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MALTA

DIRECT CORPORATE TAXATION

Special rules apply to offshore entities
Partly in response to the European Commission's attack on its low-tax corporate forms earlier in the year (see Forms of Company), the Maltese government is preparing in mid-2006 some changes in taxation.
The Tax Reform Commission is said to have drawn up a number of proposals dealing with company and personal taxation, and has suggested that the 35% corporate tax rate should be lowered and the tax system modified in line with international trends.
The review of the Maltese tax system is part of a five-year strategy announced by Dr Gonzi at the launch of a Pre-Budget Document last year, designed to improve Malta's overall economic competitiveness.
According to this Document, the government is hoping to change the taxation system so that: tax policy stimulates economic growth; the system is re-engineered from direct taxation to environment-related taxation; the regime promotes the uptake of the household rental market through tax incentives; and reporting requirements are further simplified to lower administrative costs.

Malta Scope of Income Tax
The Maltese Income Tax Act as amended governs company taxation. Malta imposes income tax on the world-wide income of companies resident in the country; this includes all companies incorporated or registered under any Maltese law if they are ordinarily resident, and any foreign company which is managed and controlled from Malta. The definition of income includes capital gains; there is no separate capital gains tax as such. However, capital losses can only be relieved against capital gains, so the distinction is preserved within the tax computation. Local-source income and foreign-source income are also treated separately within the computation; Maltese companies with foreign income maintain a Foreign Income Account for this purpose (see below).

Non-resident Maltese companies pay income tax on locally-sourced income including capital gains, and on income remitted to Malta (excluding capital gains).
Non-resident foreign companies pay income tax on locally-sourced income only (not including capital gains). Local interest and royalty income would normally be exempt.
The Income Tax Act lists a number of sources of taxable income:

• Trade or business;
• Profession or vocation;
• Employment or office;
• Dividends;
• Interest and discounts;
• Pensions, charges, annuities and other annual payments;
• Rents and other profits arising from immovable or real rights thereon;
• Royalties;
• Other gains or profits.

Malta Rates of Income Tax
The rate of income tax in Malta is 35% on chargeable income. Note that certain types of company benefit from lower rates: for Offshore Companies (now defunct), International trading Companies and International Holding Companies, see Offshore Legal and Tax Regimes; also, companies licensed under the Malta Freeport’s Act and 'qualifying' companies under the Business Promotion Act may receive tax holidays of 10 years or more.

Malta Branch or Subsidiary?
Branches of foreign companies are not subject to income tax in Malta; Maltese income and expenses are taken into the tax computation in the home country of the mother company. On the other hand, branches are not able to take advantage of double tax treaties, nor of Maltese investment incentives, all of which are available only to companies incorporated in Malta.

Malta Calculation of Taxable Base
Allowable expenditure needs to be incurred 'wholly and exclusively' for the business; however, mixed private/company expenses can often be apportioned. Expenses can only be offset against the income in whose production they were incurred; they can be apportioned between types of income (losses, however, are transferable between income types). Among others, the following expenses are allowable:

• Repairs and the cost of maintaining the equipment used;
• Interest on capital employed in acquiring income;
• Bad debts and provisions for them;
• Capital allowances: first year 20%, but only 10% for hotels and industrial buildings; wear and tear allowances in future years.
Some types of expense are non-deductible, including:
• expenses incurred prior to production of the income, e.g. company formation, equity issuance or installation costs;
• charitable contributions (and other spending away of net income);
• capital items.

Unrelieved losses can normally be carried forward to offset future profits from whatever source (but only within the overall category of 'foreign-source' or 'local-source' - losses cannot cross that boundary line). Unabsorbed capital allowances however can only be applied to income from the same source.

Foreign-source income is protected against double taxation through 'Commonwealth Relief' which is now hardly ever used, Double Taxation Treaty relief, Unilateral Relief (often applies when Double Taxation relief is not available), and finally a 25% Foreign Tax Credit if all else fails. Only one of these four relieves is available, and they apply in the order stated. (See also Offshore Legal and Tax Regimes and see below under Withholding Taxes.)

Group relief is available both for income and capital, but with limitations.
NB: This brief summary of some of the more important aspects of Maltese income tax law is given for general information only; it should not be relied upon in actual situations, for which professional tax advice is necessary.

Malta Filing Requirements and Payment of Tax
The tax year is the calendar year, ending 31st December. Tax is assessed on the basis of the preceding calendar year, on the financial year of the company that ended in the previous calendar year.
Companies make three equal payments of tax in the year of assessment, in April, August and December.

