PKF Malta officials attend trade delegations in Bulgaria, Poland and Japan

Published on Malta Independent on Thursday, 9 August 2018

PKF Malta Senior Partner George Mangion recently traveled to Sofia where he attended the EMEI Tax meeting which is organised by PKF International (PKFI).  Being a network of independent firms, PKFI is constantly on the lookout to organise various conferences and events for its members and non-members.

After Sofia, PKF Senior Partner, George Mangion attended a trade delegation to Poland. This trade delegation was organised by the Malta and Poland Chamber of Commerce.  During this visit, Malta and Poland Chamber of Commerce signed a Memorandum of Understanding to strengthen business ties in the interest of respective members.

The mission included a well-attended high-level Poland – Malta Business Forum which was addressed, amongst others, by the Minister for the Economy, Investment and Small Business, Chris Cardona and Hon Marcin Ociepa on behalf of Jadwiga Emilewicz, Minister of Entrepreneurship and Technology of Poland and later followed by a B2B meeting between the Maltese and Polish companies. During these B2B meetings, Mr. Mangion met with various Blockchain and virtual currencies organisers.  The next visit was to a business accelerator called The Heart. This is an organisation which offers assistance to corporations and start-ups to grow and innovate.

During the same week, PKF Poland celebrated their 25th company anniversary.  They celebrated it with various business partners and as well as with other PKF firms.  PKF Malta was invited for this anniversary where they enjoyed a Jubilee Gala with a concert and dinner.


Mr. Mangion together with the Head of Legal, Dr. Marilyn Formosa, and Asia Business Development Executive, Ms. Yolanda Dong also visited Japan with a business delegation organised by Trade Malta jointly with the Office of the Prime Minister of Malta, the Hon. Dr. Joseph Muscat between the 30th July and 3rd August 2018.

Published on Malta Independent on Thursday, 9 August 2018

PKF shines a light on the poverty myth

Published on Malta Today 5th October 2017
Get in touch: | +356 21 493 041

It is encouraging to hear just a few days ahead of the budget speech that Malta has improved its competitiveness ranking in the World Economic Forum’s Global Competitiveness Index 2016-17, rising from 40th place to 37th. This improvement is not easy to obtain since it depends on a number of macroeconomic factors, some of which are beyond the control of the government.

Can we rest on our laurels now?  Not really – but it is a good start knowing that out of a total of 137 countries we rank ahead of Italy, Portugal, Slovenia and Croatia. The government proudly announced a budget surplus for last year. This is a welcome effort to reduce public debt and precipitate an increase in national savings.

Our flourishing economy registered an extraordinary growth in the last years, in contrast with European members’ trend, yet this must not mislead us and lure us to wave a flag of complacency. There is a number of social challenges that affects our society which need to be addressed in a constructive and innovative way to avoid a pejorative effect in the future. One of these challenges is the retirement benefits in Malta. A lot of people opine that the statutory pension mechanism, unless supplemented by external income, will not be sufficient to help people falling into the poverty trap. To check this PKF has volunteered to conduct a number of ‘one to one’ questionnaires and run a confidential survey among tenants in old people’s homes housed in three government run centres.

The main purpose for this study was to clarify the controversial aspects of poverty, identifying the shifting needs of people and to investigate that cohort aged 65 and over, which is usually identified as more at risk of suffering from social exclusion or lack of income. According to the latest 2016 data, Malta registered a reduction in the risk of poverty and social exclusion (AROPE) rate from 22.4% to 20.1%.  It is interesting and necessary to note that when one splits this value by age group or household type one finds the evidence that this improvement has not benefited everybody.

In particular, in the age group of 65 and over the AROPE rate increased from 23.7% in 2015 to 26.1% in 2016. By 2030, the number of people within this age group will exceed that of young people aged 15 to 24. This data shows how society is getting older, so it will inevitably face various challenges. For these reasons and several more it is necessary for the government to have a deeper understanding of senior people’s pattern of expenses which is a prerequisite to guarantee a respectable quality of life.  If a positive equilibrium is reached then elderly people can live a healthier life and, therefore, can remain active and participate in the community. It goes without saying that elderly people have a rich endowment to bequeath to society. Taking into account the trend showing a decline in the number of young people, under ‘the pay-as-you-earn system’ this poses a challenge for the maintenance of a pension fund which over time will see fewer workers contributing for each pensioner. When questioned most pensioners replied that the pension they receive is enough but others argue that they cannot afford to go to any events, concerts or museums. For this reason, such pensioners feel detached from society.

Unfortunately, relative and more so absolute poverty is still a veiled problem that we have to quantify. An altruistic drive to fight relative poverty and social exclusion is a common policy with political parties and finds favour with stakeholders and NGOs. Individuals who live in poverty are more likely to produce adverse outcomes for themselves (i.e. abuse of alcohol and drugs) and for society (augment criminal activity).

The public pension system (old-age pension, survivors’ benefits and invalidity pensions) is reinforced by a non-contributory welfare programme. The national scheme is called the “two-thirds pension”. The two-thirds pension aims to provide a pension equivalent to two-thirds of the average earnings of insured persons capped at a fixed limit. However, there is also a minimum pension guarantee that is about 50% of the current average wage. Is this welfare not adequate and acceptable in a growing economy of 2017? Is it buttressing the welfare of our society?

The first noteworthy observation from the survey results is that almost 70% of families nowadays rely on a single pension. Be that as it may it is advisable to focus our research on households composed of two people or more that only receive one pension, since without other sources of income these may easily fall below the poverty line. Furthermore, respondents receiving the maximum pension said the two-thirds pension system is not representative of their total lifetime contributions given that the pension limit is capped. Only minor increments are triggered each year as a result of the Cost of Living Adjustment.

