In the coming month, The Economicard Group of Companies will switch to the SEPA system, in accordance with the relevant EU Legislation on payments that will come into force on the 1st February 2014.  As part of the Group of Companies, GM International Services Limited and GM Corporate & Fiduciary Services Limited are also undertaking procedures to align themselves with the new EU Legislation.

Starting from the above mentioned date the national operation of direct debit and bank transfers will be replaced by the relevant European systems, respectively, SEPA Direct Debit (SDD) and SEPA Credit Transfer ( SCT).

In order to better operate at this stage of transition to the new system, we need to update the relevant supplier personal details.  In order to avoid any delays and ensure a seamless transition, thereby maintaining our level of service, we ask you to reply providing the following details:

Businnes name:

VAT number:

Contact person:

Suppliers`email address for payment communication:

Contact person:

Telephone number:

Bank name:

Bank address:

Account holder name:

IBAN:

BIC (Swift):

For more information please feel free to contact us.  You may also obtain further information from the European Central Bank website (www.ecb.int) or your local bank.

Information may be sent via fax on fax number +356 21220101 or by email to the following address: finance@gmint.com

Everyone at the Economicard Group of Companies would like to wish our esteemed clientele, their families and friends all the best this festive season and a prosperous 2014!

Malta’s Prime Minister, Joseph Muscat, revealed the new requirements which are to be attached to the somewhat infamous Individual Investment Programme (IIP).  Despite talks being held between the Maltese Government and the opposition party no consensus was reached.  However, the Government has taken the decision to “create a bond with the country in a tangible manner”, Dr. Muscat said, primarily through investment in Malta.

A new government agency, Identity Malta, is intended to be set up whilst other financial operators, such as GM Corporate & Fiduciary Services Ltd. Would act as agents for interested applicants.  Applicants would be required to make an investment of €1.15 million, including a contribution of €650,000.  70 per cent of the contribution would go into a national development and social fund run by a board of trustees, akin to the Sovereign Wealth Fund in Norway. The rest would go to the consolidated fund. 

In order to be eligible for the IIP, applicants would be required to invest in property valued at no less than €350,000 or take a €16,000 annual rental, both on five-year contracts plus €150,000 investment in bonds or shares kept for five years in Malta.

Whilst there will be no annual cap, the programme is to be capped at 1,800 after which it would be closed.  The minimum time between application and the granting of citizenship would be six months (due to due diligence by Identity Malta) whilst the maximum would be two years.  The names of those granted citizenship would not be kept secret.

European Union finance ministers have agreed on a new system to centralize control of failing euro-zone lenders, in the hope that it will stop expensive banking crises from ruining the finances of entire countries. The political agreement comes after a year of hard bargaining and is being touted as the most ambitious step in integrating the EU economy since the adoption of the euro.

Taking to Facebook, Maltese Finance Minister Edward Scicluna welcomed the deal by stating that "The Banking Union is here: Proud to having participated in this European milestone decision. A significant collective complex project".  The so called Single Resolution Mechanism is intended as a new European institution in charge of closing down or propping up ailing banks, complete with an arrangement to finance its operations.

Proponents of the joint institution had warned that failure to reach agreement would have further decreased confidence in the already unstable banks and would expose national governments to the possibility of being dragged down again by failing banks.

The timing of the decision also means that the deadline (the summit of the EU's 28 leaders on Friday 20^th December 2013) imposed by the German Chancellor, has been met.  It also means that the legislation can be sent to the European Parliament on time to secure its passage before the end of the current legislature's term in May, thereby avoiding a delay of at least several months.

Nonetheless, detractors have voiced their concerns about the institution's legal footing. Furthermore, in order to decide what to do with a failing bank, the centralized banking supervisor, the EU's executive arm and member governments may all have to get involved, with the likes of Mario Draghi (European Central Bank president) stating that such a mechanism might be too cumbersome to act swiftly.

The Isle of MTV official website has announced that the popular annual event “returns to il-Fosos Square in Malta on Wednesday 25^th June 2014!”.  The event has proved to be a huge success in the past and has attracted tens of thousands over the years, exceeding more than 50,000 at one event.

Global acts such as Snoop Dogg, Lady Gaga, David Guetta, The Black Eyed Peas and Scissor Sisters have performed over the years.  The 2013 concert saw the likes of Afrojack, Jessie J, Rita Ora and Rudimental entertain the crowd at the granaries in Malta.

The Government of Malta has tasked the Financial Intelligence Analysis Unit (FIAU) in Malta to lead the National Risk Assessment (NRA).The NRA is an exercise aimed at identifying, assessing and understanding the money laundering and terrorist financing (ML/FT) risks faced by the jurisdiction as a whole.

