Home > Publications > Newsletters > Newsletter 4

Newsletter 4
MONTH YYYY

From the Editor

Dear Reader,

The Christmas and New Year’s festive season has come and gone and we are, once again ,settled in our daily routines.

Over the past twenty years Malta has made giant steps in establishing itself as a financial and commercial center. We have had some excellent legislation enacted in Parliament whose sole purpose was that of attracting the reputable, internationally mobile investor to our shores.

The Malta Financial Services Center was also established to act as the regulator of most of these legislations and the success is there for all to see.

Perhaps the major success story was the MERCHANT SHIPPING ACT which has now firmly established the island, despite its small geographic size, as one of the world’s leading shipping registration centers. This ACT provides a definite haven for serious ship owners throughout the world who are looking for a serious and in-expensive location where to register their fleets.

In view of the continued potential of this legislation, we are this month dedicating most of this newsletter to the provision of this ACT and the advantages that our island offers to the ship owning companies.

Another success story is the INTERNATIONAL TRADING COMPANY of which a great number have been registered in Malta. Again, in this issue, we are highlighting the attractiveness of such a company to the international investor.

As always I hope that this issue will prove of interest and I look forward to your comments and feedback.

Regards

George Farrugia

Attracting Overseas Investment

One of the most attractive pieces of legislation in Malta, as far as non-residents are concerned, is the INTERNATIONAL TRADING COMPANY.

The definition of an International Trading Company by the INCOME TAX ACT, is one which is:

• totally owned by non-residents ,and
• carries out all its trading activities overseas.

For local tax purposes this type of company is treated as any other Maltese company. However the major difference is when such a company distributes its profits, enabling the shareholders (and not the company) to receive a rebate from the Income Tax Department of 30.83% out of the 35% company tax originally paid.

This brings the effective tax suffered by such a company down to 4.17% of its chargeable income.

Apart from the above, such International Trading Companies are still entitled to all the benefits and provisions of the Double Taxation agreements currently in force.

Although there exists the requirement that such companies must have a registered office in Malta there is no need for the day-to-day control to be carried out locally.

Shareholding and directorships in such companies may also be effected through the services of nominees.

Registration Of Ships And Yachts Under The Malta Flag

Ship Registration

All types of vessels, from pleasure yachts to oil rigs, may be registered in Malta, provided that they are either wholly owned by Maltese citizens or by a Maltese company, or bare boats chartered to a Maltese company.

The procedure for the registration of a vessel is carried out in two stages:

• Provisional registration, which in terms of law has the same effect as the so called permanent registration, can be effected very quickly. Authority to operate a ship, however, will only be given once the Administration is satisfied that the vessel conforms to all the standards required by the relative International Conventions.

Provisional registration has a validity of six months, although this can be extended by a further six months.

• By this time all the documentation has to be completed for permanent registration. This includes in particular:

1. Evidence of ownership
2. Cancellation of former registry.

Authority to operate still remains linked to conformity with the relative international standards on:

1. Manning,
2. Safety
3. Pollution prevention

Advantages of the Maltese Flag

There are many advantages to registering a shipping company in Malta, but the major ones are as follows:

• Complete tax exemption to owners, charterers and financiers of Maltese ships of over 1000 net tonnage,
• No restrictions on the nationality of the shareholders and directors of Maltese companies and of master, officers and crew of Maltese ships
• No restrictions on the sale and mortgaging of Maltese ships
• No trading restrictions
• Preferential treatment is given to Maltese ships in certain ports
• Twenty four hour, seven days a week service in respect of urgent matters.

Company formation formalities

The formation of a Maltese shipping company is the first step to be taken in a Malta flag registration and a ship can be registered within a minimum period of time on the basis of a power of attorney sent by the shareholders to their representatives in Malta. The principal place of business need not be located in Malta and there are no restrictions on the sale and transfer of shares or stocks of a Maltese shipping company.

Bare-boat Charter Registration

Maltese law provides both for bare-boat charter registration of foreign ships under the Malta flag and also for the bare boat charter registration of Maltese ships under a foreign flag. Vessels so registered enjoy the same rights and privileges, and have the same obligations, as any other ship registered in Malta. The requirements for bare-boat charter registration are that the ship must be bare boat chartered to Maltese citizens or Maltese companies,and that the ship, which is not a Maltese ship, is registered in a compatible registry.

Mortgages

A mortgage in respect of a Maltese ship may be recorded in the Maltese register as soon as the vessel is registered while transfer and discharge of mortgages may be effected immediately on presentation of relative documentation to the Registrar.

Manning Requirements

Upon registration of a ship, and on application by the owner, the Merchant Shipping Directorate, in accordance with the SOLAS CONVENTION issues a minimum safe manning certificate valid for the period of the provisional registry. On permanent registration the Directorate will issue a minimum safe manning certificate valid for three years.

There are no restrictions as to the nationality of seamen engaged on Maltese ships. However, the crew on Maltese trading ships must be in possession of a recognized valid certificate of competency issued in terms of 1978 STCW CONVENTION.

Mailing list

This publication is primarily intended for distribution to our clients, friends and
colleagues throughout the world.

Anyone wishing to receive a copy can drop us an e-mail at: infogfcomalta.com and we shall include his name on our e-mailing list.