Attracting FDI in Malta's financial services industry

Abstract

Purpose: The aim of this study is to establish the reasons why companies may choose to invest in Malta reviewing the importance of taxation, regulation and other aspects. The research includes also non-fiscal factors in order to be in line with what companies do really consider since past studies show that taxation and regulation are not considered in isolation. Design: The objective of the study was achieved by semi-structured interviews with FinanceMalta and the International Tax Unit. The Ministry of Finance and the MFSA were also contacted electronically. Finally, questionnaires, both electronically and by post were send to the financial companies, selected due to their foreign ownership, and hence decision to invest in Malta. Findings: The findings establish that the main factors considered by companies were Malta's taxation system and the European Union membership. However, as will be discussed in the study, other factors also played an important part including non-fiscal factors. The research also establishes areas that may discourage investment including changes in fiscal law and bureaucracy. Conclusion: This study concluded that when undertaking an investment decision a whole package is considered. Authorities do realise which factors are of priority and consider that they are on the right track, yet there are areas that still need improvements which will help further boost investment. Value: This study should be of contribution to authorities and stakeholders operating and working in the sector. The study shows what companies consider important and other areas that may discourage them to invest and expand in Malta. Emphasis should be made to enhance areas considered essential and discourage areas that distract them.