According to a statement issued by the Financial Intelligence Analysis Unit, the purpose of this national project is to allow the authorities, based on the results, to develop effective and risk‐based policies and actions.  Furthermore, it will allow the authorities to prioritise and allocate the available resources in the most efficient way, thereby ensuring that the identified risks can be properly managed and mitigated.

The Financial Action Task Force (FATF) is constantly increasing its pressure of jurisdictions to carry out assessments of Money laundering and terrorist financing, particularly those jurisdictions that could be exposed to a high degree of risk.

The Maltese Government is fully aware of the risks faced being a country with a thriving financial services industry and the initiation of the National Risk Assessment is evidence of the country’s “firm long‐term commitment to adopt the highest standards in the area of prevention of ML/FT and it is a further step in the range of actions being taken to adhere to the revised FATF Recommendations”.

The NRA is also a requirement for every EU Member State under the fourth anti-money laundering directive that was issued on the 5^th February 2013. The results of the NRA are intended to serve as guidance to “subject persons” in conducting their own risk assessment which will also become mandatory.

Finance ministers of the Euro Zone are said to have made progress in their efforts to close banks thereby paving the way for a so called Euro Zone ‘banking union’, it is being reported.  These steps are being taken in a bid to restore confidence in the financial sector and to boost growth.  The catastrophic consequences that collapsed banks had on the likes of Ireland and Spain is well documents and the Euro Zone finance ministers want a framework in place to police banks and tackle their problems together.  The idea is for the establishment of an agency and fund in order to shut weak banks to complement European Central Bank supervision of the sector if European Union.

German Chancellor Angela Merkel stressed the need to set up a banking union prior to the EU leaders’ meeting on Thursday 19^th December 2013.  The agreement that was reached in the early hours of Wednesday increase the chances of a deal being reached on failing lenders … in time with the German Chancellor’s deadline.

Under this agreement, banks will provide the cash to pay for the closure of failed lenders, giving roughly 55 billion euros, over the next decade, accumulated in a Single Resolution Fund.  In the meantime, similar to the actions taken by the Spanish government in 2012, an EU Member State government which does not have enough money could borrow from the Euro Zone bailout fund ESM.

Later on today, EU ministers will discuss who will ultimately have the power to close down deteriorating banks in the euro zone.

The 'Which?' survey, being quote by local and international press, has ranked Malta’s national air carrier, Air Malta, the sixth best short-haul airline in the world in a reported by the UK press.  The Which? survey asked some 8,264 members to list the carriers they had flown with over the past year and say how satisfied they were with them and whether they would recommend them to a friend.  69 per cent of people asked said they are satisfied with the service and would recommend it to a friend.  This positive feedback means that Air Malta shares sixth place with British Airways.

On either end of the rankings were Aurigny Air Services, of Guernsey, that topped the rankings and well known airline Ryanair which placed last, with a total customer score of 32 per cent. Thomas Cook Airlines and Alitalia only fared slightly better than Ireland’s low cost Ireland.

In the long-haul category, Air New Zealand and Singapore Airlines finished joint top with a score of 87 percent.

Malta’s Finance Minister Edward Scicluna and US ambassador Gina Abercombie-Winstanley yesterday signed a tax information sharing agreement that will enable the countries to combat evasion.  The agreement is an offshoot of the Foreign Account Tax Compliance Act (Facta) and is seen as a show of intent by both governments to step up the fight against tax evasion.

Prof. Scicluna and Ms Abercombie-Winstanley both emphasised the strong relationship that exists between the two countries and that there is a common understanding that governments need to collaborate closely and share information on such issues in order to “detect, deter and discourage” tax evasion.

Malta’s Finance Minister also took the opportunity to make reference to the new registration scheme for those who have funds in foreign accounts, which will soon be launched in line with the 2014 Budget.  Prof. Scicluna warned that this amnesty would be the last chance for people who have funds in foreign accounts to come clean on any tax due.

It is quite well established that a significant part of Malta’s economy and annual income comes from tourism. Benefitting from a Mediterranean climate, plenty of world heritage sites, blue seas and golden beaches together with well-developed entertainment facilities make Malta an ideal holiday destination. However, as will shortly be explained, it is not the only reason to visit the Maltese archipelago. Malta’s tourism industry partly owes its success to the EFL (English as a Foreign Language) industry.

Some 80,000 people come to Malta every year in order to learn English in English language schools and centres. This makes EFL students almost six per cent of all tourist arrivals in Malta, as per 2012 data. According to many international sources, during the last ten years, Malta has become a serious provider of English Language courses, aiming to establish itself as a destination for EFL students. Malta was the first country in the world, whose language learning industry was regulated by Government legislation (1996), which was a milestone for the development of the EFL industry on the Islands. Since then, teaching standards increased and better accessibility to the island have been provided in order to make Malta a centre of excellence in English language teaching.

