Investing in Malta

Malta is a prime location for foreign direct investment (FDI). The island’s accessibility, advanced communication systems, adequate and flexible labour supply, high work ethics, tax and fiscal incentives and political stability are but some of the main advantages.

The World Investment Report 2008 lists Malta as 3rd worldwide on its inward performance index and considers the country a front runner on inward FDI performance and potential.

Malta offers a highly competitive investment location for niche manufacturing and services, particularly in the following industries: generic pharmaceuticals (Malta adopted the Roche Bolar provisions in its patent legislation), medical, biotech, automotive, film, maritime services, contact centers, aviation services, ebusiness and iGaming, back office services, electronics and software.

Malta offers investors a comprehensive package of incentives under the new Malta Enterprise Act (MEA) and the Business Promotion Act. Incentives include soft loans, investment allowances, training grants, tax incentives and the provision of ready built specialized factory space. There are specific incentives aimed at encouraging activities in the growth targeted sectors that include: pharmaceuticals, plastics, biotechnology, electronics, electrical equipment and ICT enabled. Special incentives have recently been launched for firms engaging in research and development (R&D) activities.

The granting of these incentives is subject to the approval of the Malta Enterprise Corporation, an autonomous government agency. In appraising a proposal the following factors are considered: viability, processes, amount of capital investment, sources of finance and employment to be generated.

The island is committed to bolster its financial services sector and has a declared target for the sector to contribute 25% (from the current 12%) of the GDP by 2015.

In summary Malta’s main fiscal advantages include the following:

does not levy any withholding taxes;
has no thin capitalisation rules or debt-to-equity ratios;
has no specific transfer pricing rules;
has no capital duty and wealth taxes;
has no stamp duty on share transfers in companies owned by nonresidents;
non residents are exempt from any capital gains on certain share transfers;
has an extensive treaty network with fifty treaties in force and a number of other treaties in the process of ratification;
as an EU Member State Malta has adopted the EU’s Parent-Subsidiary Directive and the Interest and Royalties Directive;
under the continuation (re-domiciliation) provisions it is possible to migrate companies into and out of Malta without the need of winding up;
no exchange control regulations and business may be conducted freely in any currency;
Malta’s financial services legislation and tax laws are compliant with EU directives;
has strong and effective anti-Money Laundering Laws and Regulations in line with the pertinent EU directives;
Malta’s legislation offers regulated professional trustees which may provide fiduciary and trust services;
provides local companies with passporting rights to other EU and EEA areas making it an attractive location for captive insurance and fund management firms.