Malta

Bureau of Economic and Business Affairs
Report
July 5, 2016

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Executive SummaryShare    

The Republic of Malta is a small, but strategically located island country 60 miles south of Sicily and 180 miles north of Libya, astride some of the world’s busiest shipping lanes. Malta, a politically stable parliamentary republic with a free press, is considered a safe, secure, and welcoming environment for American investors to do business.

Malta joined the European Union (EU) in 2004, the Schengen visa system in 2007, and the Eurozone in 2008. With a population of about 420,000 and a total area of only 122 square miles, it is the smallest country in the EU. The economy is based on services, primarily shipping, banking, professional, scientific and technical activities, online gaming, motion picture industry, and tourism. The country’s banking sector is relatively large (roughly two and a half times GDP), and Malta’s ship registry is the largest ship in Europe. Maltese and English are the official languages.

Malta's economy has weathered the recent global economic crisis relatively well. Real Gross Domestic Product (GDP) growth is estimated to have reached 6.3 percent in 2015, a rate which should moderate to 3.9 percent in 2016 but remain strong relative to the rest of the Euro area. In terms of unemployment, Malta is one of the best performers in the EU, with unemployment projected to average 5.4 percent for the year 2015, and expected to remain broadly unchanged until the end of 2016.

The top three credit rating agencies rank Malta well; all note a stable outlook. The current sovereign credit ratings are:

  • BBB+ with a stable outlook (S&P)
  • A3 with a stable outlook (Moody’s)
  • A with a stable outlook (Fitch)

In 2013, the Government of Malta established the Individual Investor Program (IIP), which assigns citizenship by naturalization to a person and his or her dependents who are contributors to an individual investor program and who pay a fee of €650,000 (additionally, €25,000 for spouses and for dependents under age 18; €50,000 for dependents over age 18). This amendment to the Maltese Citizenship Act, (Chapter 188 of the Laws of Malta) was passed in November 2013 and met with criticism due to the perceived selling of Malta's EU passport and Schengen zone access. In response, the Government modified the law in some ways, such as adding a one-year residency requirement and publicizing the names of new citizens. IIP conditions include a €350,000 threshold for purchasing immovable property, or a €16,000/year threshold for leasing immovable property (which must be retained for at least five years), and a €150,000 threshold for investment in stocks, bonds, or debentures.

Table 1

Measure

Year

Index or Rank

Website Address

TI Corruption Perceptions index

2014

43 of 175

transparency.org/cpi2014/results

World Bank’s Doing Business Report “Ease of Doing Business”

2015

80 of 189

doingbusiness.org/rankings

Global Innovation Index

2015

26 of 143

globalinnovationindex.org/content/page/data-analysis

U.S. FDI in partner country ($M USD, stock positions)

June 2015

11.4 million

Host government Statistics

World Bank GNI per capita

2013

21,000 USD amount

data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

Malta actively seeks foreign direct investment (FDI), providing financial, tax, and other investment incentives to attract investment in high-tech manufacturing (especially health technologies such as pharmaceuticals, manufacturing, and life sciences), information and communications technology (ICT), R&D, aerospace & defense/ aviation maintenance, registration of ships and aircrafts, electronics, transshipment and related service industries, finance services, and digital gaming. Foreign investment plays an integral part in the Government of Malta's policies to reduce the role of the state in the economy and increase private sector activity.

Malta's comparative advantages include membership in the EU, the Eurozone, and the Schengen Zone; competitive wage rates (even though the standard of living is high, labor costs are relatively low compared with other EU countries); a highly skilled, English-speaking labor force; proximity to both European and North African markets; a fair and transparent business environment; and excellent telecommunications and transport connections.

Other Investment Policy Reviews

Malta Enterprise, a government organization established to promote FDI, provides information to prospective investors, processes applications for government investment incentives, and serves as a liaison between investors and other government entities. Malta Enterprise offers an attractive investment package for American and other investors (see section 5, “Performance Requirements and Investment Incentives”).

Laws/Regulations on Foreign Direct Investment

The following are the most important laws that govern foreign investment in Malta:

  • The Income Tax Act of 1948 (as amended) establishes a single rate of taxation of 35 percent on income for limited liability companies in Malta. In certain qualifying cases, this rate is effectively reduced to 5 percent through a system of tax refunds on dividends paid.
  • The Business Promotion Act authorizes the government of Malta to allocate fiscal and other incentives to companies engaged in manufacturing (including software development), repair, or maintenance activities.
  • The Malta Enterprise Act of 2003 enables Malta Enterprise to develop and administer incentives and other forms of support to liberalize and update legislation relevant to FDI.
  • The Companies Act of 1995 regulates the creation of limited liability companies. The Companies Act provides for the establishment of investment companies with variable share capital (SICAVS) and companies with share capital denominated in a foreign currency.
  • The Malta Financial Services Authority Act of 1989 established the Malta Financial Services Authority (MFSA), responsible for the regulation of banking and investment services in Malta.
  • The Investment Services Act of 1994 contains a package regulating investment services in the banking and insurance sectors.

