The Individual Investor Programme (IIP) will soon cease to exist and will be replaced by a new residency plan that can lead to citizenship.
Draft amendments to the Maltese Citizenship Act were published on Friday in the government gazette.
During a press briefing, the Parliamentary Secretary for Citizenship and Communities, Alex Muscat, said he hopes that the amendments will be approved by Parliament latest by September.
The IIP will cease to exist, even if the 1,800-application limit is not reached by then. So far, 1,500 applications have been approved.
Under the new system, only individuals who first manage to obtain a Maltese residence permit will be allowed to apply for citizenship. There are two ways to do this. Individuals can apply after a one-year residency period if they invest €750,000 or more. Applicants would have to pay €600,000 if they apply after a three-year residency period.
Currently, IIP applicants pay €650,000 for their Maltese citizenship.
Under the new system, €50,000 must be paid for each dependent of the main applicant. The minimum value of the property purchased is increasing from €350,000 to €700,000. If a property is rented, the minimum value is increasing from €16,000 to €18,000 annually.
Applicants must also make a mandatory €10,000 philanthropic donation.
A new agency will be set up to oversee all forms of citizenship, including those obtaining their Maltese passport through investment.
The money generated from this investment will be split up in the same way that applies with the current system, with 70% going into the National Development and Social Fund.
There will be a limit of 1,500 applications.
Alex Muscat explained that the proposed system is more in line with those operated by other European countries.
"We are moving towards a residency programme that can lead to citizenship," he explained. "The first step is to become a resident of Malta. In order to become a citizen, one has to pass an eligibility assessment. The already rigorous due diligence process will be strengthened further to ensure that we attract good natured citizens who have acquired their wealth in a lawful way."
Obtaining a residency permit is the first "sieve" in the meticulous process to obtain citizenship, he said.
Journalists were also given a detailed briefing on the due diligence process carried out by the Malta Individual Investor Programme Agency (MIIPA), which engages foreign firms to scrutinise applicants. The current rate of rejection of IIP applicants is around 23%, Muscat explained.
He said that, out of 1,500 applicants, only 4 were found to have been unsuitable candidates - two have since lost their citizenship and two are in the process of having it revoked.
The Parliamentary Secretary said the list of individuals who are granted citizenship will continue to be published. There will still be no distinction between those who acquire their citizenship through investment and those who acquire it through marriage or other reasons.
Muscat explained that there will be stronger regulations on money laundering and on how agents operate and market their services with regard to citizenship.
The Parliamentary Secretary also said that applicants will have to reside in Malta for at least a number of weeks but explained that, normally, such high net worth individuals have busy travelling lifestyles and cannot remain in one place for long periods of time. Thus, enforcing an aggressive residency requirement could be counterproductive.
The new system aims to create a more genuine link to Malta he, said. Only 5% of IIP applicants opened a business in Malta, Muscat said, adding that he wishes to see this figure increase. The government is, in fact, discussing the matter with the Chamber of Commerce to find ways of enticing applicants to invest further in Malta.
An independent regulator will continue to audit and scrutinise the application process executed by the agency and all resultant decisions.
The Minister will not be able to grant citizenship to individuals who do not meet the basic legal criteria.