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Since 2004 Malta has been an EU member state, and a Eurozone member since 2008. It welcomes foreign direct investment to increase the rate of economic growth. Malta offers incentives to draw in investments in a range of divisions, including manufacturing, shipping and the servicing sector, especially generic pharmaceuticals manufacturing, information and computer technology and financial services.
Malta is politically sound with regards to its position as a parliamentary republic and has free press and active political parties. Malta is known for being a safe and trustworthy country in which to do business. In fact, Moody’s scored Malta an A3 government bond rating, with a stable outlook.
The local government created The Malta Enterprise, in order to encourage overseas direct investment in Malta. The Malta Enterprise gives information to potential investors, processes submissions for government investment incentives and communicates between investors and other government parties.
Below are some essential laws that influence overseas investment in Malta:
Most manufacturing divisions are accepting of investors on the condition that they export the products from Malta. No legal restraints exist for investments geared toward sales in the small local domestic market, but the government carefully screens such submissions from overseas businesses.
Sectors controlled by the state, like the production of electrical energy and circulation of fuels, are being liberalized as a result of European Union regulations. Energy distribution remains in the hands of Enemalta.
In a bid to bring in investors, the Maltese government gives priority to businesses operating in the following sectors:
Private overseas investors are at liberty to make equity changes as they please, from dual ventures to full equity control.
The Maltese government has privatized a quantity of state-controlled companies, taking count of its shares in the country's largest bank, and postal service and its remaining 60% of the share in a wireless telecommunications services company.
The government willingly accepts private investors, both Maltese and non-Maltese, to partake in privatization plans. It affords overseas investors equal treatment as that given to domestic investors. A small number of limitations on their operations are also set. Currently there are no performance requirements other than those linked to the objectives stated by the investors at the time of application for assistance. Overseas investors have the right to repatriate or reinvest their profits without constraints and can take disagreements before the International Centre for Investment Disputes.
The government frequently accepts repatriation of income, dividends, and assets. There are no restrictions with regards to the incomings or outgoings of resources for remittances of profits, debt service, capital, capital gains, returns on intellectual property or imported raw materials as long as investors provide the relevant documentation to the Central Bank of Malta. No substantial delays exist in converting investment returns after the submission of the essential documents. Maltese laws and practices affecting remittances of investment capital and earnings have been improved as many global exchange controls were relaxed to conform to EU orders.
Over the past few years there have been no sizeable investment disputes involving American or other overseas investors or contractors in Malta. The Maltese Parliament is the highest law-making organization. Every five years its 65 members are elected by proportional representation.
The Maltese Government functions via a cabinet of ministers, headed by a Prime Minister. The judiciary is independent and courts are separated into Superior Courts, overseen by judges, and Inferior Courts officiated by magistrates. The jurisdiction of the Inferior Courts is controlled to minor offences of a criminal nature and to small civil matters. Typically, the judiciary functions through the Criminal, Civil and Constitutional courts. The First Hall of the Civil Court arbitrates cases of a commercial nature. There is one Court of Appeal for all jurisdictions. The Constitutional Court has authority to hear and decide questions and appeals on constitutional issues.
There are various 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.
Maltese law courts have an extensive tradition of sovereignty. Once elected to the bench, judges and magistrates have set salaries, which do not require yearly approval, and cannot be dissolved except for a proven incapability to exercise their role properly or proven misbehaviour, following a two-thirds vote in the House of Representatives. The Constitution ensures the separation of powers amongst the executive and the judiciary. Fair trial is also recognized as a constitutional human right under the Maltese Constitution.
Malta has a unique Commercial Code, which states that commercial activities are to be controlled by the Commercial Code and interrelated legislation, such as the Banking Act, the Central Bank of Malta Act, amongst others. Bankruptcy is covered in the Commercial Code. The court assigns a curator to settle the assets of the bankrupt company, organization or individual and distributes the proceeds among the creditors.
In 2002, Malta signed the Convention on the Settlement of Investment Disputes. It is also a member of the New York Convention of 1958 on the acknowledgment and enforcement of foreign arbitration awards. Means of agreement of disputes are also given in bilateral investment guarantee agreements, which Malta has with several countries.
The government provides many important fiscal and other incentives for investment in industrial projects. These include:
Companies operating inside the Malta Freeport, which is a customs-free region, will benefit from two main incentives: in particular, decreased rates of taxation and investment tax credits. As a result, tax credits may counterbalance the tax payable for a number of years or decrease it substantially.
All investment incentives are specified by law and made unavailable in an impromptu manner. Handling of local and foreign investors is the same. Non-Maltese investors do not receive favoured treatment.
There are no performance prerequisites other than those related to the goals stated by the investor at the time of application for assistance to Malta Enterprise. There are no stated conditions that an overseas investor should minimise his shareholding interest over a period of time, transfer his technology, or employ Maltese nationals. These factors might influence Malta Enterprise's evaluation regarding a firm's application for assistance.
Malta Enterprise supervises compliance with any conditions set by the government as a condition of government assistance. Investors are not forced to disclose proprietary information.