Malta Business Services Overview
Setting up a Business in Malta
The Republic of Malta is a small island nation situated in the central
Mediterranean Sea and consists of an archipelago in the middle of the
Mediterranean Sea, of which only the three largest islands Malta (Malta), Gozo
(Ghawdex), and Comino (Kemmuna) are inhabited. The strategically located islands
constituting the Maltese nation have been ruled by various powers and fought
over for centuries, and they have a deeply rooted history dating back to
According to the last demographic survey (September 2008), the estimated
population of Malta at the end of that year (including foreign residents) was
410,290. The Maltese-resident population was of 389,769. Malta is currently the
smallest European Union country in both population and area.
Until 1800, Malta’s main economic activities were based around agriculture
and ship-related services, the latter being provided from the natural harbours
around which the island’s oldest cities, including the capital city Valletta,
are built. The dockyard was later used by the British for military purposes. In
times of war, Malta's economy prospered due to its strategic location in the
middle of the Mediterranean and at the crossroads of Southern Europe, North
Africa and the Middle East.
In 1869, the opening of the Suez Canal benefited Malta's economy greatly due
to the huge increase in the level of shipping entering the port with Malta
becoming one of the principal coaling stations for steamers bound for India and
East Asia. In 1988, the Malta Freeport was established and it is now one of the
key players, within the Mediterranean region, in maritime trans-shipment
Nowadays, Malta’s major resources are its favourable geographic location, and
a highly productive, educated labour force. The country’s economy is
predominantly driven by service-based industries, including prospects of foreign
direct investment in Information and Communication Technologies. The
agricultural sector is small, with potatoes being the only major export
commodity. Although Malta is an island, the fishing industry is also relatively
insignificant. Malta produces only about 20% of its food needs, has limited
freshwater supplies, and has no domestic energy sources. The economy is
dependent on foreign trade (serving as a freight trans-shipment point),
manufacturing (especially semi-conductors and electronics) tourism and financial
services. The tourism infrastructure has increased dramatically over the years
and a number of quality hotels, including international brands like Radisson
SAS, Hilton and InterContinental have now become established on the island.
Tourism now accounts for over a quarter of Malta's foreign exchange earnings.
Following the overhaul of Malta’s financial legislation, which was undertaken
in earnest in the early 1990s, Malta has obtained international recognition as a
stable financial services centre of repute. Today, Malta’s regulatory framework
for financial services is fully consolidated and aligned to internationally
recognized standards. Its onshore regime provides a seamless framework that
supports both domestic and international economic activity. The Malta Financial
Services Authority (MFSA) is Malta’s single regulator for banking, investment
services, insurance and other financial services activity. The regulator’s
accessibility and its pro-active approach to addressing market developments,
balanced against the rigorous application of international financial regulatory
standards, have proved to be a highly successful formula.
The Maltese financial services industry has witnessed a rapid growth over the
last decade, with over 6,000 people presently employed within the financial
services sector (excluding law firms, corporate services providers and
accountancy firms) which contributes a significant 12% to the country’s GDP. The
Maltese Government continues to evaluate and update relevant legislation and
regulations, keeping abreast of developments in the industry with a view to
maintaining Malta’s competitiveness in this sector.
Malta was part of the EU enlargement in 2004, along with nine other
countries. Several state-controlled corporations have been privatised and
markets have been liberalised in anticipation of Malta’s EU membership, and the
Government’s remaining participations in the private sector continue to be
privatised. The Maltese government entered the ERM II framework in May 2005, and
has adopted the Euro as the country’s currency, replacing the Maltese Lira as
from the 1st January 2008. Malta has also adopted regulations implementing the
Schengen Treaty provisions.
The Government of Malta is additionally undertaking a strategic plan intended
to bring Malta to the forefront of the information technology and
telecommunications industries in Europe. In keeping with this ambition, an
agreement has been signed between the Government and a Dubai-based company to
set up a “SmartCity” in Malta. This is projected to include a new fully-fledged
ICT and Media Smart City, modelled on the basis of the “Dubai Internet City”
developed by the same group in Dubai, and a similar “Smart City” being
undertaken in Kerala, India. The project is expected to generate a substantial
demand for knowledge-based jobs, particularly in the ICT sector.