Business Registration

The Maltese Commercial Code provides for the establishment of several types of business entities according to the needs of an individual investor when setting up a company in Malta. The following are the different available structures:

When setting up a Maltese private company, the minimum share capital amount accepted is €1,165 ($1,300), while the minimum for a public company is approximately €46,600 ($51,670) of which 25 percent must be deposited prior to registration. In the case of private companies with an authorized share capital exceeding the minimum requirements, only 20 percent of the amount must be deposited.

The maximum amount of shareholders is 50 and minimum number is 2 (although a single member company may also be registered under the Companies Act).

The following are the main steps required to set up a company in Malta:

  • Reserve a company name with the Maltese Commercial Register;
  • Draft the company’s memorandum and articles of association;
  • Deposit the minimum share capital; and
  • File the application with the Malta Registrar of Companies.

The documents to be filed with the Malta Registrar of Companies are:

  • The memorandum and articles of association;
  • A confirmation of the company name reservation;
  • The bank receipt confirming the share capital deposit; and
  • Passport copies of the shareholders, directors and company secretary.

The Memorandum must be presented to the Registrar of Companies accompanied by a check to the MFSA covering the registration fees, as well as the bank receipt as proof of payment of the initial share capital. The MFSA may also request that due diligence on the directors, shareholders and/or beneficial owners be provided before proceeding with the incorporation. Upon incorporation, a registration fee is payable to the MFSA that is established according to the amount of share capital held by the company.

Given that all the above requirements are satisfied, incorporation of a company can normally be carried out within 2-3 working days. Once incorporation is complete, the MFSA will publish a Certificate of Incorporation which will also display the company registration number.

MFSA website: http://mfsa.com.mt/.

Industrial Strategy

Virtually all manufacturing sectors are open to FDI. There are no legal prohibitions against FDI oriented toward sales in Malta's domestic market. The Government of Malta seeks as a top priority companies operating in the following fields:

  • Information & communications technology, including electronic components and digital gaming;
  • Health technologies, medical equipment, pharmaceuticals and life sciences;
  • “Back office” and regional support operations including call centers;
  • Knowledge-based services, including aerospace & defense (aviation maintenance), education and training, and research and development;
  • Logistics-based services, including marine technology, warehousing, and oil/gas services;
  • Film Industry (Malta has one of the few sets in the world for water/boating scenes).

Limits on Foreign Control and Right to Private Ownership and Establishment

Private foreign investors are free to make equity arrangements as they wish, from joint ventures to full equity ownership.

The Government of Malta recognizes the right to private ownership in theory and in practice. Private entities are free to establish, acquire, and dispose of interests in business enterprises and engage in all forms of remunerative activity. Many U.S. firms sell their products or services in Malta through licensing, franchise, or similar arrangements. The Government of Malta normally allows foreign companies to operate in merchandising areas, especially if they operate a licensing, franchising, or similar agreement through a local representative.

It is the government's stated policy not to allow public enterprises to operate at the expense of private entities. Some sectors, such as electricity generation, are now also open to private sector participation. The government provides private enterprises with the same opportunities as public enterprises for access to markets and other business operations.

Privatization Program

In recent years, the Maltese government has privatized a number of state-controlled firms, including the country's largest bank, the postal service, shipyards, energy generation, and the wireless telecommunications industry. Although full privatization of Air Malta, the national airline, has been excluded, the Government of Malta is currently considering options for a strategic minority partner.

The government welcomes private investors, Maltese and non-Maltese, in privatization projects. It affords foreign investors equal treatment to that given to domestic investors and sets few limitations on their operations. Foreign investors have the right to repatriate or reinvest profits without restriction and can take disputes before the International Center for the Settlement of Investment Disputes (ICSID).

Screening of FDI

Malta is a free trade, open economy country. The government does not approve or restrict any foreign direct investment, as long as it complies with EU and national regulations. Malta Enterprise reviews FDI before granting any incentives requested by the private entity/business. A due diligence process is carried out prior to approving greenfield investments. Company formation can be completed within ten days.

Competition Law

The MFSA undertakes the filings and regulatory screenings on financial investments. For other types of investment see “Screening of FDI” section above.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

As long as investors present the appropriate documents to the Central Bank of Malta, there are no limitations on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, returns on intellectual property, or imported raw materials. There are no significant delays in converting investment returns to foreign currency after presentation of the necessary documents. Maltese regulations and practices affecting remittances of investment capital and earnings have been streamlined, as several foreign exchange controls were relaxed to conform to EU directives.

