As one of the smallest and most highly populated countries in Europe, Malta has a proud history. Home at one time or another to the ancient Greeks, Phoenicians, and citizens of Carthage, it has legendary links to the lost city of Atlantis and a millennium-long reputation as a land that welcomed visitors from all countries, cultures and reputations.
As one of the smallest and most highly populated countries in Europe, Malta has a proud history. Home at one time or another to the ancient Greeks, Phoenicians, and citizens of Carthage, it has legendary links to the lost city of Atlantis and a millennium-long reputation as a land that welcomed visitors from all countries, cultures and reputations.
More recently, Malta became an important stop off for the British Empire, traders using it as a base on the voyage between the Strait of Gibraltar and the Suez Canal. The bravery of the people of Malta during World War II led to the British King awarding the country the George Cross, the highest honour available to non-military personnel, and the only time it has been awarded to an entire population.
Following independence in 1964, the republic quickly became one of the most popular tourist destinations in Europe, and it’s official neutral status led it to become an important destination for world leaders to negotiate - it hosted a summit between George Bush and Mikhail Gorbachev in 1989, the first time the two had met for talks. It joined the European Union in 2004 and became part of the Eurozone in 2008.
Since joining the EU, the Maltese government has made significant progress in becoming one of the most attractive destinations for the international funds industry. It brought its legislation up to international standards, and put huge efforts into attracting some of the biggest names to the islands.
An important development in this regard has been the establishment of the Malta Financial Services Centre, a regulatory body aimed at ensuring that the significant advantages that Malta offers are used in a manner that both offers fiscal benefits to the foreign investor and is consistent with Malta’s international obligations. Other measures it has introduced include:
Ensuring that income originating from overseas is not subjected to double taxation, even if there is no double taxation agreement in existence. This is achieved by providing relief from double taxation on a unilateral basis and through a system of flat rate foreign tax credits AND refunds to non-resident shareholders on tax paid on dividend payments from overseas
Advance rulings by the commisioner of Inland Revenue to provide certainty and clarity on international tax issues. These rulings guarantee the tax position for a minimum of five years and may be renewed for a further five year period
Limiting the maximum tax liability of non-residents to Malta taxation on dividends from international business companies
A taxation scheme for groups of companies allowing offset of losses between fellow subsidiaries
A definition of qualifying participation in foreign holding companies
A law regulating collective investment business schemes and investment services in general
Amendment of existing company law incorporating, inter alia, the introduction of new concepts for Malta such as SICAVS and incorporation of a number of concepts from EU company law
Professional secrecy legislation. This provides levels of protection of personal and commercial privacy comparable to other Western countries offering reassurance to foreign investors without obstructing proper supervision
Money laundering regulations
Ratification of the Hague Convention on recognition of Trusts and incentives for the management of unit trusts from Malta whilst still allowing such trusts to be governed by foreign trust law
Insider trading rules
Malta was less affected by the global financial crisis than many of its neighbours and continued to experience the same levels of growth in most economic sectors as registered in previous years.
The Malta Financial Services Authority registered growth in the number of new licences issued in 2010 in all areas of activities. Three new credit institutions and six new insurance companies were licensed. Significant increases were registered in the number of Professional Investor Funds and investment services companies. During the year under review, the Authority also authorised the first occupational retirement schemes under the Special Funds Act.
Total assets in the banking sector grew by 21 per cent to €49.5 billion, which was partly due to new credit institutions which started operating in 2010. The capital requirements ratio of the banking sector increased to 57.06 per cent. The net asset value of locally based Collective Investment Schemes stood at almost €8 billion, an increase of 13.5 per cent over the previous year end.
The gross premium written (GPW) in the general business sector increased by 10 per cent to €716 million (end of 2009 figures). In the long term business sector, gross premium written increased by 48 per cent to €327 million (end of 2009 figures).
In 2010 the World Economic Forum’s Global Competiveness Index put Malta at No10 for the soundness of its banks and No11 for financial market development. These figures put Malta in the very front rank of world financial centres and greatly add to its global reputation.
As Malta’s finance industry has expanded, as the country has remained attractive to blue-chip finance businesses from all over the world and as the obligations placed on regulators have grown. The finance industry continued to expand, new businesses continued to arrive on a regular basis and employment in the sector has once again grown.
The chairman of the Malta Financial Services Authority, Professor Joe Bannister stressed in his annual report “that while the future continues to look bright, we should be fully conscious of the many threats to global economic stability that currently exist. These include high inflation rates in many important countries, volatile commodity markets, rising food process and enormous political and economic changes across the globe. In a troubled world it is as always vital that our values of integrity, honesty and service are the values that should endure and help cement Malta’s reputation as a world leading financial services jurisdiction”.
This growth can be seen most starkly in the funds sector. In 2001, the total value of domiciled funds in Malta was around €500 million. Six years later, it was €8.8 billion. The value has fallen slightly now, in 2010, it was €7.4 billion, but compared to the drops in other jurisdictions it has done remarkably well.
Malta has a long standing history of trade with the economy being an open one and where foreign direct investment is actively and tangibly encouraged. The Maltese have a strong work ethos where business meetings are typically less formal than in other North European countries.
Business is supported by a strong infrastructure which includes an advanced telecommunications system and a number of well trained graduates in law, accountancy, management and administration as well as banking and insurance.
The legislation is strongly influenced by European Union by virtue of Malta’s membership since May 2004 with Maltese corporate law being modelled on British legislation.
Speaking to those in the funds industry, the country’s key advantage over more established rivals such as Dublin and Luxembourg is its flexibility. The regulators retain an open door policy, which means our voices are always heard,” says one fund administrator. “And we know that they do listen - changing regulation in Malta seems to be much quicker than it does in other places.”
