Evolution as a strategic international business base

Malta was recently ranked fifth amongst financial centres worldwide likely to increase in importance over the next two to three years, according to the Global Financial Services Index (GFSI) issued by the City of London Corporation.  The GFSI ranks world-wide financial centers based on competitiveness.  The GFSI  also listed Malta among the financial centres where operators might think of opening in the next five years. The index rates and ranks each major financial centre in the world in terms of competitiveness.

This international industry endorsement, coupled with Malta’s 2007 GDP growth rate of 3.8%, show a European Union renaissance of the islands millennial tradition as a maritime, trading and strategic outpost.  Malta has exploited its intermediary role between the Middle East and EU and Africa, functioning as a neutral venue of choice for joint-venturing, corporate domiciling and even most recently housing Islamic investment funds.  The islands expertise has allowed it to quickly establish niche markets in such areas as aviation services, super-yacht care and financial services.

From maritime base to international business base

Malta’s evolution from an international maritime registry launched in 1973 to its current status of 6^th largest flagged fleet in the world (and one of only four flags to attain the highest quality ranking following the 2006 Paris Memorandum of Understanding on Port State Control) to today’s diverse and solid financial services centre, is evidenced by the fact that the financial services industry today accounts for 12% of GDP. Following Malta’s European Union membership in 2004, the number of world-wide blue chip companies, banks and international entrepreneurs establishing a presence in Malta has reached an average of 250 new company registrations per month, and is expected to grow to 25% by 2015 especially following this year’s smooth transition to the Euro.

Unique legislative and legal structure

Malta has a distinctive blend of civil law principles and UK statutes.  It is a well balanced, pragmatic body of law with clear international application and it has provided a world class platform attracting high net worth individuals to reallocate, owner/managers to build new business, and multinationals using Malta for treasury operations, pension fund administration, and captive insurance business. Moreover, all Maltese legislation is published in the island’s official languages: Maltese and English.  This facilitates an international legal system and makes Malta a reliable and cost-efficient jurisdiction of choice in such areas as international contracts, arbitration/dispute resolution, investment funds, trust management, VAT management, as well as yacht, ship, and aircraft registration.

A leading European corporate residence

Malta is aware of its geo-strategic value, the quality of its British banking heritage, and its European character.  Malta has not targeted the “volume” market in international business and financial services. In fact since its financial services launch in 1988 (via the Malta International Business Activity Act) there has been a deliberate institutional and industry focus on tailored solutions and products.  A cautious regulation-oriented institutional approach has yielded an unparalleled political and professional consensus across all sectors of Malta’s economy.  Stringent due diligence has created a service culture of personal liability for corporate obligations to the relevant authorities and standard full disclosure to banks and financial institutions. This culture of professional responsibility has functioned as a “quality filter” attracting serious clients over the “brass-plate volume/risk” entities Malta does not want.  It has simultaneously created a financial industry sophisticated at a multitude of levels that has attracted experts and projects from all over the world. This careful but solid strategy has paid off so that Malta hosts an expanding community of international traders and international operations who see Malta as add value to their operations.

EU integration and legislative innovation

Malta has implemented all major EU legislation – most notably the Parent Subsidiary Directive, the Interests and Royalties Directive, the Savings Directive and most recently the MIFID Directive. Indeed one of the strongest sources of new business is the use of Maltese companies as holding vehicles for European Union operations, having the dual benefit of parent subsidiary elimination of withholding taxes plus Malta’s attractive company and investments regime. In recent years Malta has consolidated its long-standing company regimes with additional tax treaties, and refinements to its legislation such as the Trust & Trustees Act and the Captive Insurance Act.  The island’s coming of age as a mature and proactive centre of innovative finance can be seen in its pioneering new legislation regimes in the fields of internet gaming and pension fund management, both regimes highly utilized by leading global corporations.

Europe’s ICT/business services bridge to the Middle East and the U.S.

A modern ICT infrastructure, coupled with excellent business services and lifestyle, has been the key to Malta’s rapid development as an e-commerce location and has convinced many international companies to locate IT training, sales and marketing functions to the island to service global markets. Such success is best represented by Malta’s leading status in the internet gaming field, an industry with an annual turnover estimated to exceed €2 billion.

One of the latest ICT projects is SmartCity, a $300 million state-of-the-art business park scheduled for opening in 2009.  Incorporating a fully fledged ICT and media centre similar to the promoters’ Dubai based Internet City. The project is estimated to create around 4% growth in the Maltese job market, acting as a regional hub for ICT expertise, and also contributing to the islands fast growing film industry which has seen The Count of Monte Cristo, Gladiator, Troy and Munich filmed here.

Malta and the U.S. have always had a strong rapport given the large immigration of Maltese to the U.S. who established thriving communities in New York, the Midwest and in California.  This relationship has been recently enhanced via the U.S. government’s new embassy, a new international business centre, and the new Malta-U.S. tax treaty entering into this year.

Malta corporate business support

Although Malta is more demanding in terms of compliance, audit and anti-laundering requirements than non-EU financial centers, it is fair to say that Malta is considerably less expensive and less stressful than other EU finance capitals.  It has steadily assimilated an international expertise as several start-up and back office operations and investments funds have located here.  It’s mushrooming diversity (including but not limited to a mega yacht industry, bank call centers, the movie industry, local software houses, winning international tenders, property funds, etc.) have attracted business people and investors from the U.S., Europe, the Persian Gulf and the Far East.

Whereas most EU business regulators and tax authorities are typically difficult to access, their Maltese counterparts see themselves as part of the solution.  They see their role as one to recommend the best way forward to new clients at the onset of a venture.  It’s a balance of regulation and market suitability.

Unique business incorporation platform

A Malta company remains Europe’s most advantageous corporate solution, providing excellent results via its tax and credit system.  Having full European Union endorsement, it produces excellent tax savings.  The Malta company model adds clear economic value to the business model. One should therefore plan a Malta corporate solution not as an alternative to an offshore company but as a fully regulated and user friendly EU company which conforms to international accounting, legal and anti-laundering standards.  

Integration of international banks, auditors and client advisors/resources

As part of our risk management strategy, we firmly believe that solutions not only require our bankers, independent auditors and our own established service partners but also the client’s existing established relationships and experts in any implementation process.