Remittance Policies

The 2015 International Narcotics Control Strategy Report (INCSR) has deemed Malta a ‘Monitored Jurisdiction’. Malta’s location between North Africa and Italy makes it an attractive transit point for narcotics and human trafficking moving to Europe. The country’s banking sector is relatively large (roughly two and a half times GDP), and Malta’s ship registry is the largest ship in Europe. According to the Malta Police Force, the major sources of illegal proceeds are trafficking of cocaine, heroin, and cannabis resin, as well as economic crimes, primarily fraud and misappropriation. The proceeds generated from these crimes are not large and are primarily based on domestic offenses. Maltese authorities have not detected any organized criminal groups committing money laundering on behalf of others. Moreover, they have detected no terrorism financing activity. Contraband smuggling does not appear to be a significant source of illicit proceeds. No specific studies have been conducted in Malta on trade-based money laundering or terrorism financing.

3. Expropriation and CompensationShare    

Private property may, in exceptional instances, be expropriated for public purposes, in a non-discriminatory manner, and in accordance with established principles of international law. Investors and lenders of expropriated property receive prompt, adequate and effective compensation. There have not been any expropriations in the last decade. There are no particular sectors at risk for expropriation or similar actions, nor are there any laws that force local ownership.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Malta has a distinct Commercial Code which regulates commercial activities and related legislation, such as the Banking Act, the Central Bank of Malta Act, and bankruptcy. In cases of bankruptcy, the court appoints a curator to liquidate the assets of the bankrupt company, organization, or individual, and distributes the proceeds among the creditors.

The Maltese judiciary is independent and courts are divided into superior courts, presided over by judges, and inferior courts, presided over by magistrates. The jurisdiction of the inferior courts is restricted to minor offenses of a criminal nature and to small civil matters. Traditionally, the judiciary functions through the Criminal, Civil, and Constitutional courts. Commercial cases are adjudicated by the First Hall of the Civil Court. There is a Criminal Court of Appeal and a Court of Appeal for all other jurisdictions. The Constitutional Court has jurisdiction to hear and determine questions and appeals on constitutional issues. There are also a number of administrative tribunals, such as the Industrial Tribunal, the Rent Regulation Board, and the Board of Special Commissioners for income tax purposes. Malta adopted the European Convention of Human Rights as part of Malta's domestic law in 1987.

The Maltese judiciary has a long tradition of independence. Once appointed to the bench, judges and magistrates have fixed salaries which do not require annual approval. Judges cannot be dismissed, except by a two-thirds vote in the House of Representatives for a proven inability to exercise their function properly or proven misbehavior. The Constitution guarantees the separation of powers between the executive and the judiciary. Fair trial is also recognized as an enforceable human right under the Maltese Constitution.

The Maltese Parliament is the highest law-making institution in the country; its members are elected every five years by proportional representation. The number of members of parliament is normally 65, but may be adjusted according to the constitution to provide a governing majority to the party winning the popular vote in a general election, as is the current case with 69 members. Government functions through a cabinet of ministers, headed by the Prime Minister.

Bankruptcy

Bankruptcy in Malta is regulated by means of the relevant provisions found in the Companies Act and the Commercial Code. Additional regulations are provided through the Set-off and Netting on Insolvency Act, enacted in 2003. This Act provides for the set-off and netting due from each party to the other in respect of mutual credits, mutual debts or other mutual dealings which are enforceable whether before or after bankruptcy or insolvency.

The Maltese Insolvency law regime distinguishes between bankruptcies of a person or a commercial partnership other than a company. Insolvency proceedings can be initiated when a company is unable to pay its debts. The court examines carefully whether the financial situation of the company justifies its winding up or if there exists the possibility that the company can still operate and consequently pay its debts. The court appoints a curator to liquidate the assets of the bankrupt company, organization, or individual, and distributes the proceeds among the creditors.

Criminal proceedings may be taken against any officer of the company who, in the twelve months prior to the deemed date of dissolution, had concealed assets or documents, disposed of assets, or otherwise acted in a fraudulent manner. In civil proceedings these officers may be found responsible to pay back to the company any monies due to the company or even damages. The law also provides for proceedings in case of wrongful trading by directors and fraudulent trading by any officer of the company.

According to latest data collected by the World Bank Doing Business report, resolving insolvency in Malta takes 3 years on average and costs 10 percent of the debtor’s estate, with the most likely outcome being that the company will be sold piecemeal. The average recovery rate is 39.6 cents on the dollar. Globally, Malta stands at 83 in the ranking of 189 economies on the ease of resolving insolvency.

