The European Parliament has just approved €672.5 billion in grants and loans meant to help member states recover from the pandemic.
Approval paves the way for member states to submit recovery plans to receive funding, which was approved last year.
Malta has been allocated €1.1 billion through the fund. It is not yet clear how Malta will spend its allocation, although the island is among six EU countries advised to curb aggressive tax practices in recommendations submitted by the EU Commission as part of its funding proposal.
Malta is expected to receive a cash injection of €316.5 million in grants and €835 million in loans payable by 2058 through the Recovery and Resilience Facility proposed by the European Commission last year.
The final value is still subject to change, as 70 per cent of the grant allocation will be based on the island's population, the inverse of its Gross Domestic Product per capita and its average unemployment rate between 2015 and 2019.
The remaining 30 per cent will be finalised in June 2022 because the allocation will be based on the observed loss in real GDP over 2020 and the observed cumulative loss in real GDP over 2020 and 2021 (instead of the unemployment rate).
States can meanwhile request a loan of up to 6.8 per cent of their 2019 Gross National Income.
The European Parliament approved the proposal on Wednesday with 582 votes in favour, 40 against and 69 abstentions.
Malta urged to tackle money laundering, tax
Countries have until the end of April to submit a final recovery and resilience plan, which will be assessed by the Commission and adopted by the Council.
National recovery plans must focus on key EU policy areas such as the green economy, digital transformation and education, to be eligible for funding. Each plan must dedicate 37 per cent of its budget to climate change and 20 per cent to digital actions.
The national plans are also expected to address challenges identified in country-specific recommendations adopted by the Council.
The latest such recommendations flag Malta and five other countries - Cyprus, Hungary, Ireland, Luxembourg and the Netherlands - as member states that should curb aggressive tax planning.
Soon after the EU unveiled its recovery plan in May of last year, then Finance Minister Edward Scicluna had warned that the deal could spell trouble for Malta’s fight against tax harmonisation.
“It is good fruit, but like a prickly pear it must be handled with care,” he had told Parliament, questioning whether the facility would put pressure on Malta's favourable corporate tax schemes for the financial services and gaming industry.
Malta has been objecting to such harmonisation as these industries would no longer be able to reclaim up to 30 per cent of the 35 per cent corporate tax paid here, making the country less attractive for investment.
Meanwhile, Malta also featured in the country-specific recommendations when it comes to the prevalence of money laundering risks.
Malta, Bulgaria, Denmark, Estonia, Latvia and Sweden all received a recommendation to step up anti-money laundering regulation and supervision in 2019, and five more countries - Ireland, Luxembourg, Netherlands, Slovakia, Finland - were added in 2020.