Budget 2026 – What matters to business

It is clearly not easy to be the Minister of Finance of any country, let alone a small one like Malta. People’s expectations before the annual Budget are always high, and the build-up to this year’s Budget Speech certainly raised them further. The question thus arises naturally: did the Budget deliver on people’s expectations, and more importantly, has it met those of the business community? There is no doubt that this Budget has again addressed the needs of lower-income earners, pensioners, and the more vulnerable. Moreover, the tax breaks will also be beneficial for parents. 

Yet in discussing the budget announcements with clients and fellow professionals, it appears that uncertainty in the Maltese tax regime, which is crucial for FDI in Malta, is still there. Whilst it is to be  acknowledged that the Budget speech is not the right forum to elaborate on any detailed tax provisions which involve international business, a strong statement by the Minister stating that the government remains committed to keep Malta attractive as a jurisdiction for FDI whilst remaining compliant with its international obligations would have been welcome.

Businesses are demanding that the country address bureaucracy, which simply results in extra costs — especially when it comes to recruiting third-country nationals. The business community was also expecting a clear indication of the country’s fiscal and economic vision. Certainty in this area is critical. The business community was eager to hear what investment in the country’s infrastructure was being proposed to allow commuting times to be shortened. Those businesses working in logistics are calling out for this.

The business community would have certainly appreciated amendments to our tax laws, improving certain draconian measures such as heavy penal interest and administrative penalties, limitations on expense deductibility, as well as a modernisation of other parts of our fiscal legislation. 

The accelerated deduction on qualifying expenditure of 175% is a welcome introduction, and the extension of the reduced rate of duty on qualifying transfers as well as the carrying forward of Microenterprise schemes are again useful for business.  Yet modernising the Income Tax Act by providing definitions of intellectual property, pure research, and the taxability of crypto gains, among others, should be addressed. It is strange that our laws still define bills of exchange and promissory notes but not more modern tools used in business.

A further point to make is that if we are to attract and retain foreign talent, it would be critical that the brilliant incentives aimed at Highly Qualified Persons are also extended beyond the pure C-level of employment. If this is not done, middle management experienced personnel who come to Malta and are trained to work in financial services, marketing, IT, gaming, and digital, among others sectors, will keep using Malta as a stepping stone to other European jurisdictions once their contracts with their Malta-based employers expire — leading the business community to continuously recruit replacement employees, to the benefit of no one but head-hunting agencies.

Alternatively, there is also a clear need for businesses working in these sectors to invest in foreign platforms that would allow the business community to enable real remote working, where employees would service Maltese companies from their country of residence. While this could result in tax challenges, it will lower the strain on the country’s infrastructure, provide access to human resources and should thus be studied by our authorities. From comments made by a number of clients involved in the tourism sector, it was noted that this sector is seeking assistance from the state to help them invest and upgrade their hotels, modernise their car hire fleets, and improve their restaurants and the overall service offering. 

These clients were also expecting to hear about initiatives to improve Malta’s beaches, clean up certain parts of the island that badly need a facelift, and invest in cultural areas such as museums and cultural events. It is felt that this would attract a better level of tourist to the island, generating a greater multiplier effect for the economy. Finally, the business community was eager to hear what initiatives would be introduced for Maltese students and graduates, to ensure that after graduation they seek employment in Malta and do not eagerly consider leaving the island. 

Resources are indeed very scarce, and retaining local talent is critical. Indeed, it is not easy to be the Minister of Finance, and one certainly cannot envy his job. Yet, business needs matter and whereas not all may be realistically addressed, debates with the business community do indicate that some points may have been missed.

Paul Giglio is a Tax and Assurance Partner at Forvis Mazars in Malta, where he manages a diverse portfolio of clients across the insurance, iGaming, asset management, and manufacturing sectors.

This article was written by Paul Giglio, Tax and Assurance Partner at Forvis Mazars in Malta, and first published on Times of Malta on 3 November 2025.