A tax return must be submitted within six months of the end of a calendar year, or if the company's financial year ended before 31st December, within one month of receipt of the official return form, if this is later. If there is a balance due according to the company's return, it must be paid by 30th June in the year of assessment.
Tax due on foreign-source profits is payable 18 months after the balance sheet date, or 18 months after the payment of a dividend, it that is earlier.

Malta Withholding Tax
As regards dividends, Malta operates a full imputation system, but the situation is made quite complicated by the interaction of varying regimes for different types of income. Companies need to maintain three distinct income streams:

• Foreign Income;
• Taxed Local Income; and
• Untaxed Local Income.

Untaxed local income is that received from fiscally-privileged companies of various types, who are allowed to pay untaxed dividends etc, and it can be passed on subject to a withholding tax of 15% or in some cases without any deduction; taxed local income will have borne corporate income tax at 35% and dividends are not subject to withholding tax; foreign income will have been relieved of all or almost all of any tax it has suffered (see above) and will then have borne 35% local income tax - no withholding tax, therefore.
Resident (tax-paying) shareholders have a full 35% tax credit in respect of taxed local or foreign income dividends. Non-resident shareholders can take the tax credit, or they can opt for refunds of either two-thirds or all of the domestic tax paid depending on whether the foreign income came through a 10% participation or not.

NB: This is a highly simplified description of the Maltese withholding tax regime; specialist professional advice is necessary before any action is taken.
Malta's November 2000 budget introduced withholding tax on Collective Investment Schemes. With regard to foreign funds (with a primary or secondary listing on the Malta Stock Exchange), the fund manager or representative must register with the Inland Revenue Department which means that income to the investors in the fund will be subject to a 15% final withholding tax.

Income that goes to local residents from Investment Collective Schemes (either traded on the primary or secondary listings on the exchange) will be subject to tax. This includes distributing funds and accumulator funds.
Further changes made by the budget include tax levied on all government stock bought directly by an investor. However, tax is not levied if the investor invests in an accumulator fund which then reinvests in government stock.

Malta The Business Promotion Act
The Business Promotion Act provides an incentives package aimed at establishing and strengthening certain business sectors within the Maltese economy:

• the production, manufacture, improvement, assembly, processing, repair, preservation or maintenance of any goods, materials, commodities (including computer software), equipment, plant and machinery;
• the rendering of services of an industrial nature analogous to the activities referred to above;
• fisheries or large scale aquaculture;
• agricultural stock farming or large scale horticulture;
• activities carried out by a company under the Malta Freeport’s Act;
• the operation of catering establishments, guesthouses, hostels and holiday premises;
• the undertaking of projects considered to be beneficial to the tourism industry;
• the production of feature films, television films, advertising programmes or commercials, and documentaries;
research and development programmes; and
• the export of goods or services produced or provided as the case may be, by other qualifying companies.

The government has discretion under the Act to give incentives to other business sectors in addition. Qualifying companies must not engage in non-qualifying activities.
Companies carrying on one or more of the qualifying activities pay reduced rates of income tax. New companies pay 5% for the first 7 years, 10% for the next 6 years and 15% for the next 5 years.

Qualifying companies are also eligible for an investment tax credit calculated either as a percentage of qualifying investment expenditure or as a percentage of the wage costs of employment created by the investment. For small and medium sized companies the percentage is 65% and for large companies the percentage is 50%. Investment tax credits which are not utilised in any particular year are carried forward to future years and on each such carry forward the credit is increased by 7% per annum.
Qualifying investment expenditure is defined as any cost incurred in acquiring industrial buildings and structures, plant and machinery, land, other buildings and know-how. Imported second hand machinery may also qualify. Investments must be maintained for at least 5 years.

Profits which have been taxed at the incentive rates or which escaped tax due to Investment Tax Credits are exempt from further tax when distributed as dividends to shareholders.
The Value Added Incentive Scheme

This incentive is available to manufacturing companies which do not qualify as above and which increase the value they add during manufacturing. Such companies pay tax on their increased trading profits at 5%, 10% and 15% for 7, 6 and 5 years respectively; and the taxed profits may be distributed without further taxation.
Other Investment Incentives

The Act provides for investment and accelerated depreciation rate allowances for acquisitions of plant and machinery or industrial buildings, subject to various conditions. The investment allowances are 20% for industrial buildings or structures, and 50% for plant and machinery. The accelerated depreciation rates are 5% per annum for industrial buildings or structures, and 33.3% for plant and machinery.
A range of further incentives includes soft loans, training grants, low-rent premises, and job creation grants.

