Forbes magazine has classified Malta as the fifth most tax-friendly country for companies, in the latest Tax Misery and Reform Index carried out by the influential publication.

Malta was also ranked the most attractive country in the European Union in terms of taxes and social security contributions paid out by companies. Malta was only bettered by, in order, Georgia, Hong Kong, the United Arab Emirates and Qatar – this year’s winner.

The index also gauges the amount of increased “misery”or “reform” toward company tax-friendliness since it began tracking progress in 2000.

Malta was the second best performer in the area, according to the study, by having reduced its tax misery factor by 42 points over the last eight years. Malta was only bettered by Russia, which was shown to have improved by a slightly better 43.5 points.

Malta’s overall misery index of 63 compares with the 71.3 registered by Cyprus, Malta’s closest EU competitor, Bulgaria’s 73.5 and Lithuania’s 91.

Germany’s score of 106.3 was the “old” EU’s lowest, while France (166.8) was the 66-country index’s most ‘miserable’ country for companies, followed by Holland (157), Belgium (156.4) and Sweden (153.4).

The widely read index bodes well for Malta’s prospects of attracting much needed foreign direct investment, record levels of which, according to government figures, were achieved last year.

All EU member States were gauged to have reduced their misery factor since 2000, with the exception of Holland, which has climbed by 14.2 points.

Malta also stands a good chance of climbing even higher in the next rankings. The country’s rapid improvement on the scales, if sustained, is far outperforming those of its four higher-ranking countries.

At an overall 63, Malta is not far behind Georgia (58) and Hong Kong (41.5), while Malta’s improvement of 42 points outstrips those of its two closest competitors. Georgia improved by 14 points, while Hong Kong was actually found to have decreased in company tax friendliness by 0.5 points.

Moreover, the possible introduction of value added tax in Qatar and the UAE, ranked a respective first and second, could very well propel Malta into at least third place in next year’s index if other current trends persist.