Financial Services Centre of Excellence
Rapidly gaining international recognition as a world-class financial centre, Malta is actively promoting its competitive advantages: a strong and positive legislative framework coupled with a flexible, pro-business attitude and EU Membership is providing the island with a winning formula for success.
Malta’s flourishing financial sector experienced unprecedented growth in recent years. Malta’s strength as a financial services centre is based on innovation and a strong desire to provide an optimum operating environment for business. EU Membership and adoption of the Euro has provided Malta with the spur it needed to catapult it from a financial backwater to quite possibly Europe’s most dynamic and fastest growing onshore finance centre. The impact of joining the EU in 2004 has been very positive for Malta; the financial centre enjoys greater credibility, state-of-the-art EU compliant legislation and direct writing and passporting rights to the entire European market, ensuring the island’s placement on the radar of the international finance industry.
Malta has also been identified as one of the top 3 financial centres worldwide likely to increase in importance over the next 2 to 3 years, according to the Global Financial Centres Index Report (GFCI) published in March 2008.
Onshore Dynamism
All financial services in Malta are now subject to one regulator, the Malta Financial Services Authority (MFSA) set up in 2002. The single regulator means companies benefit from streamlined procedures and reduced bureaucracy, leading to lower fees and compliance costs and a more consistent interpretation of the rules and legislation. Demanding in its compliance requirements, the centre nonetheless offers a non-standardized approach to dealing with its clients where custom-made solutions can be delivered. Effective, responsive and proactive is how the MFSA’s approach is described by the financial sector in Malta.
Unique Advantages
While many other international centres have become crowded and expensive Malta’s advantage is available capacity, low costs, prompt and efficient regulatory process. In addition, Malta’s location as a Mediterranean hub with access to European, North African and Middle Eastern markets, its low-cost base (salaries are 3.5 times lower than in Luxembourg and 2.5 times lower than in Ireland), its European time zone location, its highly skilled, multilingual workforce, and its back office and IT capabilities make it a natural choice. A significant advantage is the ability for companies to re-domicile themselves into the finance centre, possibly winning UCITS compliance and EU-wide passporting rights.
Investment funds are exempt from tax, while Malta’s tax imputation system entitles operating companies to a 6/7ths refund of a 35% corporate tax upon a dividend distribution. Malta has double taxation treaties with 45 countries, including most of the major European trading nations, and is in the process of negotiating others. Income originating from overseas is not subject to double taxation, even if there is no double taxation agreement existing.
Malta’s reputation as a Hedge Fund domicile has increased significantly following the revamping of the entire legislative system catering for professional investor funds as well as flexible legislation for hedge funds and specialty funds. Although still relatively small in size, the Malta Stock Exchange (MSE) has large funds players among the 300 funds listed on their boards. These include names such as Fidelity and HSBC among others. The island also has a growing trust sector following a revision of the Trust Act: a new Trust and Trustees Act was introduced which removed the old cumbersome trust structure and replace it with a more globally competitive product.
In Sight of Goal
The promotion of Malta as a dynamic financial services centre is paying dividends, and Malta is now well placed to continue to attract business from across the world. Malta’s message to the financial services world is simple and straightforward: The regulatory system is world class, costs are comparatively low and the Maltese government and the industry are committed to putting Malta on the map as the foremost centre for financial services in the Euro-Med region.
Source: Country Profiler - Business & Investment Malta 2007
Updated: 24th June 2008
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