MALTA: OFFSHORE LEGAL AND TAX REGIME
The term 'offshore' is used in Malta only in the 'Offshore Company' which has been phased out in favour of the International Trading and Holding Company (ITC and IHC) forms. Non-residence is a key criterion for obtaining offshore tax treatment in most situations. The main forms useful for offshore operations apart from the ITC and IHC are the Limited Partnership and the Trust. Normally, non-resident tax treatment is given to foreign income, while income arising in Malta is taxed more highly.

Following Malta's acceptance into the EU in 2004, there was doubt about which parts of the country's offshore regime will be allowed to continue. In August, 2003, the European Commission described seven 'harmful' tax measures that it wants the Maltese government to abolish as part of its attack on tax measures in the ten acceding nations that it fears will distort the single market.

The first three measures identified by the Commission concerned offshore trading and non-trading companies, offshore insurance firms and offshore banking companies. In fact, Malta acted to abolish 'offshore' companies as such in 1996, although a transition period allowed the continuance of existing companies until 2004.
Other measures singled out by the Commission as harmful include International Trading Companies, which create an effective tax rate of 4.2% for non-residents, the beneficial tax treatment of dividends from companies with foreign income, the tax treatment of Investment Service Companies, and the deferral of tax on foreign income for non-resident companies.

In March, 2006, the European Commission formally requested Malta under EC Treaty state aid rules to abolish the tax regime for Maltese Companies with Foreign Income (CFI) and the International Trading Companies’ (ITC) regime by the end of 2010 at the latest.
Competition Commissioner Neelie Kroes observed that: “The schemes provide sizable aid to companies that are owned by non-Maltese and produce revenues outside of Malta, and are therefore highly distortive without promoting growth of the Maltese economy”.
In May, the Maltese government formally decided to gradually abolish the existing aid schemes.

Competition Commissioner Neelie Kroes announced: “I welcome the abolition of Malta’s preferential regimes as a further important step towards eliminating selective tax incentives that significantly distort the location of business activities in the Single Market”.
Malta’s acceptance of the EC recommendation means that:

• The existing ITC and CFI schemes will be effectively abolished by 1st January 2007 at the latest;
• By the same date a new refundable tax credit system may be enacted by Malta provided that it does not effectively favour foreign-owned companies over domestic-owned companies;
• The tax status of ITC is prohibited to any new company registered in Malta after 31st December 2006;
• The existing ITCs will benefit from the current system only until 31st December 2010; and
• The number of newly created ITCs between the date of acceptance of the appropriate measures and 31st December 2006 will be limited to the yearly average number of ITC companies created in the last five years.

The Business Promotion Act 2003 offers worthwhile tax concessions to many types of manufacturing and other businesses.

Malta Forms of Offshore Operation
Offshore operations may take place within the following forms:

• International Trading Company
• International Holding Company
• SICAV
• Offshore Company (now defunct)
• Trust
Click on any of the forms for a description of its legal basis.

Malta Tax Treatment of Offshore Operations
See Domestic Corporate Taxes for the general principles of Malta corporate taxation, which also apply to offshore entities when they pay tax. Also see Withholding Taxes for a simplified description of the rather complex Maltese withholding tax regime.

An International Trading Company pays tax at the regular rate, 35%, but a non-resident shareholder, or a Maltese company shareholder owned by non-residents, is subject to Maltese tax only at 27.5% on dividends received from an ITC, and can apply for a refund of the difference. In addition, the non-resident shareholder is entitled to a refund of two-thirds of tax paid on dividends (imputed tax) which equals 23.33%, giving a total return of 30.83%, and an effective rate of tax of 4.17%.

The two-thirds rule is in fact optional, and the shareholder can choose just to take the tax credit of 27.5% if he wishes.
The rules for tax payments and refund payments are such that there is a gap of only 14 days between payment of the tax due by the company and receipt of the refunds by the shareholder.

An International Holding Company, which operates a Foreign Income Account (see Domestic Corporate Taxation) to receive income from foreign sources, pays 35% tax on its net income as usual, but can make use of four levels of abatement of the tax:

• Double Tax Treaties: Malta has treaties with 45 countries, including almost all of the leading OECD countries, with another 17 treaties in the pipeline. Most of the treaties allow offsets against local taxation.
• Commonwealth Relief: Not much used now, but equivalent to treaty relief in the case of Commonwealth-source income;
• Unilateral Relief: when there is no tax treaty, Malta gives equivalent relief unilaterally; and
• Flat-Rate Foreign Tax Credit: if no documentation is available to establish treaty or unilateral relief, Malta gives a 25% tax credit anyway.