And the good news for the Maltese economy is not only of relevance to the English language schools in Malta.  As latest FELTOM (The Federation of English Language Teaching Organisations Malta) research shows, common belief that EFL students spend little money is a myth. They spend more nights in Malta than the average tourist and are interested in culture, entertainment and other facilities as well.  It seems to be that the native English aspect of the island coupled with the holiday appeal that has helped carve out Malta’s EFL niche market.

English is widely used all around Malta, which is an important advantage for students, giving them the opportunity to use English outside of the classroom.  This provides substantial added value to the learning experience and provides the benefit of learning the language more efficiently and effectively.   It is important to bear in mind that in general no one likes spending any part of their summer at one’s desk, especially youngsters who are meant to be enjoying time off from school in their summer holidays.  Knowing that one can enjoy the climate, culture and entertainment on offer in Malta when lessons end, has enticed more and more people to further their English language studies in Malta.

The question within such a competitive industry will always be; what measures will be implemented to ensure that the positive results are maintained? New destinations will always form part of a new trend.  The importance of easy and affordable access to the Island will always be a crucial factor and industry standards do not only have to be maintained but must constantly be improved.  There are a wide variety of courses offered by EFL schools, but increasing opportunities for adult students should be taken into consideration and developed. Special programmes for business clients may assure full classes during low season, especially when one considers the amount of individuals and companies relocating to Malta.  There has always been consensus between political parties in Malta when it comes to key industries and if this continues with the same effort as in the past, industry stakeholders have good reason to believe that this industry will continue to grow.

As 2013 begins to near its end, we took some time to review and summarise some economic issues and outline the some of the Maltese Government’s plans for next year.  What has been emphasised the most by Mata’s government is their 30 new Foreign Direct Investment (FDI) projects which are to be approved by the end of this year.  These mainly originate from the UK, Spain, Italy, the Netherlands, France, Iceland and Israel.  It is expected, that within 3 years investments will create at least 500 new jobs. Minister for the Economy, Investment and Small Business, Chris Cardona, underlined the contribution of new management, intense investment promotion work undertaken both internally and abroad, which have resulted in approved projects.

It is noticeable that the Maltese industry is experiencing changes. Malta is now successful in the engineering, life science, digital game production and ICT sectors, which replaced the manufacturing industry such as textile and labour-intensive work. These naturally migrated to North Africa which offer lower labour costs but as Dr Cardona explains, a strong economy cannot do without a strong manufacturing base, so things are about to change.

A trend in downsizing large companies operating in Malta has also been witnessed of late.   Whilst at face value this may seem negative, it seems to be an advantage for small companies, which perceive this as a chance to have more access to qualified human resources. Small and Medium Enterprises (SMEs) are a significant sector for Malta, as they constitute more than 90% of Maltese business enterprises.  The EU budget 2014-2020 is also focused on financial help to SMEs which shows this class of business enterprises as being significant contributors to the entire European Union economy. Additionally, as Minister Cardona assures, electorally pledged reduction of bureaucracy is in progress. The administrative burden, now imposed on businesses irrespective of their size and experience, will be minimalized for small enterprises and other enterprises operating in Malta. The idea is to provide more opportunities for many SMEs to participate more directly in domestic business activity and help enterprises grow.

The Minister’s priorities for 2014 are, inter alia, real creation of new jobs and employment regarding the new FDI projects, helping industry to be more competitive and instigate more active participation in EU structures.

The Maltese Government has this week launched a new Civil Aviation Policy with the scope of making use of the lands surrounding the Malta International Airport and increasing synergy between all stakeholders.  Karmenu Vella, Malta’s Tourism Minister, made his intentions clear from very early on in the Malta Government's legislature; Malta’s aviation sector is one that has to be nurtured and promoted. The new Civil Aviation Policy is intended to do exactly that and bring about industry-wide coherency.  Aviation is viewed as fast becoming a main contributor to Malta's economic growth and this should therefore be positively exploited to its full potential.

The main points that are to emerge from the Civil Aviation Policy are the following:

• Set up of a Civil Aviation Authority that in turn would be tasked with regulating and issuing licenses and to act as a national supervisory authority.
• Better use of the "disregarded" lands surrounding the airport to satisfy demand and improve operations
• Launch of the airport zone master plan, which would aim to intertwine all airport workers and stakeholders, thereby alleviating the airport's shortage of human resources and limited land.
• Re-establish adequate communication by air between the two main islands of Malta and Gozo, thereby enhancing the facilities in Gozo's aviation services industry.

It is intended that in implementing the Civil Aviation Policy, vast consultation will be had with all relevant stakeholders including the government, MEPA, airport operators and the public apart from private industry stakeholders.

