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Malta: Offshore Business Sectors

Trade Marketing and Distribution

Malta's offshore taxation regime doesn't stand out particularly among its competitors, but the island does have some considerable advantages, including its geographical location, its extremely well-equipped ports and Freeport, its quite well-developed manufacturing infrastructure, its network of double tax treaties, and its relatively sophisticated, European business environment.

Thus, a substantial number of companies involved in the trading or distribution of FMCG and other physical goods use Malta as a trading base for the Mediterranean, Southern European and North African region.

The European Commission announced in November 2006 that it would allow Malta to grant start-up aid for new air routes from Malta International Airport. The measure lasted until September 2011 and provided for a total of EUR58m to be paid to airlines in order to finance new routes. The primary objective of the aid was to improve connectivity by enhancing access to air transport services, which are of basic importance for the economic and social development of Malta.

The measure approved by the Commission provided for public funding of new services departing from Malta International Airport. The aid was designed to help airlines wishing to establish new routes to/from the airport by meeting part of their start-up costs and route-specific marketing aid.

The Commission found that the proposed scheme was in line with the Community rules adopted in 2005 in order to favour the development of regional airports and the mobility of EU citizens, as:

  • The aid was available to all operators in a transparent and non-discriminatory manner;
  • It was limited to five years for each new route;
  • The aid was limited, on average, to 40% of start-up costs (including specific marketing costs);
  • The aid had to be paid out on the basis of a business plan.
The Maltese government hoped that the measure would encourage the private sector to invest in new air services, by sharing the risk between the airlines and the public authorities.

Malta does not suit everyone as a physical supply base, but that does not prevent companies from establishing marketing or holding companies in Malta, and very many do so. The combination of Malta's double tax treaties with the 4% effective tax rate on International Trading Company profits was very attractive, as long as the regime remained in force (until 2010). See below, Financial Holding and Investment Activities.

Along with other offshore jurisdictions, Malta is a suitable place in which to base e-commerce services for retail or wholesale distribution of material or non-material goods: see Offshore-e-com.com for extended descriptions of how such businesses can take advantage of the combination of offshore and e-commerce.



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