Investment Disputes

There have been no significant investment disputes over the past few years involving U.S. or other foreign investors or contractors in Malta. In a limited number of cases, American investors have identified difficulties in obtaining fair legal resolution, especially in disputes with Maltese parties. Courts in Malta are known to be slow in processing cases, although a reform has been proposed in order to increase efficiency in the judicial system.

International Arbitration

Malta honors the enforcement of foreign court judgments and foreign arbitration awards. Modes of settlement of disputes are also provided in bilateral investment treaties, which Malta has with several countries (see section 14, Bilateral Investment Agreements).

ICSID Convention and New York Convention

In 2002, Malta signed the Convention on the Settlement of Investment Disputes (ICSID). Malta is also a member of the New York Convention of 1958 on the recognition and enforcement of foreign arbitration awards (UNCITRAL).

Duration of Dispute Resolution – Local Courts

Investment/commercial dispute resolution proceedings in Malta generally take a minimum of three years. Generally speaking, summary proceedings which involve debt collection related to liquidation take less time. According to data collected by the World Bank Doing Business report, contract enforcement takes 505 days and costs 35.9 percent of the value of claim.

5. Performance Requirements and Investment IncentivesShare    

WTO/TRIMS

Malta has been a World Trade Organization (WTO) member since January 1, 1995 and a signatory of the General Agreement on Tariffs and Trade (GATT) since November 17, 1964. Malta does not maintain any measures alleged to violate the WTO Trade Related Investment Measures (TRIMs) requirements.

Investment Incentives

The Government of Malta offers several investment incentives to attract FDI. All investment incentives are specified by law and not made available in an ad hoc manner. However, the way in which incentives are designed allows the opportunity to offer relatively tailor-made solutions, even though treatment of domestic and non-Maltese investors is identical. There are no stated requirements that a foreign investor should transfer technology, employ Maltese nationals, or reduce his shareholding interest over time. These factors might, however, influence Malta Enterprise's decision regarding a firm's application for assistance. Malta Enterprise monitors compliance with any conditions set by the government as a condition of government assistance. Investors are not required to disclose proprietary information.

Investment Tax Credits:

Companies in the target sector are entitled to a tax credit which is calculated either:

  • As a percentage of qualifying capital expenditure (currently granting 15 percent for a large enterprise; 25 percent for a medium enterprise, and 35 percent for a small to micro enterprise);
  • Or, as a percentage of the wage cost for the first 24 months of a newly created job (currently, 15 percent for a large enterprise; 25 percent for a medium enterprise, and 35 percent for a small and micro enterprise).

Access to Finance:

  • Soft Loans: Malta Enterprise supports enterprise though loans at low interest rates for partial financing of investments in qualifying expenditure.
  • Loan Guarantees: Malta Enterprise may guarantee bank loans taken by a company to finance acquisition of additional assets to be employed in the company’s business.
  • Loan Interest Subsidies: Malta Enterprise may subsidize the rate of interest payable on bank loans. Loan interest subsidies are not in addition to loan guarantees and applicable to loans provided by banks or other financial institutions.
  • Micro Guarantee Scheme: Malta Enterprise aims to accelerate the growth of enterprises by facilitating access to debt finance for smaller business undertakings.

Employment & Training: Administered by Malta’s Employment and Training Corporation, enterprises are supported in recruiting new employees and training their staff.

SME Development: Incentives to assist SMEs in accessing financing area available through the Micro Guarantee Scheme noted above. The Ministry for the Economy, Investment and Small Business can also facilitate access to newly developed crowd funding platforms.

Enterprise Support: Malta Enterprise provides assistance to businesses to support development of international competitiveness, improving processes, and networking with other businesses.

Research & Development: Malta Enterprise offers incentives to support and encourage businesses to engage in industrial research and experimental development, including exploitation of intellectual property through licensing of patented knowledge.

Other Tax Benefits:

The Government of Malta offers generous incentives to trading and financial companies registered with the Malta Financial Services Authority. Legislative changes in 1994 removed the distinction between offshore and onshore companies, so that all companies in Malta are subject to a 35 percent tax rate on profits. However, the fact that the Maltese tax system is the only remaining full imputation system in the EU means that tax paid by a company will essentially remain a prepaid tax on behalf of the tax liability of the shareholders. Shareholders will then be entitled to claim a tax refund which may be equivalent to roughly 85 percent (in the case of trading income) of the tax paid at the corporate level.

Companies operating within the Malta Freeport, a customs-free zone, may also benefit from reduced rates of taxation and investment tax credits (see section 16, Foreign Trade Zones).

