As Malta stands on the brink of a new era, the transition from the  five per cent corporate tax regime is both a challenge and an opportunity. In this transformative moment, Malta must leverage its strengths in fintech, AI, gaming, and gambling, as well as look at prospects nascent from open banking, pharma and medical devices to solidify its position as a global leader.

Malta 5.0 is about moving beyond tax incentives, embracing regulatory clarity, sandbox innovation and preparing for the complex legal questions emerging in these sectors, particularly around AI-generated works and intellectual property rights (IPR).

The integration of AI in fintech is already transforming financial services by enhancing risk management, automating compliance and offering personalised experiences. However, regulatory frameworks must keep pace to encourage innovation while maintaining accountability.

As I have advocated in previous articles, we need a risk-based approach that ensures AI transparency and human oversight, particularly in high-risk sectors like finance.

Malta can continue to be a player in AI and fintech by adapting its regulatory frameworks within the confines allowed under EU law to encourage innovation (like AI-driven novelties) while ensuring accountability and ethical standards are upheld.

Sandboxing offers a unique opportunity for Malta to serve as a bridge for third-country developers and operators to line up with EU law on AI, GDPR as well as cybersecurity and particularly for AI to also be able to run commercial offerings in the EU through the mechanisms afforded by the sandbox tenancy.

Open banking is also the future and has been revolutionising financial services by allowing consumers to share their financial data securely between banks and third-party providers.

Malta can take a leading role by fostering sandbox environments where fintech companies, particularly those from non-EU countries can test their innovations in a controlled and compliant setting.

By positioning itself as a gateway for non-EU firms, Malta can bridge the gap between non-EU innovators and EU regulatory frameworks, allowing businesses to experiment and adapt before scaling across the EU market. This approach provides a clear path for global firms to navigate Europe’s    increasingly complex regulatory landscape.

Pharma and medical devices can also represent crucial growth sectors for Malta and would fit as well with the above vision. As the pharma industry integrates AI-driven diagnostics and biotechnology, Malta has the opportunity to lead in regulatory innovation. By offering RegTech solutions, Malta can simplify compliance with EU pharmaceutical and medical device regulations, providing sandbox frameworks that allow start-ups to test new technologies before launching fully within the European market.

Gaming and gambling have long been thriving sectors in Malta, and the future is even more promising as AI and blockchain technologies become central to the industry. However, these advancements bring challenges related to data privacy, intellectual property and AI-generated content.

Malta can lead by offering sandbox environments where gaming/gambling companies can test new features, particularly those powered by AI, in a compliant and flexible legal setting. This will ensure that as the gaming sector evolves, Malta remains at the cutting edge of regulatory and technological innovation.

With the transition away from Malta’s five per cent corporate tax rate, the country must pivot towards offering more than just tax incentives. Regulatory clarity, compliance facilitation and technological innovation will become Malta’s most attractive features for global companies.

In sectors like fintech, pharma and gaming/gambling, businesses are looking for jurisdictions that provide legal clarity and regulatory foresight. Malta can position itself as a regulatory hub, offering a streamlined approach to navigating EU regulations and setting the standard for AI, IOT as well as cybersecurity governance.

Specifically on AI, following my previous positions and article on the latter, as AI plays an increasingly significant role across all these sectors, one of the most pressing issues Malta must address is the ownership and protection of AI-generated works. Whether it is a financial algorithm, a medical diagnostic tool or a new gaming feature, AI-generated content presents complex legal challenges surrounding intellectual property rights (IPR).

The legal framework must evolve to ensure that AI-generated works with human control and input are clearly protected under intellectual property laws. This is an issue that will cut across fintech, pharma, gaming, and medical devices, as AI-driven innovation becomes more prevalent.

Malta 5.0 is about seizing the opportunity to become a global leader in fintech, AI, open banking, pharma, gaming, and medical devices. By embracing regulatory clarity and creating sandbox environments for testing and innovation, Malta can continue to attract global businesses while serving as a bridge between non-EU countries and the European market.

As we move beyond tax incentives, our focus must be on developing legal frameworks that protect AI-generated works, streamline compliance and foster a culture of innovation. By doing so, Malta will maintain its status as a global hub for technology, finance and medical innovation, ensuring its place at the forefront of the digital evolution.

Ian Gauci is managing partner of GTG. This technology-focused corporate and commercial law firm has been at the forefront of significant developments in fintech, cybersecurity, telecommunications, and technology-related legislation.

This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.

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