The financial services sector is today one of the strong pillars of Malta’s economic structure, contributing around six per cent to GDP, or 12 per cent if both direct and indirect contributions are accounted for, the parliamentary secretary in the Finance Ministry, Tonio Fenech said yesterday.
Delivering the opening speech at a seminar organised by the Malta Institute of Taxation on the amendments to the international tax regime, Mr Fenech said amendments to the Income Tax Act were undoubtedly an important milestone in the development of Malta’s financial services industry.
The contribution by the financial services sector was growing year on year. This was a very remarkable achievement, particularly considering that less than 20 years ago, a financial services industry for Malta was just a dream, said Mr Fenech.
While there was some doubt about the viability of a financial services industry in Malta when offshore legislation was introduced in 1988, members of Parliament believed in the country’s potential and Parliament moved ahead with new measures, he said, adding that the growth of offshore business necessitated further legislation.
The financial services legislative regime was reshaped and today compared very favourably with the legislative systems of the most advanced financial centres, said Mr Fenech.
“We are now going through a further phase. Maltese law was examined and scrutinised by the State Aid authorities of the EU Commission and the EU Code of Conduct Group for Business Taxation.
“Discussions have been going on for a long time and the Maltese government has explained and clarified the system. It was finally established that the only reservations that could be expressed on our law fell within the field of the State Aid rules,” the parliamentary secretary said.
Explaining that Malta agreed to enact changes to its income tax law, Mr Fenech said amendments would remove all differences between resident and non-resident taxpayers and between Malta-sourced and foreign-sourced income.
He said the country had learnt a lot from this exercise and the importance it was given by the European Commission.
“We have overcome our initial drawbacks and have established ourselves as key players in the field of international financial services. Malta is now recognised as one of the major financial centres in Europe,” he said, while adding that the government was committed to continue supporting the industry by way of further initiatives.
The government planned to expand Malta’s tax treaty network even further and one of the priorities in its programme was the conclusion of a double taxation agreement with the USA.
“We hope that negotiations on this treaty will continue without further delay. The government will also continue attaching maximum importance to international cooperation in measures designed to combat international crime and tax fraud.”
Mr Fenech said the government’s programme for the development of the financial services industry was not based only on promoting attractive tax legislation.
“We were able to make steady advances because we operated within a tightly regulated regime. Malta has gained the reputation of a serious, efficient and respectable financial centre. It is the duty of each one of us individually to treasure and protect this reputation.”