“Higher rents for flats, higher consumption of electricity, water, healthcare costs, internet connection charges etc., all push the cost of living on an inflationary trajectory. This is the main reason why the spending power of a single pension is dwindling”

When asked if they can afford to save money, more than a half of all respondents said they spend their entire pension. Respondents with the lowest pension income, in this case lower than €500 in a month, said that they are not able to save money. Again, pensioners who receive €800 and more said that often the pension cheque does not stretch beyond the month.

Talking with people from nursing homes we find out that as the level of pensions is low and most do not have any alternative sources of income, such as contributions from relatives or friends, then probably they cannot save. Saving was identified as being one of the most important means to avoid running out of finances when unforeseen events occur, indicative of the ingrained aspect of Maltese culture – ‘save for a rainy day’. It is important to emphasize that nowadays higher rents for flats, higher consumption of electricity, water, healthcare costs, internet connection charges etc., all push the cost of living on an inflationary trajectory. This is the main reason why the spending power of a single pension is dwindling.

When people do not make ends meet they try to find other sources of income.  It was considered that one of them could be gambling, which can double up as a source of entertainment in addition to being a possible source of alternative income. Could we test to see if a positive correlation prevails with the problem of poverty and prevalent gambling habits?  This exercise is a complex one and calls for more data than PKF could obtain from the public domain.

In conclusion, our primary research was to try and ascertain if income of single pension couples is enough to live by. We questioned our first hypothesis, which is “retired people are at risk of poverty”.  On average, results show that despite the compulsion to live a more frugal life style, coupled with a lack of savings yet overall the level of satisfaction of the pensions system is good.

As the economy expands so is the need to reform the P.A.Y.E system fine tuning its single pillar and gradually introducing a sponsored second pillar.  How can retirement be attractive if it is capped and not inflation-proof? However, it is not expected that the State alone carry the burden to provide for universal retirement except for those on the poverty line and incapacitated persons. PKF Malta believes that more empirical studies are to be sponsored on the subject of social welfare reform with the noble aim to facilitate the equitable sharing of richer pickings of our economic harvest. The ubiquitous trickle-down effect must permeate faster to reach the lower hierarchy of the community.

A copy of the study can be secured by calling Ms Pace on 21484373.

Author: Audrone Linionyte
Published on Malta Today 5th October 2017
Get in touch: | +356 21 493 041

Insolvency in the UK

Author: James Camilleri

Insolvency in the UK is currently regulated by the Insolvency Act 1986. However, it is relevant to point out that a modernisation of the Insolvency Act 1986 will see the light this year by means of the Insolvency (England and Wales) Rules 2016 due to come in force in April 2017.[1] The purpose of the new legislation is to be up-to-date with developments in the business world.[2] Important changes include the embracement of electronic communication in everyday life. Therefore, it will be possible to validly communicate with creditors by electronic means and hold meetings amongst creditors by videoconferencing.[3] Creditors who do not wish to be involved in the correspondence have the option to decline participation and small amounts of money may be paid directly without requiring a formal authorisation.[4]

The insolvency procedures available in the UK are five: i) administration, ii) company voluntary arrangement (CVA), iii) administrative receivership, iv) compulsory liquidation, and v) creditors’ voluntary liquidation (CVL).[5]

The administration procedure allows a company to remain in place whilst considering the future prospects of the business.[6] If is possible to rescue the company – either a financial restructuring may be proposed or the sale of the business together with all its assets.[7] This procedure is also being used to liquidate the assets and distribute the proceeds amongst the creditors, though it should be said this is not the intended purpose of the administration procedure.[8] A company can make an application for administration in court by means of an administrator who must be an insolvency practitioner. There is also the possibility for the company directors to appoint their own administrator and register the necessary papers in court. [9]

In a company voluntary arrangement, an insolvent company can forward proposals to its creditors for settling its debts – either in whole or in part. It allows a company to devise its own layout and thus not be constrained by the Insolvency Act. [10] The arrangement must be approved by not less than 75% of the creditors at which point it is binding on all with the exception of the secured or preferential creditors.[11]

Administrative receivership is only available to secured creditors on an individual basis.[12] There are two types of receivers: an ‘administrative receiver’; and a ‘Law of Property Act (LPA) receiver’ or ‘fixed charge receiver’. An administrative receiver is in charge of the whole or the majority of the assets and the running of the business. An LPA receiver, who does not need to be a licensed insolvency practitioner, is mainly used to sell a particular asset such as land. [13] It should be noted that an LPA receiver’s competence terminates should an administrator be appointed. On the other hand, an administrative receiver precludes the appointment of an administrator.[14]     

Compulsory liquidation is often initiated by the creditors. They need to petition in court for the winding-up of the company. In the petition the creditors, or whoever is making the petition, must show that the company is not able to meet its debts.[15] Article 123 of the Insolvency Act provides certain criteria for determining the inability to pay debts. Amongst these is the inability to pay a debt of at least £750 within 21 days; cash flow problems; and proof that the company’s liabilities surpass the value of its assets.[16]

In a creditors’ voluntary liquidation 75% or more of the shareholders pass a resolution for the winding-up of the company and the appointment of a licensed insolvency practitioner as liquidator. The liquidator appointed by the shareholders needs to be approved by the creditors and if not they can choose to appoint a different liquidator. The creditors act by majority voting based on the value of credit owed.[17]