Research and Development

The government of Malta offers specific incentives for companies to engage in industrial research and development (see “Investment Incentives” section above). The government does not differentiate between U.S. or foreign firms and local firms to be able to participate in incentive programs.

Furthermore, U.S. companies can partner with local firms to participate in Horizon 2020, the EU Framework program for funding research and innovation. Horizon 2020 will run until 2020 and has a budget of €80 billion.

Performance Requirements

There are currently no performance requirements, other than those linked to the goals stated by the investors at the time of application for assistance with Malta Enterprise. Foreign investors have the right to repatriate or reinvest profits without restriction and can take disputes before the International Center for the Settlement of Investment Disputes (ICSID).

Data Storage

The government does not require foreign investors to establish or maintain data storage in Malta. However, the Malta Gaming Authority (MGA), the single, independent regulatory body responsible for the governance of all gaming activities, requires gaming companies to hold their data in Malta.

6. Protection of Property RightsShare    

Real Property

Property and contractual rights are enforced by means of (a) legal warning; (b) warrants of seizure; (c) warrants of prohibitory injunction; (d) warrants of impediments of departures (if proceedings fall within the jurisdiction of the Criminal Court); and (e) sale of property by court auction. Procedures for registering and enforcing judgments of foreign courts are laid out in the Code of Organization and Civil Procedures. Rights and secured interests over immovable property must be publicly registered in order to be enforceable. The Government of Malta has occasionally been a party to international arbitrations and has abided by tribunal decisions.

Intellectual Property Rights

The Maltese legal system adequately protects and facilitates acquisition and disposition of intellectual property rights. In 2000, Malta implemented the pertinent provisions of the WTO Trade-Related Aspects on Intellectual Property Rights (TRIPS). Malta has fully incorporated the EU and WTO rules into national law. Additional information on EU-wide provisions on copyright, patents, trademarks, and designs is obtainable from:

In addition, Malta is a member of the World Intellectual Property Organization (WIPO); the Paris Convention for the Protection of Industrial Property; the Bern Convention for the Protection of Literary and Artistic Works; the Universal Copyright Convention (UCC); and the World Trade Organization (WTO).

The Association against Copyright Theft claims that Malta’s local laws do not include high enough minimum fines to deter vendors from selling pirated material. However, the Ministry for Competitiveness and Communications has assured the Embassy that the Government of Malta is currently taking the necessary steps to remedy the situation. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Resources for Rights Holders

Embassy point of contact: Maria Cassar, Tel: +356 2561 4120; email: maltabusiness@state.gov
Local lawyers list: http://malta.usembassy.gov/list_of_attorneys.html

The office responsible for intellectual property-related issues is Malta’s Commerce Department within the Ministry for the Economy, Investment and Small Business:

Commerce Department

Tel: +356 2122 6688
Email: commerce@gov.mt
Website: http://commerce.gov.mt/en/Pages/Contact-Details.aspx
Address: Commerce Department, Lascaris Bastion, Valletta, VLT 1933, Malta

7. Transparency of the Regulatory SystemShare    

Malta has transparent and effective policies and regulations to foster competition. It has revised labor, safety, health, and other laws in general to conform to EU standards.

8. Efficient Capital Markets and Portfolio InvestmentShare    

Malta's Stock Exchange was established in 1993. In 2002, the Financial Markets Act effectively replaced the Malta Stock Exchange Act of 1990 as the law regulating the operations and setup of the Malta Stock Exchange. This legislation divested the Malta Stock Exchange of its regulatory functions and transferred these functions to the MFSA. The Financial Markets Act also set up a Listing Authority, which is responsible for granting "Admissibility to Listing" to companies seeking to have their securities listed on the Exchange.

To date, the small number of companies publicly listed on the Malta Stock Exchange has not faced the threat of hostile takeovers. Malta has no laws or regulations authorizing firms to adopt articles of incorporation/association that would limit foreign investment, participation, or control. Legal, regulatory, and accounting systems are transparent and consistent with international norms; several U.S. auditing firms have local offices.

Money and Banking System, Hostile Takeovers

The Maltese banking system is considered sound. In recent years, local commercial banks expanded the scope of their lending portfolios. Capital is available from both public and private sources; both foreign and local companies can obtain capital from local lending facilities. Commercial banks and their subsidiaries can provide loans at commercial interest rates. It is possible for new investors to negotiate soft loans from the government covering up to 75 percent of the projected capital outlay.