Malta's Finance Minister, Prof. Edward Scicluna, during a public session of the Economic and Monetary Affairs Committee of the European Parliament in Brussels, strongly hinted that the Individual Investor Progamme will be subjected to a general overhaul.  Whilst Malta's Labour Government continues talks with representatives of the opposition party over the changes, Prof, Scicluna mentioned that a capping on the number of people that could obtain a Maltese passport under the IIP will be introduced, likely to be 50 per annum.  It is also likely that some sort of relationship between the inidividual and the island of Malta is to be established, ideally through ownership of property.

Talks between the Maltese Government and the opposition party are being carried out behind closed doors and it is only when the relevant legal notice is published that we will know the full criteria for a person to be eligible for Malta's Individual Investor Programme.

The social services agreement between Malta and New Zealand, which was signed in July this year, has come into force.  In terms of the agreement, Maltese who have lived in New Zealand and returned to Malta after making social security contributions in both countries could receive their pensions in Malta

Malta’s re-election to the International Maritime Organization Council is great news for the country.  Malta’s re-election was confirmed during the elections held last Friday, 29^th November, 2013 at the IMO Headquarters in London.  Whilst not necessarily something new for the nation, as Malta has held the post of IMO Council member for the last 14 years, it shows the country’s ongoing keen commitment in the international maritime industry and is undoubtedly the result of years of campaigning with other countries by the Ministry for Foreign Affairs and the Ministry for Transport.  The IMO Council is the executive organ that oversees the work of the Organization. The 40 member States making up the Council were elected, from among the 170 member States. 

On the 25^th November the EU Commission proposed amendments to key EU corporate tax legislation in order to significantly reduce tax avoidance in Europe.  According to the press release the proposal will close loopholes in the Parent-Subsidiary Directive, which some companies have been using to escape taxation.

The Commission’s proposal aims to:

a.       Update anti-abuse provision in the Parent-Subsidiary Directive (i.e. the safeguard against abusive tax practices) and would require EU Member States to adopt a common anti-abuse rule that would allow them to ignore artificial arrangements used for tax avoidance purposes and to determine that taxation is based on economic substance.

b.      Tighten the Parent-Subsidiary Directive provisions so that specific tax planning arrangements (e.g. hybrid loan arrangements) could not benefit from tax exemptions. Under the proposal, for example, if a hybrid loan payment is tax deductible in the subsidiary's Member State, then it must be taxed by the Member State where the parent company is established, thereby preventing cross-border companies from planning their intra-group payments to enjoy “double non-taxation”

 EU Member States are expected to implement the amendments by 31 December 2014.

Background to the amendments

The Parent-Subsidiary Directive was originally conceived to prevent same-group companies, based in different Member States, from being taxed twice on the same income (double taxation). However some companies have exploited provisions in the Directive and mismatches between national tax rules to avoid being taxed in any Member State at all (double non-taxation). The issue of corporate tax avoidance is very high in the political agenda of many EU and non-EU countries, and the need for action to combat was highlighted at recent G20 and G8 meetings.

On 6 December 2012 the Commission presented an Action Plan for a more effective EU response to tax evasion and avoidance. This action set out a comprehensive set of measures, to help Member States protect their tax bases and recapture billions of Euros legitimately due. The revision of the Parent Subsidiary Directive is one of the measures announced in the action plan.

Malta's Labour Government has presented it's first fully drafted budget to the Maltese Parliament.  For a breakdown of the main points please read our article in the Resources section on the following link: http://gmcorporateservices.com./en/resources/resources/96/malta-budget-2014.htm

• 1% of the difference between the amount declared to be payable and the amount paid; or
• €20;

• for the late application for VAT registration or other late notifications;
• for the filing of incorrect VAT returns or VAT Forms 004; and
• for the late filing of VAT returns, VAT Forms and recapitulative statements. As per the VAT Act, a VAT return is considered as ‘not filed’ unless it is full and complete in all material respects and the VAT payable is duly paid.

A number of unlicensed online operators are trading in Malta. The Malta Financial Services Authority has issued a warning against trading with online operators  “The Bank”, “SaneFX Binary”, “New Rich Lazy Trader”, “FXPro2” and “Gold Trade Pro”. These companies are claiming to operate from Malta by John Campbell.

John Campbell and the other mentioned operators do not have the license to operate in Malta and therefore it has warned the public against trading with these companies. 

A list of licensed operators can be viewed at www.mfsa.com.mt

Our chairman Mr John A. Gauci-Maistre will be attending the Shipping 2013 held in Stamford Connecticut. For any metting requests kindly e-mail us on finance@gmint.com. 

Our Chairman John A. Gauci-Maistre K.M. will be attending the German Ship Finance Forum on the 21st February. For any meeting requests kindly e-mail us on finance@gmint.com.  

GM Corporate & Fiduciary Services Limited will participate in the 4th Annual Ship Finance Forum in London that will be held on January 26th 2013. For any meeting requests kindly e-mail us on finance@gmint.com.