Insolvency in Germany

In Germany the Insolvency Code (Insolvenzordnung) governs insolvency proceedings in the country. Enacted in 1999, the Insolvency Code replaced the 1877 Bankruptcy Code (Konkursordnung) and stressed the importance of reorganisation in preference to liquidation.[18] The Code has been amended over the years, with some reforms having taken place recently.[19]

On the 1 March 2012 an important amendment was passed revising the German Insolvency Code. It is headed the Act for the Further Facilitation of Restructuring of Companies, also known as the ESUG (Gesetz zur weiteren Erleichterung der Sanierung von Unternehmen).[20] With the purpose of encouraging the filing of insolvency to be made as early as possible, the stipulations for the debtor entity’s self-administration were made less stringent.[21]

By virtue of the ESUG, creditors can take a more active part and at an earlier point in the insolvency proceedings. The creditors are provided with more in-depth information regarding the initial phases of self-administration and the appointment of an administrator and the focus of the proceedings has shifted away from being mostly dominated by the court and the administrator.[22] The added protection offered to creditors has the collateral effect of benefitting the shareholders who stand to gain from the successful outcome of the restructuring plan. Different restructuring alternatives are possible under the ESUG amendments since any approach that is within the limits of corporate law may be put forward.[23]

In the past, the notion of self-administration was frowned upon because it sounded awkward to rely on a person who is filing for insolvency to, on the other hand, manage the restructuring plan. Thus, the debtor entity was refrained from being able to commence the self-administration process until a formal go-ahead was declared by the court. All-in-all, self-administration programs were the exception rather than the norm.[24]

This has changed following the enactment of the ESUG, and the initiation of a self-administration program can begin upon the instigation of the debtor entity, operating under the supervision of a trustee. This is subject to the unanimous vote of the creditors’ committee but once accepted the court is not obliged to scrutinize the agreement.[25] Self-administration encourages the management to declare a state of insolvency when this becomes imminent by making the transition less dramatic. This also reflects in the costs of self-administration being lower than in normal insolvency proceedings.[26]

The ‘protective shield’ is another useful mechanism introduced by the ESUG that allows the insolvent company up to three months for the preparation of an insolvency plan and refrain creditors from making any claims whilst the protective shield is still running.[27] The court will decline to grant the protective shield only if the chances of successfully restructuring the company are too remote. This awards the debtor entity time to prepare and submit an insolvency plan. By means of the ESUG, the protective shield is integrated in the preliminary proceedings not treated as an external process of the restructuring plan.[28]

The ESUG made the setting up of a creditors’ committee compulsory under certain conditions. Three conditions are stated by the amendment and it is enough to satisfy any two of these three. They are: i) a balance sheet total of at least €4,840,000, ii) revenues of at least €9,680,000, and iii) an average of at least 50 employees.[29]

During an insolvency plan, the ESUG had introduced the possibility to alter the rights of shareholders even if they do not approve of such changes. In what is referred to as the constructive part, the claims of a creditor may be converted into shares.[30]

For an insolvency proceeding to be initiated a request needs to be filed in court.[31] Insolvency rules apply to both physical and legal persons and partnerships. The competent court is the place of residence or the place of business of the debtor.[32] Since the replacement of the 1877 Bankruptcy Code there is an emphasis towards reorganization rather than outright liquidation.[33] The measures intended to promote reorganization are, inter alia, the insolvency plan and the influence of the insolvency administrator to avoid liquidation.[34] The administrator’s main goal is to retain the assets of the business venture to increase the possibility of recovery.

As part of the insolvency initiation proceedings a reason must be specified indicating why the entity is insolvent. The main reasons for declaring insolvency are: i) illiquidity, and ii) over indebtedness. ‘Illiquidity’ means the entity does not have enough liquid assets to meet its financial obligations. ‘Over indebtedness’ is an entity’s inability to meet its obligations based on all its assets – this insolvency reason only applies to legal entities.[35]

Another reason that was added for the application of insolvency proceedings is that of imminent illiquidity. Under this insolvency reason, the application is processed more speedily while more assets are still available and increase the possibility of an entity’s successful reorganization.[36]

At this stage, for the insolvency proceedings to continue further, the entity must have enough assets to cover the costs which the proceedings entail. These costs are namely: the court fees, the remuneration of the administrator and the creditors’ committee. In the event that the costs of proceedings are not covered by the available assets the insolvency application is dismissed and the consequences are dissolution for a legal entity or, in the case of a natural person, five years blacklisted as an insolvent debtor.[37]

If an insolvency application is accepted the court will appoint an administrator to liaise with the creditors on the future options available. At that point, all rights of management and transfer of assets of the entity are handled exclusively by the administrator.[38]

At the heart of the insolvency proceedings is a plan that meets the best interests of the creditors. The insolvent entity is shielded from individual actions by the creditors who have to act in tandem through the committee.[39] All the parties involved have to agree on a final plan which is presented to the court for acceptance. If approved by the court, the entity concerned regains control of the assets and has to provide for the proper implementation of the plan, if necessary under the surveillance of the administrator.[40]




Author: James Camilleri
Get in touch: | +356 21 493 041





[1] ‘Modernised insolvency rules commence in April 2017’ (Gov.UK, 25 October 2016) <> accessed 22 March 2017.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] ‘Insolvency in brief’ (PricewaterhouseCoopers, 2009) <> accessed 22 March 2017.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] ‘Brief guide to English Corporate Insolvency Law’ (, 2008) <> accessed 22 March 2017.

[11] (n 2).

[12] (n 7).

[13] Ibid.

[14] Ibid.

[15] Ibid.

[16] Ibid.

[17] (n 2).