Only one of these four types of relief applies to a given piece of foreign income; the Maltese Inland Revenue is involved in determining which applies. One way or another, double taxation is avoided.

Once the income passes as dividend to a non-resident shareholder (individual or company) he is entitled to a refund of two-thirds of the 35% imputed tax charge. Therefore the effective tax rate on the originating foreign income will be a maximum of 11.67% (there may be deductible expenses).

If the income arose from a participating holding (a company owned 10% or more by the Maltese company) then the refund is 100% of the imputed tax, so that the effective rate becomes nil.
The SICAV (Societe d'investissement a capital variable) is used by mutual funds. Licensed collective investment funds in Malta are exempt from income tax, but are also not eligible for tax treaty benefits. However, a SICAV can elect to be taxed at 25%, which brings it within the treaty rules and may be advantageous in some situations. Fund management companies (investment services companies) pay tax at 35% but are able to use an extensive list of deductions, including double deduction of salaries paid to Maltese personnel.

Malta's November 2000 budget introduced withholding tax on Collective Investment Schemes. With regard to foreign funds (with a primary or secondary listing on the Malta Stock Exchange), the fund manager or representative must register with the Inland Revenue Department which means that income to the investors in the fund will be subject to a 15% final withholding tax.

Income that goes to local residents from Investment Collective Schemes (either traded on the primary or secondary listings on the exchange) will be subject to tax. This includes distributing funds and accumulator funds.
The Offshore Company is being phased out. New ones cannot be formed, but existing ones could continue until 2004. Tax was charged on the net income of trading offshore companies at 5%, but they could choose to pay a higher rate if they want (this kind of 'designer' tax situation has been targeted by the UK Treasury, and other Finance Ministries will no doubt follow suit). Non-trading offshore companies (investment holding companies) were exempt from tax; they did not have to file a tax return. There was no taxation of any payments by offshore companies to non-residents.

Until the end of 1996, incoming banks, insurance companies and mutual funds took the form of offshore companies; existing institutions could convert into one of the other corporate forms that are available, or they could remain as offshore companies until 2004. They pay fees on registration and annually as follows:

• Offshore banks: Lm 25,000
• Offshore insurers: Lm 5,000
• Captive insurers: Lm 1,000
• Offshore collective investment company: Lm 5,000

Apart from collective investment schemes (see above) there are no special tax regimes for financial institutions: they are taxed according to their corporate form, ie as Offshore Companies, International Trading Companies, International Holding Companies or regular Private Limited Companies as appropriate. A special taxation regime for insurers is being prepared as part of a general revision of Maltese insurance legislation.

Until 2005, Maltese trusts, having by definition non-resident settlors and beneficiaries, were exempt from income tax, except that they paid an annual amount of Lm 200 to the Government. Under the The Trusts and Trustees Act 2004, Maltese residents can also form trusts, but the trust is a taxable entity in respect of undistributed income, unless both the beneficiaries and the income are foreign, in which case the trust remains exempt from tax.

Foreign trusts do not have to file tax returns; the Professional Trustee company which is acting as their trustee makes an annual declaration of conformity with the law. No stamp duty or other taxes are payable in respect of trust transactions or documents.

Malta Taxation of Foreign Employees of Offshore Operations
This section refers to the taxation of foreign employees of the various types of offshore entity; see Domestic Personal Taxes for the general principles of individual taxation in Malta, which also apply to the resident employees of non-resident entities. There is in fact no distinction between the employees of resident or non-resident operations. It is a question of individual status; residents and non-residents are treated differently of course. Most types of compensation and benefit paid to employees are taxable; there are no special privileges or exemptions for expatriate workers, except for the special situations detailed below:

• expatriates employed in the fund management and insurance sectors are not liable for tax on benefits and allowances of various kinds;
• expatriate employees of companies licensed to operate in the Freeport zone pay income tax at a top rate of 30% and do not have to make social security contributions; they are also exempt from stamp duty and customs duties;
• officers and employees of an Offshore Company are exempt from customs duty on their personal belongings imported into Malta for the first six months of their residence.

Malta Exchange Control
The Central Bank of Malta used to apply exchange control under the terms of the Exchange Control Act 1972. Current transactions were freed from exchange controls in 1994; capital controls were removed on Malta's entry to the EU in 2004.