9. Competition from State-Owned EnterprisesShare    

The Malta Investment Management Company Limited (MIMCOL) was established in 1988 to manage, restructure, and selectively divest the Government of Malta from state-owned enterprises (SOEs). MIMCOL also promotes private sector investment using cost-effective business practices across various SOEs. MIMCOL initially created strategies leading to the dissolution of SOEs with limited commercial prospects, as well as the profitable spin-off of non-core operations with commercial potential. MIMCOL’s focus then turned to SOEs deemed of strategic national value, but whose inefficient operations were reflective of a lack of competition. Eventually, most SOEs were groomed for privatization and sold off.

Today, the list of Maltese SOEs under MIMCOL review has decreased to 11 (excluding companies falling under the responsibility of other ministries and investments held directly by the government). This portfolio is not well-defined. Most government investments are held by either the Board of Trustees within the Ministry of Finance, the Economy, and Investment, or by Malta Government Investments Limited (MGI) as an agent for the Government of Malta. There are other state entities which hold shares in companies which are typically special purpose vehicles set up in furtherance of that entity’s operations.

OECD Guidelines on Corporate Governance of SOEs

MIMCOL falls under the responsibility of the Ministry of Finance, the Economy, and Investment, supporting the Ministry’s efforts to ensure that SOEs within its authority operate within a sustainable and cost-efficient environment, enhance service delivery, and improve organizational effectiveness. MIMCOL’s sister company, Malta Government Investments Limited (MGI), holds a portfolio of equity and debt investments as an agent of the Government of Malta.

In general, SOEs in Malta are considered to adhere to the OECD Guidelines on Corporate Governance for SOEs.

Sovereign Wealth Funds

The Government of Malta does not have a Sovereign Wealth Fund.

10. Responsible Business ConductShare    

Corporate social responsibility (CSR) has become more prevalent in Malta in recent years, as global concerns such as climate change have risen to the forefront and as the EU has raised expectations for its member states regarding CSR. An increasing number of companies in Malta recognize the importance of their role in society and the real benefits of adopting a proactive approach to CSR.

The Maltese government does not specifically adhere to OECD Guidelines for Multinational Enterprises; however, it does expect that multinationals follow these generally accepted CSR principles.

11. Political ViolenceShare    

There have been no recent incidents involving politically motivated damage to projects and/or installations, and there are no signs that civil disturbances may become more likely. There are no signs that U.S. investor properties might become targets in the future.

12. CorruptionShare    

Maltese law provides criminal penalties for official corruption, and the government generally implements these laws effectively. The Malta Police and the Permanent Commission against Corruption are responsible for combating official corruption. The U.S. Embassy is aware of an increasing number of government corruption allegations; however, few have yet to result in legal action or resignations.

Exporters and investors should be aware that generally all countries prohibit the bribery of their public officials, and prohibit their officials from soliciting bribes under domestic laws. Most countries are required to criminalize such bribery and other acts of corruption by virtue of being parties to various international conventions.

Public sector corruption, including bribery of public officials, is a minor challenge for U.S. firms operating in Malta. The Council of Europe’s Group of States Against Corruption (GRECO) completed its fourth evaluation of Malta in the summer of 2015. Following the three previous rounds of evaluation and follow-up compliance review, Malta introduced a number of legislative measures to combat corruption. The reviewers noted that, “the pace given to these changes and their reactive nature have not always provided reassurance to the public that unethical practices are unacceptable and that effective action will be taken to punish transgression. Moreover, the current complexity and delay in the Maltese judicial system mean that cases often take many years to reach conclusion. In a small community such as Malta, handling interpersonal relationships and addressing real or potential conflicts of interest are clearly critical challenges.”

Despite these challenges, Malta has taken significant steps to combat corruption, including the establishment in 2002 of the Financial Intelligence Analysis Unit, to support domestic and international law enforcement investigative efforts. The Prevention of Money Laundering and Funding of Terrorism Regulations were transposed into Maltese law in July 2008, and conform to the EU legislation under Directive 2005/60/EC (the Third Directive) and Directive 2006/70/EC.

A 2008 report by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) confirms Maltese authorities have taken measures to ensure the anti-money laundering/combatting the financing of terrorism (AML/CFT) regime in Malta is consistent with recognized international standards and practices.
The MONEVAL report is available at http://www.fiumalta.org/library/PDF/MONEYVAL%282008%2941ProgRep-MLT_en.pdf. An updated report is expected to be released in the spring of 2016.

Local Laws: U.S. firms should familiarize themselves with local anti-corruption laws, and, where appropriate, seek legal counsel. While the U.S. Department of Commerce cannot provide legal advice on local laws, the Department’s U.S. and Foreign Commercial Service (USFCS) can provide assistance with navigating the host country’s legal system and obtaining a list of local legal counsel.

