MALTA: An Introduction to Corporate/Commercial
Malta’s economy has, over the last sixty years, evolved from that of a fledgling newly independent island State, heavily dependent on direct foreign assistance and regional maritime trade, to that of a thriving small economy within the European Union, with a diversity of industries contributing to its GDP and high standards of living. Whilst tourism, advanced manufacturing and the construction and real estate economic sectors continue to account for a significant part of the island’s economic activity as they did in the past to varying degrees, Malta has also developed itself into a stable and reliable hub for foreign investment in less labour-ntensive industries like financial services, aviation and maritime services, online gaming, healthcare and pharmaceuticals, ICT and film production.
These industries are currently supported by rather liberal policies regulating the recruitment and employment of third-country nationals in sectors that struggle with finding the right skills to join their workforce, by the availability of favourable taxation rates to highly qualified persons who take up key positions with companies established on the island and by the granting of non-onerous residence permits to foreign persons who decide to make Malta their home. Malta’s status as a member of the EU underscores the strengths it has achieved since joining the union in 2004.
As with all other countries, Malta’s current economic climate is heavily influenced by global trends, geopolitical developments and international trade dynamics, and the several benefits that Malta enjoys due to its EU membership can also therefore be sometimes subdued by the impact of EU-wide economic downturns, its macro-economic and fiscal policies and by its strict regulation of the markets. Just to take a few examples:
Despite the real and perceived drawbacks of EU regulation there is, however, a general consensus that Malta’s membership continues to deliver more economic rewards than penalties. Economic operators and investors will, until this trend is reversed, continue to be attracted to the island for this reason but also because of its robust economy, skilled workforce, as well as the strategic and tax advantages it offers.
Malta has a thriving financial services sector, which includes credit and financial institutions, insurance and reinsurance, asset management, investment funds and fintech firms. The country’s regulatory framework, which fully adheres to EU principles, has attracted numerous financial institutions and service providers to establish business operations in Malta. The Malta Financial Services Authority (MFSA) independently regulates, monitors and supervises financial activities to ensure compliance with regulatory requirements and safeguard consumer interests.
Similarly to other jurisdictions, Malta has been actively pursuing digitalisation and technology adoption, as well as the deployment of technology-based tools in corporate and commercial practices, with the aim of enhancing efficiency, competitiveness, and innovation across diverse sectors and industries. Malta has established itself as a pioneer in blockchain and cryptocurrency regulation, with the objective of creating a favourable environment for blockchain-based enterprises. The Virtual Financial Assets Act and the Innovative Technology Arrangement and Services Act, provide a comprehensive regulatory framework for blockchain technology, cryptocurrencies, and related services. This has attracted numerous blockchain startups and companies to Malta, thereby contributing to the expansion of Malta’s digital economy. Malta has been actively encouraging innovation in the field of financial technology through initiatives launched by the Malta Digital Innovation Authority and the MFSA.
Additionally, Malta has long been a prominent hub for the online gaming industry, boasting a favourable regulatory environment that has become home to numerous gaming operators and service providers. A recent trend within this sector has been the increasing focus on responsible gaming practices, with gaming operators and regulators implementing measures to promote player protection, prevent problem gambling, and ensure responsible advertising and marketing practices. Gaming operators in Malta are diversifying their offerings to cater to a broader audience and align with evolving consumer preferences. This includes the expansion beyond traditional casino games to include sports betting, fantasy sports, esports betting, online lotteries, and social gaming. The diversification of gaming offerings enables operators to differentiate themselves in the market and attract new end users.
Malta also has a diverse manufacturing base, which has been instrumental in the island’s economic progress, producing a wide range of goods for domestic consumption and export markets. Key industries include pharmaceuticals, cosmetics, electronics, precision engineering, food and beverage processing, and maritime manufacturing. Various laws and regulations govern the manufacturing sector in Malta, ensuring legal compliance with health and safety standards, environmental regulations, employment laws, product safety regulations, intellectual property rights and trade regulations, amongst others.
Sustainable finance is emerging as a priority for Malta, with efforts underway to integrate sustainability considerations into the country’s financial sector and encourage responsible investment and economic development. Various competent authorities have been diligently pursuing the incorporation of environmental, social, and governance factors into Malta’s domestic regulatory frameworks. Malta has been exploring various avenues to promote green finance and investment in sustainable projects. This includes initiatives to support renewable energy projects, energy efficiency improvements, and sustainable infrastructure development. One can certainly note a growing emphasis on transparency and disclosure regarding sustainability performance among companies and financial institutions in Malta.