[18] ‘German Insolvency Law’ (Schultze & Braun) <> accessed 24 March 2017.

[19] ‘German Insolvency Law – an overview’ (Mayer Brown, 2016) <> accessed 24 March 2017.

[20] ‘First Experiences with the revised German Insolvency Code (ESUG)’ (GLNS, 2017) <> accessed 11 April 2017.

[21] Ibid.

[22] Ibid.

[23] Ibid.

[24] Ibid.

[25] Ibid.

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] Ibid.

[30] Ibid.

[31] ‘Introduction to German Insolvency Law’ <> accessed 24 March 2017.

[32] Ibid.

[33] (n 15).

[34] Ibid.

[35] (n 17).

[36] Ibid.

[37] Ibid.

[38] Ibid.

[39] Ibid.

[40] Ibid.

CIC opens innovation hub in Miami – Malta next?

Author: George Mangion
Published on Malta Today 13th April 2017

As part of its corporate social responsibility, PKF Malta is keen to act as interlocutor to help promote Malta in the field of scientific research and for this purpose through the intervention and assistance of its correspondents in Boston (USA) it started exploratory talks with the head of international relations at Massachusetts Institute of Technology (MIT) in Boston to evaluate the possibility of introducing Malta as a potential ICT and/or Life Sciences hub for investors, inventors and entrepreneurs.

Such a visit was undertaken last year and found the wholehearted co-operation of Dr Chris Cardona minister for economy and SME’s.  The delegation was joined by a technical representative of Malta Enterprise – although each party catered for its own expenses.  PKF has succeeded to attract the attention of such an important institution which will attract 400 new jobs within a group of start-ups.  It passed the financial proposal to the authorities.  Due to the exigencies and top priorities of the EU presidency, government officials need more time to digest the proposal but one hopes for a positive reaction.  As a small country, we pride ourselves in achieving a small surplus on national account balance (unprecedented in the last 30 years) yet our industrial base stands rather low in the pecking order involving technologies such as robotics, nanotechnology and biotechnology.

Another snag is perhaps found in our ecosystem which is not fully attuned to the basic requirements of a coordinated educational and industrial policy. It is a pity if such an opportunity is lost for Malta considering how millions have been poured to support FDI such as hosting the US currency printer Crane, not to mention educational institutions such as Barts and the American University apart from others that are in the pipeline when the massive ITC campus is commissioned.

Attracting talent and retaining it can only succeed if our political leaders have the vision to support world-class innovation and R&D centres so it begs the question – why is it that we invest such a small amount of our national budget on research and development when compared to the EU average?  Statistics show 0.67% of GDP is allocated when we promised EU a higher ceiling of 2%.  Moving on, certainly one cannot doubt why Massachusetts Institute of Technology (MIT) was chosen by PKF.

This is a private research university in Cambridge, USA founded in 1861 in response to the increasing industrialization of the United States.  Needless to say with its supportive campus environment it houses an incredible range of student groups coming from the four corners of the world and as part of its diversity and creative atmosphere, its graduates flourish in all faculties.  Another interesting landmark is the Boston-based Community Innovation Center (CIC) founded in 1999 by Tim Rowe and located in Kendall Square.  This houses more than 1000 companies in close to 50,000 square meters of premium office and co-working space across 8 facilities, including its most recent expansion in St. Louis, Missouri.  A number of local high-profile companies (including top names such as Facebook and Amazon) know their baptism at CIC – including its HubSpot, which now employs over 1,100 people, and raised $125 million through its IPO last October, and Greatpoint Energy, which several years ago announced a $1.25 billion deal to build reactors in China.  Additionally, Android co­founder Rich Miner built his portion of Google Android and established Google’s New England headquarters there.  CIC also has a non-profit sister organisation – the Venture Cafe Foundation.  What is so special about CIC?  The answer is that as an innovation centre it has succeeded to attract world-class start-ups which proved very supportive for the Boston economy through the generation of premium jobs enriched with high value-added research in an impressive range of scientific sectors.

Having toured its offices and laboratories, and discussed with the founder the possibility of Malta as a future centre the PKF team were impressed by the number of dedicated entrepreneurs hosted in the building. Sassily we were told how they work hard to pursue the proverbial Alchemist Stone and morph it into a sustainable commercial operation.  A CIC centre can be a complementary structure to strengthen the operation of a Life Sciences block recently inaugurated within Mater Dei hospital precinct – now with a respectable number of quality tenants.  A recent development is the opening of Cambridge Innovation Centre ‘s high-profile startup in Miami.  The company chose Miami as its third US expansion location and will eventually house more than 500 tech startup companies.  Stas Gayshan, managing director, visited Miami periodically for the past two years to study the area.  The new centre, modelled on its successful spaces in the Boston-Cambridge area that house and support startups located in the precincts of MIT, will be located (see picture) in the University of Miami Life Science & Technology Park.  CIC founder and CEO Tim Rowe said “We are trying to build the infrastructure in the cities that have the potential to make an impact on the world.”  It’s first expansion in Europe occurred last September in Rotterdam, the Netherlands, the first of its kind outside of the US.  The Centre will be able to house 550 innovative companies and build upon CIC’s international community of entrepreneurs, investors and established businesses.  Rotterdam was selected as an ideal location chosen after analytic studies revealed it is a very central city just one hour flight south of Amsterdam, a “footstep” away from the Belgium border and really close to other European hubs like London, Paris or Cologne. The ambition of Tim Rowe, the founder of CIC is to bridge across continents and fuse innovation in Europe and in Australia.  Will Malta join the list of accredited hosts?  The answer depends on the government in its discerning policy how to attract FDI.  It goes without saying the dream of having an active international centre of calibre geared to attract inventors can be doable provided support is marshalled to help fund such a venture.  Naturally such a hub when fully operational attracts international academics and entrepreneurs from neighbouring oil-rich countries to research and develop new ideas – the backbone of strong start-ups, and the creation of virtual bridges focused to discover trends in cutting-edge technologies. In conclusion, to host a sister CIC and Venture Capital centre is a sweet-smelling vindication to revive the ghost of Smart City as an aborted ICT hub.