Assistance for U.S. Businesses: The U.S. Department of Commerce offers several services to aid U.S. businesses seeking to address business-related corruption issues. For example, the USFCS can provide services that may assist U.S. companies in conducting due diligence as part of the company’s overarching compliance program when choosing business partners or agents overseas. The USFCS can be reached directly through its offices in major U.S. and foreign cities, or through its website at www.trade.gov/cs. The Department of Commerce and State provide worldwide support for qualified U.S. companies bidding on foreign government contracts through the Commerce Department’s Advocacy Center and State’s Office of Commercial and Business Affairs. Problems, including alleged corruption by foreign governments or competitors, encountered by U.S. companies in seeking such foreign business opportunities can be brought to the attention of appropriate U.S. government officials, including local embassy personnel and through the Department of Commerce Trade Compliance Center “Report a Trade Barrier” website at http://tcc.export.gov/Report_a_Barrier/index.asp.

Guidance on the U.S. Foreign Corrupt Practices Act (FCPA): The Department of Justice’s (DOJ) FCPA Opinion Procedure enables U.S. firms and individuals to request a statement of DOJ’s present enforcement intentions under the anti-bribery provisions of the FCPA regarding any proposed business conduct. The details of the opinion procedure are available on DOJ’s Fraud Section website: http://www.justice.gov/criminal/fraud/fcpa. Although the Department of Commerce has no enforcement role with respect to the FCPA, it supplies general guidance to U.S. exporters who have questions about the FCPA and about international developments concerning the FCPA. For further information, see the Office of the Chief Counsel for International Counsel, U.S. Department of Commerce website, at https://ogc.commerce.gov/collection/office-chief-counsel-international-commerce.

Useful resources for individuals and companies regarding combating corruption in global markets include the following:

  • Information about the OECD Antibribery Convention including links to national implementing legislation, good practice guidance and country monitoring reports is available at: http://www.oecd.org/daf/anti-bribery/oecdantibriberyconvention.htm.
  • Transparency International (TI) publishes an annual Corruption Perceptions Index (CPI). The CPI measures the perceived level of public-sector corruption in 180 countries and territories around the world. The CPI is available at: http://www.transparency.org/cpi2015.
  • TI also publishes an annual Global Corruption Report which provides a systematic evaluation of the state of corruption around the world. It includes an in-depth analysis of a focal theme, a series of country reports that document major corruption related events and developments from all continents and an overview of the latest research findings on anti-corruption diagnostics and tools. See http://www.transparency.org/research/gcr/overview.
  • The World Bank Institute publishes Worldwide Governance Indicators (WGI). These indicators assess six dimensions of governance in 212 countries, including Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. See http://info.worldbank.org/governance/wgi/index.aspx#home.
  • The World Bank Business Environment and Enterprise Performance Surveys are available at: http://www.enterprisesurveys.org/.
  • The World Economic Forum publishes the Global Enabling Trade Report, which presents the rankings of the Enabling Trade Index and includes an assessment of the transparency of border administration (focused on bribe payments and corruption) and a separate segment on corruption and the regulatory environment. The reports are available at: https://www.weforum.org/reports/global-enabling-trade-report-2014.
  • Additional country information related to corruption can be found in the U.S. State Department’s annual Human Rights Report available at http://www.state.gov/g/drl/rls/hrrpt/.
  • Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report, which provides indicators for 92 countries with respect to governance and anti-corruption. The report highlights the strengths and weaknesses of national level anti-corruption systems. The report is available at: https://www.globalintegrity.org/research/reports/.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Malta signed the UN Anticorruption Convention in 2005 and ratified it in 2008, but has not signed the OECD Convention on Combatting Bribery.

Resources to Report Corruption

Complaints or reports can be forwarded to the following in Malta:

Malta Police Commissioner
Email: cmru.police@gov.mt
Phone: +356 2122 4001
Address: San Kalcidonju Square, Floriana, Malta

The Office of the Ombudsman
Email: office@ombudsman.org.mt
Phone: +356 2248 3200
Address: 11, St Paul Street, Valletta VLT 1210, Malta

Internal Audit and Investigations Department
Email: info.iaid@gov.mt
Phone: +356 2123 7737
Address: Valletta Buildings, Lower Ground Floor, South Street, Valletta, VLT 1103, Malta

13. Bilateral Investment AgreementsShare    

Bilateral Taxation Treaties

In 2010, the United State signed a double taxation agreement with Malta. Malta also enjoys double taxation agreements with Albania, Australia, Austria, Bahrain, Barbados, Belgium, Bulgaria, Canada, China, Croatia, Curaçao (signed but not in force), Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Ireland, Isle of Man, Israel, Italy, Jersey, Jordon, Korea (Rep. Of), Kuwait, Latvia, Lebanon, Libya, Liechtenstein, Lithuania, Luxembourg, Malaysia, Mauritius, Mexico, Moldova, Montenegro, Morocco, Netherlands, Norway, Pakistan, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Tunisia, Turkey, Ukraine (signed but not in force), United Arab Emirates, the United Kingdom, and Uruguay.

