HSBC Treasury Management Profiles 2018 -

Current section, Introduction

Introduction

Malta’s economy is the smallest in the Eurozone and depends heavily on the economic health of its neighbours. Malta has an industrialised, service-based economy largely driven by tourism (direct contribution to GDP: 14.1 per cent in 2016), trade and financial services (12 per cent of GDP). A highly-skilled workforce, low labour costs, an advantageous tax regime and EU membership have served to attract strong levels of foreign investment, particularly in the financial and insurance sectors. In 2016, financial and insurance activities contributed EUR158.2 billion (98 per cent) of the EUR161.4 billion of foreign direct investment inflows. The government has established a working group in order to assess how Malta can benefit from the UK’s withdrawal from the EU, particularly with regards to companies working within the insurance and financial sectors. Economic growth of 6.4 per cent in Q2 2017 (6.2 per cent in Q1), the highest economic growth in the EU, was driven by strong exports and private consumption of households. Unemployment (4.2 per cent in August 2017) and inflation (1.2 per cent) remain relatively low. Government debt was 58.3 per cent of GDP in 2016.

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Legal and regulatory

  • Foreign exchange and domestic currency (EUR) accounts can be held by residents both domestically and abroad. Resident domestic currency accounts are convertible into foreign currency
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts can be held abroad and are convertible into foreign currency
  • All transactions between residents and non-residents must be reported to the central bank on a monthly, quarterly or annual basis

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Taxation

  • Resident companies are taxed on their worldwide income
  • Non-resident companies are taxed on Maltese-sourced income only
  • The flat rate of corporate taxation is 35 per cent
  • Non-final withholding tax may be imposed on certain taxable income paid to non-resident companies

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Payment instruments and systems

  • Credit transfers are used for both high-value corporate and low-value retail transactions’ in 2016, credit transfers accounted for 90.5 per cent of total volume of cashless payments. Standing orders are often used for recurring payments such as rent and insurance premiums. Cheques are commonly used by both companies and the government. Payment card use is rising; debit cards account for 33.5 per cent of all cashless transactions
  • SEPA covers all 28 EU member states, the four EFTA member states, Monaco, San Marino and Andorra
  • Malta operates three national payment systems: TARGET2-Malta (T2MT), an RTGS system; STEP2, for low-value domestic and cross-border SEPA payments; and the Malta Clearing House, for cheque payments

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Cash management

  • Notional pooling is not available in Malta. Cash concentration is rarely used and is offered on a selective basis only
  • Automated collection methods are increasingly used by medium-sized and large businesses in Malta

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Electronic banking

  • Electronic banking is available in Malta. There is no bank-independent electronic banking standard
  • Internet and mobile banking services are provided by all of the country’s banks for both corporate and retail purposes. An estimated 60 per cent of internet users access online banking

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To read the full report on Malta and to discover more on these and other topics, including banking and trade, please click on the Download PDF option.

Sources:

  • World Travel and Tourism Council: Economic impact 2017 Malta
  • Eurostat
  • National Statistics Office

The materials contained on this page were assembled in June 2017 (unless otherwise dated).

 

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