Nothing else will improve our chances to have an active research and development base standing as a strong pillar of our economy.  Let us pray the government converts to the idea and undergoes a Paul of Tarsus leap.

Author: George Mangion
Published on Malta Today 13th April 2017
Get in touch: | +356 21 493 041

PKF publishes tax guide for 2016

PKF Tax Guide 2016

PKF International has over 400 offices operating in 150 countries with the PKF individual country tax guides being offered by 121 countries guides for 2016/2017 including Malta. The PKF Worldwide Tax Guide (WWTG)  has a long-standing legacy servicing international businesses’ fiscal needs, having been published annually since 1994.

This publication is the precipitate of a continually joint endeavour that brings to the fore a think-tank consolidation of fiscal expertise. The WWTG stands tall as a Reliable First Point of Reference to which our readers return in the knowledge that they are partners with us in the service we render.

The tax guide includes:

  • Taxes Payable
  • Determination of taxable income
  • Foreign tax relief
  • Corporate Groups
  • Related Party Transactions
  • Withholding Taxes
  • Exchange Controls
  • Personal Tax
  • Treaty and Non-Treaty Withholding Tax Rates

A soft copy of Malta’s World Wide Tax Guide 2016/2017 is available online at the following link: A hard copy may be ordered via email sent to Dr Marilyn Mifsud at

Author: Marilyn Mifsud
Get in touch: | +356 21 493 04

Dubai Chamber Highlights Business Synergies with Malta – PKF Malta amongst the Maltese Delegation

H.E. Majed Al Shamsi, 1st Vice Chairman, Dubai Chamber of Commerce and Industry, received a strong 40-member Maltese delegation led by Hon Dr. Konrad Mizzi, Minister in the Office of the Prime Minister of Malta, recently at the Chamber head office.

The meeting was also attended by Hon Dr. Emmanuel Mallia, Minister for Competitiveness and Digital, Maritime and Services Economy, Malta, H.E. Hamad Buamim, President and CEO, Dubai Chamber, and representatives of the business community.

Held in cooperation with TradeMalta, Malta Chamber of Commerce, Enterprise & Industry, FinanceMalta and Malta Enterprise, the meeting came as part of the Chamber’s efforts to highlight the synergies between Dubai and Malta’s business communities and to further enhance the bilateral trade ties between the two sides. Amongst the Maltese Delegation, PKF Malta was represented by Dr Marilyn Mifsud, Business and Legal Associate and Ms Collette Mangion, Business Executive.

Welcoming the Maltese delegation, H.E. Majid Al Shamsi, stated that Malta is a priority market for Dubai as it’s ideally located to take advantage of trade flows between Europe and Africa. Malta’s fast-growing ICT, aviation and shipping sectors are also attractive options for UAE investors and businesses that want to diversify and expand.

“We have earlier signed a Memorandum of Understanding with Malta Chamber of Commerce, Enterprise and Industry and have since been working to forge closer bilateral ties through networking and business exchanges between UAE companies and their Maltese counterparts,” said H.E. Majid Al Shamsi.

The non-oil trade between Dubai and Malta reached $71 million in 2015, accounting for a majority of the country’s trade with the UAE. Bilateral trade is very diverse and covers a wide range of sectors and product categories. Machinery and electrical/electronic equipment dominated as Malta’s top export product to Dubai last year in terms of value, followed by prepared foodstuff and transport equipment.

“There are plenty of exciting prospects that can be explored to grow this volume and attract more Maltese companies to do business in Dubai. We see this event as an important step in taking our trade relationship to the next level,” said H.E. Al Shamsi.

He added, “Dubai offers the ideal investment and business destination for companies in Malta given its thriving economy, modern infrastructure and strong regulatory framework. We see huge potential for Dubai businesses to form joint ventures their Maltese counterparts in trade, shipping, Islamic finance, aviation, logistics and ICT sectors.

On his part, Dr Konrad Mizzi, Minister in the Office of the Prime Minister of Malta stated that Dubai and Malta have a lot in common as both the economies are going through an interesting phase of diversification while concentrating on enhancing their service sectors including financial services, maritime, logistics, manufacturing and digital economy. Dubai has a developed services sector, Malta is pushing for reforms and can adopt the emirate’s example in developing its service sector.

The Honourable Minister also stated that both Dubai and Malta serve as strategic gateways to their respective regions and complement each other in many areas and can work together in developing their maritime hub. He urged Dubai investors to explore investment opportunities in Malta which he said is open for business and welcomes overseas investors with open arms.

Dr. Mizzi added that Malta has invested in three hotels in Dubai and called upon his country’s investors to increase their footprint in the emirate further in the areas of hospitality and tourism while exploring newer avenues of bilateral cooperation.

In his closing remarks, Dr. Emmanuel Mallia, Minister for Competitiveness and Digital, Maritime Services Economy, Malta, thanked Dubai Chamber for hosting the event which he said augurs success for Maltese businesses and their counterparts in Dubai as he highlighted opportunities available for the emirate’s businesses in using Malta as a foothold in the European Union and a gateway to the African Continent.