Malta Offshore Activities
The various forms of offshore entity in Malta are limited as regards the trading they can do in the jurisdiction, but not as regards the running of their businesses from Malta.
International Trading Companies are allowed the following local activities:

• purchases for export of Maltese goods provided that they are not made from a 15% shareholder in the buying company;
• trading with companies registered in Malta under the Financial Services Centre Act 1988 (ie Offshore Companies);
• trading with other International Trading Companies.
Registered Maltese and foreign trusts and International Holding Companies can hold a wide range of assets including the shares of other offshore entities.
The situation of Trading and Non-Trading Offshore Companies was broadly similar to that of International Trading and Holding Companies, respectively.

Malta Employment and Residence
Although Malta’s accession to the EU has brought with it freedom of movement and employment for EU nationals, but in other respects Malta operates quite strict policies as a result of historically high unemployment, although it is now much less of a problem. Normally a work permit will only be issued to a foreigner if there is no suitably qualified local, and the employer will need to operate training and 'understudy' schemes. The regime is less restrictive when foreign investment is involved, and if an expatriate controls 40% of a project, he will always be able to get work permits for himself and for one other expatriate.

Anyone who wishes to reside permanently in Malta other than in conjunction with permitted work must apply for a residency permit under the 1988 Residence Scheme. An applicant must provide evidence of sufficient capital (Lm150,000 = $400,000) or an annual income of Lm10,000 (= $27,000). A permit holder must buy or rent property on the island, but benefits from tax and import duty incentives.

Malta Double Tax Treaties
Malta has entered into 46 double-tax treaties (unusually for a low-tax jurisdiction), with another 15 pending. Generally speaking, the treaty benefits are available to all Maltese companies other than Offshore Companies (being phased out, in any case). All the treaties other than the Swiss and USA treaties, which are limited to air transport and shipping, follow the OECD Model Convention.

The table below shows the countries which have double-tax treaties with Malta.
A treaty with Barbados was signed in December 2001. In September, 2004, Malta signed a DTAA with Iceland.
In May, 2005, Malta and San Marino held discussions on the terms of a DTAA. In the same month, Maltese officials conceded that they faced a difficult task in trying to persuade US officials of the merits of a Double Taxation Avoidance Agreement, after what was termed a successful visit to the US. Malta is the only member of the European Union not to have a DTAA with the United States.

In March, 2006, Maltese Foreign Minister Michael Frendo and H.E. Dr. Mohammed Khirbash, Minister of State for Finance and Industry of United Arab Emirates signed an Agreement for the Avoidance of Double Taxation.

The signing ceremony took place at the Ministry of Finance and Industry in Abu Dhabi after bilateral talks between Minister Michael Frendo and Minister Khirbash.
“We are very happy to sign this Avoidance of Double Taxation Agreement with the Emirates” commented Minister Frendo after the signing ceremony, “because this strengthens the framework for increased trade, investment and business opportunities between the two countries.”

Malta has a network of around 45 similar agreements with other countries on the avoidance of double taxation and prevention of fiscal evasion. Currently, another fifteen Double Taxation Agreements are being negotiated.
In the same month, an Agreement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income was signed between the Republic of Singapore and Malta.

Mr Raymond Lim, Second Minister for Foreign Affairs and Finance, signed on behalf of Singapore and Dr Michael Frendo, Foreign Minister of Malta, signed on behalf of Malta at a ceremony in Singapore.

The Agreement aims to alleviate the burden of double taxation which arises when the resident of a contracting state derives income from the other contracting state. It also makes clear the taxing rights between Singapore and Malta on all forms of income from cross-border economic activities between the two contracting states. There are also provisions for reduction or exemption of tax on certain types of income.
The Agreement facilitates the cross-flow of trade, investment, financial activities and technical know-how between Singapore and Malta.
The Agreement will enter into force after its ratification by both countries. The provisions of the Agreement will apply to income arising in the year after its entry into force.

