Negotiations on investment incentives

During negotiations Malta sought assurance that the new incentives under this new law are compatible with EU rules on state aid. It was agreed that support schemes under the BPA that assist investment through incentives such as soft loans, interest...

During negotiations Malta sought assurance that the new incentives under this new law are compatible with EU rules on state aid. It was agreed that support schemes under the BPA that assist investment through incentives such as soft loans, interest subsidies and investment tax credits are in line with EU rules. On the other hand, operating aid in the form of reduced income tax and the value added scheme posed a problem.

Malta argued that operating aid was necessary to offset the disadvantages that arise from Malta's island status and the additional transport costs incurred by companies investing in Malta.

The EU accepted this point in principle and it was agreed that this operating aid can continue to be available until 2008.

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