Malta may be a small economy, but it has an impressive track record when it comes to weathering challenging conditions and maintaining strong growth. The country’s economy is well diversified and mainly driven by its financial services, tourism, real estate, and manufacturing sectors. The country’s GDP stood at 8.8 billion euros in 2015 with high exports per capita of over 28,000 euros pointing to the essentially export-driven economy.

Author: Dubai Chamber 

Date: 24th November 2016

PKF: Trusted research you can count on

Tourism in Malta

This paper will analyse the state of the Maltese tourism industry by integrating it within the complex and ever changing European and international scenario. After getting a sequence of excellent results, this sector has become a critical component of the Maltese economy.  However, it is necessary to take a more in-depth look at the phenomenon, considering the framework in which it takes place: primarily, we will analyse the economic fabric, then we will investigate the dynamics of international demand in tourism industry.

In the second part, after a historical introduction we will see the combined effect that growth in arrivals will have on domestic inflation and employment.

In the third part, we will give a wider look to the general macroeconomic framework, evaluating the state of economic environment, which interacts with the tourist industry and of which it is part of.  The most important aspects in these observations are the balance of the external accounts, in which tourism plays a central role, and public finance; equally necessary to consider the exposure of the private sector.

In the fourth part, we will evaluate what are the risk factors of economy and international finance, not only European, which are likely to influence either positively or negatively the tourism sector, and where the main threats lie. Another set of risks is made up of environmental issues.

In the last part, we will analyse the effect of reforms, some already in place such as the bed tax, the rise in alternative accommodation and the impact that they will have in the short and medium term. Finally, in order to propose solutions to the problems brought to light during the study, we will assume which of these reforms could be effective in achieving a stable path for a long-term growth.

Oil & Gas-Maritime Industry

This study focuses on the current and future state of the maritime industry with particular reference to the nascent oil and gas industry. It attempts to project revenue streams arising from related activities such as registration, certification of rigs, repairs of rigs and de-commissioning of rigs, supply of personnel and associated materials for oil and gas exploration activities in neighbouring countries. The volume of business anticipated from bunkering of LNG vessels and the business model for a future LNG refuelling depot and storage facilities in Delimara. Other topics include the potential of setting up a dispute resolution and arbitration centre in Malta to adjudicate international oil and gas related cases.


Women in the Work Place

PKF Malta’s initiative to conduct a study on female participation in the workforce started in July 2015, inspired by recent findings of the National Statistics Office which show that in Malta the highest female activity rate was recorded in 2015, at 53.8%. This rate has increased substantially over the years, but it is still not close to the overall EU average of 66.8%.  Paradoxically the majority of university graduates are female.  The main aim of PKF’s study was to evaluate the different perceptions of Maltese women on female employment. For the purpose of this research, three groups of females were particularly studied. These groups consist of female business owners, mothers in employment, and idle/inactive mothers. Several females who form part of these groups were assessed through different surveys that converge to a common denominator.

PKF met with several local entities that are engaged to improve the rate of female participation in the labour force through several schemes. These entities include the Employment & Training Corporation (ETC), GRTU, Malta Chamber of Commerce, Malta Confederation of Women’s Organisations (MCWO), NCPE and last but not least the Minister for Education and Employment, Hon. Evarist Bartolo. These entities have shared their views and feedback on the subject and have also offered their support in the study.

A revamp during September and October 2016 covered the following areas:

 A complete updating of all data presented in Appendix A, this essentially brought all data in the regression analysis up to speed from 2014 to 2015;

 Inclusion of a new chapter (5) ‘A Comparison between Male & Female Labour Conditions Tested’, demonstrating a comparative of male versus female earnings.

Data for the 2016 updates was mainly sourced using data from Eurostat and NSO where applicable.


This is an ambitious exercise which tries to quantify the supply and demand for luxury quality apartments, deluxe hotel and office accommodation in Paceville and the Sliema/St Julians area. It is partly based on a study of the Property Price Index (PPI) together with comparative studies of similar trends in popular resorts such as London, Paris, Monaco, Majorca and Cyprus.  Use is made where applicable of the Mott Mc Donald report on the Paceville high rise luxury buildings project which is currently up for public consultation. Demand analysis is tested on a span of years to assess the probabilities of attracting HNWI from different sources apart from applicants to the IIP scheme.


A detailed study has been recently concluded to check the incidence of students in an educational institution undergoing vocational and other training and quantify the level of mismatches (if any) in a number of students after having concluded their studies in their choice of respective job opportunities.



All studies are available upon written request made to Dr Marilyn Mifsud – Business Associate at or on +356 21 493 041

Brexit and its impact on UK taxation

Author: George Mangion
Published on The Sunday Times of Malta 30th October 2016

The dust is setting after the UK EU referendum and speculations are starting to emerge on the future impact the vote to leave will have on the UK tax system.  Harmonisation of tax legislation across the EU member states has been a 40-year evolution and EU-driven tax measures now form part of the UK’s tax legislation.

The greatest impact is expected to be on indirect taxes.  Customs duty is almost entirely governed by EU law and the UK will need to introduce UK domestic law to replace it.

The UK already has VAT legislation which incorporates EU VAT law.  Brexit won’t cause the UK legislation implementing the VAT Directives to automatically fall away but may free the UK from the requirement to comply with the VAT directives and VAT decisions made by the EU courts.  Direct tax is less likely to be affected although the ongoing benefit of important EU Directives may have implications for some taxpayers. These include the Parent-Subsidiary Directive (elimination of withholding tax on dividends between Member States) and the EU Interest and Royalties Directive (elimination of withholding tax on such payments).

