years to make this technological shift.

Abela said Malta cannot afford to fall behind as technology evolves rapidly, and that the country must remain at the forefront of digital transformation.

A stronger tax system for innovation

The Prime Minister also announced a 175% tax credit on research and innovation expenditure, applicable to all businesses.

In addition, depreciation on investment in AI, digitalisation, automation and cybersecurity will be accelerated over two years.

Abela said this will modernise Malta’s tax system so that it better rewards investment in new and emerging sectors.

Annual €100 million investment in advanced technologies

Abela said Government will sustain an annual €100 million investment in digitalisation and the adoption of advanced technologies.

These include artificial intelligence, Internet of Things, cybersecurity, augmented reality, virtual reality, blockchain, quantum computing, deep tech and robotics.

This investment will be translated into training and financial support for businesses to integrate advanced technologies into their operations.

He also said Government will continue the AI for Everyoneprogramme, arguing that Malta must avoid a digital divide and ensure that everyone becomes literate in new technologies.

Malta eResidency for digital entrepreneurs

Another measure is the creation of Malta eResidency, through which foreign entrepreneurs will be able to set up a company in Malta digitally, fulfil administrative obligations online, access digital services and use Malta as a regulated and credible base within the European Union.

Abela said this will attract more start-ups and small companies to Malta, generate demand for professional services and create new income without increasing pressure on infrastructure or land use.

Gaming, e-sports and new digital niches

Abela also focused on gaming, describing it as one of Malta’s largest economic sectors, employing around 14,000 people in quality careers.

Over the next two years, he said, Malta will see eight projects in gaming and e-sports, involving €60 million in investment and creating 1,300 new jobs. This represents almost a 10% increase in careers in the sector.

Government will establish an e-sports centre equipped with gaming facilities and spaces for tournaments and competitive events.

The powers of the Malta Gaming Authority will also be widened so that it can license working studios, narrative-driven games, e-sports platforms, immersive virtual content and prediction markets.

Semiconductors, Web3 and innovation hubs

The Prime Minister also announced further steps in high-value emerging sectors.

Malta will open a Competence Centre for the semiconductor sector, offering services required by companies involved in packaging, prototyping, testing, simulation, quality assurance and engineering services.

Through cooperation agreements with foreign research institutes, more Maltese researchers and entrepreneurs will gain opportunities in advanced fields such as nanoelectronics and digital technology.

A new regulatory framework will also be developed to position Malta as a leading jurisdiction for Web3 innovation, including tokenisation, digital assets, decentralised autonomous organisations and smart contract-based finance tools.

Government will also create an Innovation Hub for businesses operating in renewable energy, food technology, pharma, smart manufacturing, additive manufacturing, med tech and micro-electronics.

Support for local artists

Abela also announced a measure for the creative sector, saying more initiatives in this area will follow.

A new cash rebate scheme will allow local artists to benefit from a 10% reimbursement on their expenses, up to a maximum of €50,000.

He said this will help local artists continue excelling while supporting the growth of Malta’s creative sector.

The next evolution of Malta’s economic model

Abela described the ten measures as ten links in Labour’s plan to evolve Malta’s economic model.

He said Labour will continue announcing further measures in the coming weeks, adding that the party is not afraid to be ambitious because it has already shown it can deliver major change.

“The economy is you,” Abela said, closing with the message: “You are Malta. Your dream, our project.”