The United States has maintained a Commerce and Navigation Treaty with Malta since 1815, initially in its capacity as a British colony, and, upon Malta's independence in 1964, on its own behalf. The primary aim of this agreement is to ensure non-discriminatory treatment for bilateral trade and investments. Malta has similar investor protection accords with Austria, Belgium/Luxembourg Economic Union, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Egypt, France, Germany, Italy, Kuwait, Libya, Netherlands, Slovak Republic, Slovenia, Sweden, Tunisia, Turkey, and the U.K.

14. OPIC and Other Investment Insurance ProgramsShare    

Malta qualifies for the Overseas Private Investment Corporation (OPIC) investment guarantee programs. Malta's leading trading partners (the U.K., Germany, France and Italy) offer risk insurance programs similar to OPIC's that likewise cover investments in Malta. Malta is a member of the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

15. LaborShare    

Malta's labor force currently stands at circa 186, 897 (63.8 percent male). The country's population is about 420,000, the smallest in the EU. For 2015, the national minimum monthly wage was $800 (€720.50). The estimated average gross annual salary of employees stood at $18,716 (€16,882); this amount refers to the basic salary and excludes extra payments such as overtime, bonuses and allowances. In 2015, on a sectoral basis, the highest recorded average gross annual salary for employees was in financial and insurance activities. Social insurance contributions add 10 percent to the wage bill. Free or subsidized meals, commuting allowances, and health insurance are the most common fringe benefits. In addition, employees are entitled to 24 days annual leave and public holidays that fall on a weekday. National law establishes a minimum number of sick leave days.

Foreign companies that have invested in Malta have a high regard for the ability, productivity and learning potential of Maltese workers, nearly all of whom speak English. In some industries, labor productivity is comparable to Western Europe. Maltese managers now run most of the foreign firms in Malta. Malta enjoys one of the lowest strike rates in Western Europe, and labor unrest is unlikely in the foreseeable future. The Government of Malta strictly adheres to the ILO convention protecting workers' rights.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

Malta’s Freeport container port offers modern trans-shipment facilities, storage, assembling and processing operations as well as an oil terminal and bunkering facilities. A private company, Malta Freeport Terminals Ltd., operates the Freeport under a long term concession. The operator ascertains that goods which have been processed in the Freeport are not labelled as having Malta as their country of origin, unless their identity has been substantially transformed. Companies operating within the Freeport must be licensed and benefit from reduced tax rates as well as investment tax credits.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical source*

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2015

$9752.2

million

2015

Not available

www.worldbank.org/en/country

Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions

)

2014

$9.08 million

2014

$902 million

http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Malta FDI in the United States ($M USD, stock positions)

2014

$10.9 million

2014

$614 million

http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2015

0.09%

2015

6.29%

N/A

*Source: National Statistics Office Malta, Rate of Exchange $1 = €0.902

The discrepancy between the figures provided for FDI stock position between the host country and USG statistical source is attributed to the fact that host country statistics do not include investment relating to special purpose entities (SPEs) for which geographical details are not made available.

Table 3: Sources and Destination of FDI

Sources and Destinations of FDI for 2014

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward

10,192

100%

Total Outward

1,169

100%

Germany

1,738

17%

Netherlands

251

20%

Luxembourg

876

9%

United Kingdom

157

12%

Netherlands

785

8%

Czech Republic

101

8%

United Kingdom

770

8%

Italy

65

5%

Italy

476

5%

Libya

64

5%

United States (stock, 2014)

902

 

United States (stock, 2014)

614

 

"0" reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Sources of Malta Portfolio Investment for 2014

Portfolio Investment Assets

Top Five Partners (Millions, US Dollars)

Total

Equity Securities

Total Debt Securities

All Countries

121,568

100%

All Countries

86,858

100%

All Countries

34,710

100%

Turkey

18,270

15%

Ireland

828

1%

Turkey

18,269

53%

United Kingdom

3,452

3%

International Organizations

19

0%

Ireland

847

2%

Ireland

1,675

1%

Denmark

16

0%

International Organizations

779

2%

France

1,546

1%

Norway

14

0%

Austria

474

1%

Netherlands

1,472

1%

Austria

3

0%

Norway

316

1%

 

18. Contact for More InformationShare    

Maria Cassar
Economic-Commercial Specialist
U.S. Embassy, Malta
Tel: +356 2561 4120
Email: maltabusiness@state.gov