Commenting about these changes, accountancy network PKF International said that “The UK is entering a period of significant change as a result of both Brexit and a change in Prime Minister. The UK government is committed to maintain good relationships with its EU neighbours, while remaining attractive to businesses. We expect future tax policy to be shaped by the UK government’s desire to remain competitive and expect boosts such as the proposed reduction of the corporation tax rate from 20 per cent to 15 per cent”.

Author: George Mangion
Published on The Sunday Times of Malta 30th October 2016
Get in touch: | +356 21 493 04

2017 BUDGET – A summary of principal policies


  • The tax exemption on capital gains, realised upon the sale of shares to the public through a listing on the Malta Stock Exchange, will be re-introduced, at the rate of 15%. A similar exemption will also be introduced in respect to the sale of shares to the public through a listing on an alternative trading platform. The benefit afforded in this case may be dependent on the percentage shareholding offered to the public.
  • An annual tax credit of up to €250,000, in terms of a Risk Investment Scheme, will be afforded to people who invest in Small or Medium Enterprises (‘SMEs’) that are registered on an alternative trading platform, such as ‘Prospects’, or in funds that invest in a number of SMEs  that are so registered.
  • Malta Enterprise will launch a tax credit in relation to costs incurred on renovation works undertaken on hotels and restaurants, capped at €200,000 and €50,000 respectively.
  • Disadvantaged individuals who set up a business will be entitled to receive a financial assistance of up to €25,000.


  • The Kappara project is expected to be completed by the end of 2017, after which works will commence on the Marsa Junction project. Work will also commence on the widening of the Hamrun bypass between the Santa Venera tunnels and the slip road leading towards Qormi, two new junctions at High Ridge and Mosta, and other road works in Zurrieq, Hal-Safi, Isla and Valletta.
  • A public tender will be issued for a fast ferry service between Valletta and Mgarr (Gozo). Moreover, call for proposals for the design, building and operation of the tunnel between Malta and Gozo will be issued next year.
  • The works to tackle parking problems in Mosta, Wied il-Ghajn, Birkirkara, St Andrews, Birgu and Victoria (Gozo) will be started. Moreover, in 2017, the Planning Authority shall propose fiscal incentives for the development of new public car parks including open spaces.
  • Incentives for private companies which organise free transportfor their employees will be made available. Such companies will be given a tax rebate of 150% of their expenditure, capped at €35,000 per year for a company providing this service on its own, while the capping will be increased to €50,000 per year if this service is provided jointly with another company.
  • Any person that reaches the age of eighteen during 2017 will be offered free use of public transport for one year, capped at €312 per youth.


  • Pinto Wharf in Grand Harbour will be widened by 15 metres to cater for bigger cruise liners in Grand Harbour. Moreover, negotiations will be undertaken to expand the Deep Water Quay. What is more, there are plans to build a new breakwater in Marsamxett. The project has been identified as being eligible to funding through the European Fund for Strategic Investments.
  • The second fibre-optic link will be installed between Malta and Gozo, at a cost of around €3.2 million, over the next two years, in order to attract further niche investment in the IT sector and the digital economy to the island. Moreover, a new fibre-optic link will be laid between Malta and Marseille, France, to reduce dependence on a hub in Italy. It will be financed by EU funds.
  • An indoor pool will be built at the Cottonera Sports Complex, a public call be issued for a shooting range, and a football ground and a pool will be built in Marsaskala. A final decision will be taken on whether, and if so where, a motorsports track will be built. A yacht marina will be built in Gzira, and possibly another one will be built in Marsaskala.
  • An investment of over €56 million will be undertaken on the new ITS campus in Smart City in the first months in 2017. A 40,000 square metre site in Hal-Far will be transformed into international free trade and logistics centre, with an investment of €80 million. The Crafts Village in Ta’ Qali will be developed starting from 2017, with a total expenditure of €14 million. Plans will start for the regeneration of Birzebbugia, and a plot of land will be identified to serve as an administrative centre outside Valletta.
  • Restoration work on the Valletta Triton Fountain and surrounding area will also be undertaken. Partial refund will be given on the expenses incurred on the restoration of façades of historical buildings. Opportunities will be made available to help increase the number of companies operating at the Life Sciences Park.

