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Legislation Related to Foreign Investments in Malta

Updated on Tuesday 19th April 2016

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Legislation-Related-to-Foreign-Investments-in-MaltaMalta has become a member of the European Union in 2004 and since then its legislation has been directed towards attracting foreign investments in order to enhance its economic growth.  The Maltese government has created pro-investment regulations with the purpose of reducing the state’s implication in the economy and to actively involve the private sector in increasing the economy.

Malta’s strong points when it comes to attracting foreign investments are based on the access to European markets, tax incentives for many activity areas, such as manufacturing, pharmaceuticals, computer technology and financial services, and a reduced taxation system compared to other EU member states.

Legislation for foreign direct investment in Malta

The most important provisions for foreign investments in Malta are:

  1. The Income Tax Act of 1948 and its amendments that set an unique tax rate of 35% for Maltese limited liability companies. For some companies that export good or services, a reduced rate of 5% applies.
  2. The Business Promotion Act that offers incentives to companies that act in the areas of manufacturing, repairs or maintenance.
  3. The Malta Enterprise Act enabled in 2003 that provides rules and regulation for granting incentives and helps Malta Enterprise Corporation set guidelines for industrial incentives considering the factors a company will be formed upon.
  4. The Companies Act of 1995 is the main source of law regarding the incorporation of limited liability companies in Malta. The Companies Act enables regulations for limited liability companies with variable share capital and companies with share capital in foreign currencies.
  5. The Malta Financial Services Authority Act of 1989 is in charge with the regulations regarding financial services in Malta, such as banking and investment services. The Investment Services Act of 1994 contains a set of rules regarding investment services and insurance.

The main incentives of the Malta Financial Services Authority are:

-    investment tax credits for companies in domains like pharmaceutics, electronic and electrical;

-          50% investment allowance for plants and machines and 20% for industrial buildings;

-          a reduced rate of 19.25% for reinvested profits;

-          loan guarantees and loan interest subsidies.

Malta has signed double tax treaties with over 60 countries and companies have the possibility to operate with Malta Freeport and the Maltese custom-free zone.

If you want to register a company in Malta, you can contact our company formation agents.

 

 

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