• Albania
• Australia
• Austria
• Barbados
• Belgium
• Bulgaria
• Canada
• China
• Croatia
• Czech Republic
• Cyprus
• Egypt
• Federal Rep. of Germany
• Finland
• France
• Hungary
• Iceland
• India
• Italy
• Korea
• Kuwait
• Lebanon
• Libya
• Lithuania
• Luxembourg
• Malaysia
• Netherlands
• Norway
• Pakistan
• Poland
• Portugal
• Romania
• Singapore
• Slovakia
• South Africa
• Sweden
• Switzerland
• Thailand
• Tunisia
• Turkey
• United Arab Emirates
• United Kingdom
• USA (suspended)

Malta Table of Treaty Rates
This table lists the percentage rates of withholding tax on payments made from Treaty countries to Malta.
Country Dividends % share to qualify Interest Royalties
Minor Share-holding Major Share-holding
Australia 15 15 15 10
Austria 15 15 5 10
Belgium 15 15 10 10
Bulgaria nil nil 15 10
Canada 15 15 15 10
China 10 10 10 10
Cyprus 15 15 10 10
Czech Rep. 5 5 nil 5
Denmark 15 0 25 nil nil
Finland 15 5 25 10 10
France 15 5 10 10 10
Germany 15 5 25 10 10
Hungary 15 5 25 10 10
India 15 10 25 10 15
Italy 15 15 10 10
Korea 15 5 25 10 nil
Libya 15 15 15 15
Luxembourg 15 5 25 nil 10
Malaysia 15 15
Netherlands 15 5 25 10 10
Norway 15 15 10 10
Pakistan 15 15 20 10 10
Poland 15 5 20 10 10
Romania 5 5 5 5
South Africa 15 5 10 10
Sweden 15 nil 10 nil nil
UK nil nil 10 10

Malta Other International Agreements
In January, 2004, the Guernsey Financial Services Commission and the Malta Financial Services Authority signed a Memorandum of Understanding which provides a framework for closer cooperation between the two regulatory bodies. The Memorandum provides a formal basis for cooperation, including the exchange of information and investigative assistance.

Peter Neville, Director General of the Commission, commented: “I am very pleased to have taken this step. I advised Malta on the setting up of its investment service regulation, and I have known the Maltese regulators for many years.”
He added: “This Memorandum of Understanding between the Commission and the Malta Financial Services Authority is another step towards strengthening our relationship, providing a formal basis by which we can cooperate and exchange vital information."
In May, 2004, the respective chairmen of the Maltese and United Kingdom financial regulators signed a memorandum of understanding, facilitating the exchange of information and investigative assistance.

The agreement was signed by Professor Joe Bannister, head of the Malta Financial Services Authority and Callum McCarthy, the UK’s Financial Services Authority chief in London, and lays down a “formal basis for cooperation” between the two bodies.
“The MFSA and the FSA believe such co-operation will enable them to more effectively perform their functions," stated the text of the MOU.

Noting that the authorities of Malta and the UK have long cooperated on an informal basis, Professor Bannister explained that the growing complexity of the global financial system necessitated the inking of a formal agreement to combat the threat of financial crime.

In July, 2004, the Malta Financial Services Authority (MFSA) and the Gibraltar Financial Services Commission entered into a Memorandum of Understanding on exchange of information. The Memorandum was signed in Malta by MFSA Chairman Prof. J.V. Banister and Mr. Marcus Killick, Chairman and Commissioner of Gibraltar’s Financial Services Commission.

The MOU sets out to establish “a formal basis for co-operation, including the exchange of information and investigative assistance in the fields of banking, insurance, investment services and the provision of professional trusteeship and company management services, and the exchange of information on supervisory practices and techniques.”

During Mr. Killick’s visit, bilateral talks were held on how regulatory and supervisory collaboration between the two organizations may be further enhanced, including proposals for reciprocal visits by staff and other means of improving mutual understanding of the operations and supervisory techniques of the organizations.

In November, 2005, the Jersey Financial Services Commission and the Malta Financial Services Authority signed a Memorandum of Understanding, which provides specifically for the exchange of information between the two financial services regulators.
The Memorandum of Understanding constitutes a statement of intent by the regulators to create a formal framework for regulatory collaboration, investigative assistance and co-operation. Such collaboration should help to protect investors and depositors and to promote the integrity of financial services markets in the two jurisdictions.

The Memorandum of Understanding commits both regulators to providing help within the limits of each jurisdictions’ laws, and setting up procedures and liaison points so that requests for information needed for tackling financial regulatory offences can be handled rapidly and efficiently. The agreement also provides an environment for the development of additional business between the two jurisdictions.

Commenting on the MoU, David Carse, Director General of the Jersey FSC noted that: “I am delighted to sign this Memorandum of Understanding with the MFSA. It is the latest in a number established between the Commission and regulators in the European Union.”
Meanwhile, Mr Carse's counterpart at the MFSA, Joe Bannister, observed that: “This is part of our process to increase collaboration with recognised finance centres. There is extensive collaboration between practitioners in Malta and Jersey, and this Memorandum of Understanding will further enhance business between the two finance centres.”



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