David Valenzia

Territory Senior Partner at PwC Malta

The Malta Chamber Pre-Budget Proposals - Financial Services

Wednesday 06th October 2021

The Chamber has put forward a number of proposals that specifically target the Financial Services Sector. We continue to believe that this sector is one of the pillars of the Maltese economy and therefore are supportive of initiatives that help in growing this sector in a sustainable manner. Indeed the sector itself must ensure that it remains sustainable and we feel that an early adoption of the ESG principles, including the applicable governance structures and reporting obligations should help achieve this. We firmly believe that once the Financial Services Sector adopts this principle, it is likely to become entrenched in the rest of the business community and therefore in the functioning of the whole economy.

In the international sphere, Malta needs to continue remaining relevant in attracting FDI. The geographical realities of an island state continue to present logistical issues and increased costs particularly in the manufacturing sector thus putting us at a disadvantage to other better located territories. However, it is expected that tax harmonisation initiatives including those promulgated by the OECD (as for example in its Pillar 1 and Pillar 2 initiatives) are not only likely to have an impact on Malta's attractiveness to FDI opportunities but also to challenge the continued viability of multinational corporations (MNCs) to continue to operate from Malta. In this respect we welcome the Chambers's proposal for the issuing of a study on the potential impact of corporate tax harmonisation on the Maltese economy with a view of identifying initiatives that could help in ensuring that Malta remains a jurisdiction of choice for foreign investors.

On a local perspective, we support all initiatives that target a "compliant culture" in our economy, particularly with respect to reporting obligations to the Malta Business Registry and Commissioner for Revenue. We firmly believe that this can be achieved through various initiatives including better use of technology and a more strategic, coordinated and efficient use of data. This should result in businesses being less burdened with compliance obligations whilst helping achieve a level playing field for all operators as well as to increase collection of due taxes.

I am indeed pleased to note that the proposals put forward by the Chamber are aligned to The New Equation strategy of PwC which seeks to build trust for today and tomorrow by, amongst others, working toward a future that is human-led and tech-powered and investing in solutions that will help businesses solve faster, solve more and realize more value."