Malta is a democratic republic whose parliamentary system and public
administration is closely modeled on the Westminster system in the United
Kingdom. The unicameral House of Representatives, known in Maltese as il-Kamra
tad-Deputati, is elected by direct universal suffrage through the single
transferable vote (STV) every five years, unless the House is dissolved earlier
by the President on advice of the Prime Minister. The party who wins the
majority of the votes, forms the cabinet. The House of Representatives is made
up of 65 Members of Parliament. However, where a party wins an absolute majority
of votes, but does not have a majority of seats, that party (the cabinet) is
given additional seats to ensure a parliamentary majority. By the Constitution
of Malta, the President appoints the Prime Minister, who in general is the
leader of the party forming the cabinet.
The President of the Republic is elected every five years by the House of
Representatives. The role of the president as head of state is highly
ceremonial. The main political parties are the Nationalist Party, which is a
Christian democratic party, and the Malta Labour Party, which is a social
democratic party. The Nationalist Party is currently at the helm of the
government, and the Prime Minister is Dr. Lawrence Gonzi.
Since 1993, Malta has been subdivided into 68 local councils or localities
(54 in Malta and 15 in Gozo), elected for a term of three years. These form the
most basic form of local government. There are no intermediate levels between
local government and national government.
The business practices and etiquette in Malta are very much akin to those of
the United Kingdom and this can be attributed to the presence of British forces
in Malta. The country's official languages are Maltese and English, although
Italian and French are also widely spoken in the business community. Business
correspondence is conducted primarily in English. Laws and regulations are
published in both of the official languages.
On the whole, Maltese business people have a conservative approach to
business. Punctuality is expected and appreciated and dress codes in offices are
conservatively smart. Meetings should be arranged several days in advance and it
is customary to shake hands when being introduced or when meeting someone, as
well as when leaving. Business cards are usually exchanged during business
meetings, either at the beginning or at the end of a meeting. During social
events business cards may be provided if specifically requested by another
Typical office hours are between 0830 and 1730 Mondays to Fridays, with a
one-hour break between 1300 and 1400, however many executives work longer hours.
On Saturdays, retail outlets are generally open between 0900 and 1300. Business
entertaining can be conducted during any meal and generally the individual or
body who initiates this is expected to pay.
Maltese law is broadly structured on the continental civil-law structure, but
most administrative, financial and fiscal legislation is based on British law.
The courts are divided into three principal jurisdictions namely civil
(including commercial matters), criminal and voluntary (mainly dealing with
family matters). Precedents have persuasive but not binding value before the
Maltese courts, and therefore a previous court decision does not affect the
court’s freedom to decide disputes in whatever way it considers appropriate.
In-keeping with the reduction of the government’s involvement in the private
sector, several bodies have been set up for the purposes of regulating specific
sectors. Examples include the Malta Resources Authority (MRA) with
responsibility for energy, water and mineral resources, the Malta Communications
Authority (MCA) with responsibility for telecommunications, the Malta Financial
Services Authority (MFSA) who regulate the financial services sector, and the
Malta Lotteries & Gaming Authority (LGA) who regulate the gaming industry. These
regulatory bodies seek to limit the government’s role to the regulatory and
licensing function, although certain monopolies in the energy and water services
sector are still government owned and run.
The MFSA’s premises also house the Registry of Companies, which is
responsible for all matters relating to the registration and maintenance of
Maltese companies, the redomiciliation of overseas companies from recognised
jurisdictions to Malta and the registration of branches of overseas companies
establishing themselves in Malta. All Maltese companies are required to submit
independently audited annual reports to the Registry of Companies.
All companies in Malta are required to file audited accounts with the
Registry of Companies within 42 days after the 10th month following the end of
the company’s financial year-end. A default financial year end of the 31st
December applies, unless a company elects otherwise.
Companies, however, who satisfy certain requirements and are classified as
“small companies” may submit an abridged version of their audited accounts, to
include an abridged profit and loss account, abridged balance sheet and abridged
notes to the accounts. Small companies are defined by Article 185 (1) (a) of the
Companies Act as companies which on the balance sheet date do not exceed the
limits of two of the following three criteria:
Article 185(1)(b) of the Companies Act 1995 exempts private companies from
the requirement to audit the accounts, which on their balance sheet dates do not
exceed the limits of two of the three following criteria:
Additionally, small companies that also qualify as “exempt companies” in
terms of Article 211 of the Companies Act and in this case may take advantage of
their exempt status and submit accounts consisting of an abridged balance sheet
Public liability companies, insurance companies and financial institutions
are obliged to file full financial statements within 42 days after the 7th month
following the end of the company’s financial year-end.
The most common public information of legal entities available at the
Registry of Companies includes the company’s registered address, details of
directors, shareholders and company secretary and details of nominal, issued and
paid up capital. Accounts and Annual Returns are to be submitted for
registration on an annual basis.
Above figures are quoted as at December 2008.