Energy and Environment

  • Ablecare Oilfield Services Holding Ltd will invest €55 million over 10 years to help the development of ex-Marsa shipbuilding into a maritime hub. The works will start in 2017. A new national oil exploration company will be launched.
  • During 2016 work was carried out to identify the best underwater route and location to link the gas pipeline between Gela (Sicily) and Malta. In 2017, geological tests will also be undertaken to search for the best route to pass the pipeline underground to Delimara.
  • Enemalta will start work on Malta’s first solar farm. Moreover, following the European Union funds obtained for renewable energy, Melita plc in partnership with Malta Government Investments Limited will issue Solar Bonds to the public in order to finance the rental of photovoltaic systems fitted by commercial establishments as well as to raise funds for the installation of photovoltaic in public places.
  • Malta Enterprise will start be administering new schemes aimed at providing assistance to businesses with high energy consumption, which aid the investment in new systems and machinery which will improve the efficient use of energy. The energy plants operating on heavy fuel oil will be closed and will commence operating by means of gas. The Marsa Power Station will be completely decommissioned and the oldest boilers, turbines and chimneys at the Delimara Power Station will be dismantled.
  • Enemed will be modernising the storage facilities at Has-Saptan with the development of a new filling station, involving an investment of over €50 million. Moreover, over €15 million will be invested to modernize the facilities of jet oil storage at the airport.
  • New schemes to promote the use of heat pump water heaters, double glazing, roof insulation, and solar water heaters and to encourage restoration of wells will be introduced. An eco-cheques scheme will be launched which will allow the most vulnerable people to replace their old appliances.
  • The funds collected from the “bed-tax” of €0.50 per day, introduced in 2016, shall be re-invested into specific projects aimed at embellishing and improving the Maltese islands. The projects will be implemented by a new agency responsible for the overall appearance of the Maltese islands.
  • A new scheme will be put into place between the Energy and Water Agency and the MHRA. Thanks to that, hotels will benefit from gains on savings registered in their energy consumption.
  • The eco-contribution reform should be finalised by the end of 2017. Batteries, mattresses, detergents, toiletries, vehicle filters, kitchen utensils and containers made of plastic will no longer be subject to eco-contribution. Excise duty on cigarettes and cigars will be increased by 3.76%, while that of other tobacco products will be increased by 5.5%. Excise duty on non-alcoholic drinks, excluding water, will be increased by two to four cents per litre, and the one on non-bio-degradable utensils and bags will also increase. Moreover, excise duty on concrete and certain construction products will be introduced and excise duty on cement products acquired from outside Malta will be extended. The money obtained in such a way will be diverted to a fund for environmental projects.
  • New green areas will be identified in Swatar, Bormla, Wied Blandun, Bahar ic-Caghaq and Mater Dei. Moreover, work will start on the Inwadar National Park that will stretch from Zonqor Point to the Ta’ Bakrat plant, while the Argotti and St Philip’s gardens at Floriana will be converted into botanical gardens in a €3 million project. The Ta’ Qali picnic area will be extended and the Argotti new camping area will be identified. What is more, companies who work with local councils to develop gardens and other open spaces will be given a tax rebate of 120% of their expenditure.
  • Comino will be turned into a national park. Tourism activities on the island will become organised in light of the government’s national plan to safeguard the Maltese environment.

Social measures – Education

  • Students who reside in social institutions such as church homes and the students with any disability will be entitled to maintenance and supplementary grants. Students from Gozo will be granted a subsidy in case of attending private tertiary education institutions.
  • The Government will provide an amount of €400,000 for the teachers who apply for free year in order to amplify their studies. €1 million fund will be administrated in order to purchase school supplies for children from deprived backgrounds.
  • Tablets will be provided to all 4th year primary students. The Government will change the computers which were bought eight years ago or more.

Social measures – Pensions

  • Pension income up to €13,000 will be tax free. In order to eliminate the pension disparities referring to gender, the Government has decided to establish an increase of a maximum of €20 per week.
  • Contributions to private pensions by employers will be considered as a tax deductible expense. The employer will be entitled to a further tax credit amounting to €150 for each €1,000 contributed.
  • Wages will increase by €1.75 per week to reflect the cost of living adjustment. The minimum retirement pension payable to married pensioners will be increased by an additional €4 per week. An annual amount of €300 will be granted to senior citizens over the age of 75.
  • Those who need carer’s assistance will be entitled to receive an increase of €1,820 in total per year. Elderly people who are residing in their homes while waiting for being accepted in a residential house will be entitled to a subsidy of maximum €5,200 per annum, so that they could have cares at home.

Social measures – Poverty

  • The allowances for unmarried individuals who quit their jobs to take care of their parents will be increased by €35 per week, reaching €140 per week. Likewise, for married people the amount will be €90 per week.
  • The number of vulnerable families has doubled from 1,400 to 2,800 and the rent subsidy given to them will be reconsidered.
  • Other measures
  • The rate of stamp duty applicable to transfers of businesses by parents to their children will be reduced from 5% to 1.5%. The stamp duty rate for persons who acquire a residential property in Gozo by the end of 2018 will be reduced from 5% to 2%, provided that the promise of sale agreement is registered with the Inland Revenue Department by the end of 2017. The stamp duty exemption on the first €150,000 of the value of the property for individuals buying their first residential property is being extended until the end of 2017.
  • All transfers of inherited property by means of a judicial sale by auction will be subject to a final tax at the rate of 7% on the transfer value. €5,000 tax concession for first-time property buyers will remain at the same level.
  • Research projects and projects connected with the development of digital games with a cultural theme will be entitled to a tax credit of 25% up to 45% of the expenses incurred and up to 30% of the expenses incurred, respectively.
  • A European Gaming Institute of Malta will be set up to ensure that persons working in the gaming industry possess the required specialised expertise.
  • Legislative measures will be introduced in the areas of insurance, collective investment schemes and securitisation in order to ensure that Malta’s financial services sector continues to develop. The Joint Enforcement Task Force is being established to ensure that the Inland Revenue Department, the VAT Department and the Customs Department can address the issues of unfair competition and tax evasion in a more effective manner. Among other functions, the Task Force will seek to identify instances of unregistered employees, undeclared rental income and unfair competition with respect to certain importations.

Andrea Beccarini Crescenzi
Justyna Ferenc
Economic Department, PKF MALTA


All matters raised in this report are only those which came to our attention and are not necessarily a comprehensive statement of all weaknesses and strengths, and potential risks and opportunities that exist. Though no complete guarantee can be given with regard to the advice and information contained therein, care has been taken to ensure that all the information provided in this report is accurate as possible, enabling us to provide a reasonable representation of the sector. The report is prepared solely for the exclusive use of its recipient/s as indicated in the covering letter accompanying the report, and otherwise the report should not be quoted or referred to in whole or in part without our prior consent.  No responsibility to any third party is accepted as the report has not been prepared, and is not intended for any other purpose.  PKF Malta is a member firm of PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.