Last week, during our annual review meeting with our Belgian accountants, we were advised that since Malta has now been classified as a tax haven in Belgium, financial institutions and organisations doing business with Maltese businesses are placing far more onerous conditions on our company. 

This may seem something minor to most but, in reality, the impact of this is that doing business outside of Malta, or internationalisation, has just been made so much more difficult for Maltese companies, and has put us on a non-level playing field, making it harder to compete in a market that was already very competitive. 

We need to remember that for international export-oriented manufacturing, there are inherent disadvantages.  The Malta Chamber of Commerce, Enterprise and Industry, through its electoral manifesto proposals, is making recommendations for Malta to compete on a level playing field.

The first thing would be to sort out our reputation.  Why?  If we want to argue with the EU that Malta should be able to support export companies that suffer additional costs to import and export their goods, we need to be on solid ground. 

We then can argue and make a stronger point as the truth is that Maltese export-oriented manufacturing is at a disadvantage, incurring significantly higher shipping costs due to its geographical peculiarity. 

Supply chain costs are impacting manufacturing.  Successive governments never addressed the exorbitant local costs on top of freight costs.  The chamber would like to see customs operating extended hours and the staff base increased to meet business needs.

Electricity rules surrounding night rates is one other long-standing recommendation that will help manufacturing businesses.  By extending the hours and the entry bracket, this will help balance the power distribution and help manufacturing.

The chamber recommends the reduction of corporate tax rates to 25 per cent, but this should be linked to timely payment of taxes- Nick Xuereb

Coming from a company that has long invested in innovation, it is a pity that the incentives in Malta are inferior to what we see in other jurisdictions that we work in.  Bureaucracy-free schemes should be launched to reach proposed research spend equating to three per cent of GDP.  We need to attract more companies, starting with those already here, to invest in innovation and place Malta higher on the value chain.

Taxation is also a critical tool for investment in Malta, whether for Maltese businesses or foreign-owned investments.  We operate in a business with several subsidiaries in Europe and outside.  Most jurisdictions today have corporate tax rates between 20 per cent to 25 per cent where we operate, with Malta at 35 per cent.

The chamber recommends the reduction of corporate tax rates to 25 per cent, but this should be linked to timely payment of taxes, in line with the government’s priority to collect taxes.

Doing business in Malta is a critical factor for investors when deciding to choose Malta as their place of business.  There is a judicial system that requires long years to resolve civil issues, at times taking 10 to 20 years.  The judicial remedies are slow and ineffective and require considerable enhancements.

The chamber has listed several issues that need to be addressed to ‘make it easy’.  These stem around from simple topics such as removing the duplication (or triplication and more) of due diligence efforts, the ease to open a bank account, to the excessive bureaucracy and messy interface of government departments.  This includes processes to

assist having a balanced workforce, as various sectors continue to suffer from shortfalls in several different skills.

Malta is at a crossroad and needs to make certain choices.  Possibly the greylisting has helped Malta to re-examine its value proposition, and this gives us an opportunity to make certain fundamental changes to put Malta back on the map for investors.

Nick Xuereb is the vice president of the Malta Chamber of Commerce and chief financial officer at Toly.