Flying The Malta Flag On Land And In The Air

Joanna Demarco - 17th November 2018

Malta’s ship and aircraft registers are growing rapidly. Why the country is so attractive as a jurisdiction, and what does the future hold?


Lying at the crossroads of Europe, Africa and The Middle East, it is no wonder that Malta has always been at the forefront of the maritime industry. And with the introduction of EU compliant legislation, fiscal incentives and the 2010 Aircraft Registration Malta Act, the aviation industry has prospered too.

Today, the country is experiencing a rapid growth in the number of vessels and aircraft registrations in Malta. Transport Malta Chairman Joseph Bugeja explains that the number of registered aircraft has actually doubled since 2012, with more than 280 aircraft registered in Malta, while the number of operators has increased from 18 to 35 within the same period. The number of vessels registered locally has also increased phenomenally. In the past five years, the registration of superyachts has increased by over 97 per cent, meaning there are now over 800 superyachts registered under the Malta flag.

Joseph Bugeja

Joseph Bugeja

According to Mr Bugeja, it is not only the figures which have increased. “Malta’s ship register has grown not only in numbers but also in repute,” he says, pointing out that Malta is constantly adding high-end vessels to its fleet.

What leads to such success? Mr Bugeja expresses no doubt that it is Malta’s legislation. “A strong legislative foundation lies at the heart of our success as a nation. A major prerequisite to Malta’s achievements in both sectors was the enactment of a robust regulatory structure.”

Other professionals in the field are quick to highlight the benefits, particularly fiscal, which the Maltese jurisdiction offers: the incentives range from the 6/7ths refund regime for aircraft operators to the fixed tonnage tax regime for vessel owners, among others.

Ann Fenech

Ann Fenech

“Most of the advantages available are unique to Malta,” Dr Cedric Mifsud, Founding Partner at Mifsud & Mifsud Advocates believes, “hence why the jurisdiction has been well-placed to attract the assets of high net worth and multinational companies. If we stuck to emulating other jurisdictions, we would not have been in a position that we are today; a world leader in services relating to the maritime and the aircraft industries.”

Dr Ann Fenech, Managing Partner of Fenech & Fenech Advocates asserts that nowadays, “most countries with a maritime sector both inside and outside Europe offer a form of tonnage tax regime, so we are nothing special any more in that regard.” However, she believes that what differentiates Malta from other countries is that the regime is “probably the only EU tonnage tax regime which has been passed through the mill and is fully approved by the EU Commission.”

Other benefits which add to Malta’s attractiveness as a jurisdiction, including English being the official language, Malta’s EU membership, and having a ‘solid and stable law’. “The Malta flag today has over 70 million tonnes and is the largest flag in Europe. It is a very impressive statistic,” she adds.

With all of this growth, however, are there any consequences?

Dr Mifsud says that whilst becoming part of the European Union has given “a big boost” to both industries, as clients generally prefer European Union-based solutions, it has also opened Malta up to more scrutiny. “Being part of the European Union has placed the products we offer under more intense scrutiny following concerted efforts by other member states that are in the same game,” he says. He mentions the investigation of the tonnage tax regime by the European Commission as an example.

Annelise Abela

Annelise Abela

Dr Annelise Abela, Advocate and Associate with multi-disciplinary legal firm EMD, says that standards have to be maintained constantly. “In order to retain such high standards, it is fundamental that Malta maintains its positive track record in offering efficient and attractive administrative services and customer approach, even upon increased demand.”

Indeed, despite all service providers interviewed being thrilled at the growth of these industries, they believe that work in maintaining the quality must not falter, and that monitoring the field is crucial.

“The Malta flag is on the white list of the Paris Memorandum of Understanding, meaning that fewer and fewer vessels are being detained for breaches of international conventions and regulations,” argues Dr Fenech. “This does not happen by accident but by virtue of implementing all the international regulatory regimes applicable and by ensuring the highest of technical standards. This means that the regulator, the Directorate of Merchant Shipping at Transport Malta and we, the service providers, need to cooperate and work hand in glove to ensure that standards are maintained and that our reputation keeps on going from strength to strength.”

“Constant monitoring of what is taking place at an international level is essential,” reiterates Dr Mifsud. “As a jurisdiction we must never be happy with what we have and we have to continue searching for ways to improve our product.”

Cedric Mifsud

Cedric Mifsud

However, other jurisdictions are not the only challenge for the industry, according to Dr Mifsud. “Geo-political shifts affect the aircraft and maritime markets too. “Recently, President Trump’s importation taxes and the retaliatory tariffs placed by the European Union have affected the importation of yachts and other high-end assets into the EU. Malta within the European ambit has to see how to overcome the protectionist wave that has engulfed the cross-Atlantic trade.”

“One can only prospect that the Malta flag, both in cases of ship and aircraft registration, will continue to grow,” says Dr Abela. “The Maltese aviation register has already proposed itself as a flag of confidence, and one can predict that it will follow in the footsteps of the shipping register.”

“The opportunities to establish Malta as a platform for aviation-related activities exist. As Malta responded to past opportunities, it is important to put in place, maintain and sustain the basic building blocks which are required for the aviation sector to grow... the end goal is to create a high value-added aviation sector, where new job opportunities are created and existing ones are sustained through the availability of a skilled workforce, revenue generation and economic growth,” Mr Bugeja concludes.

The full version of this article appeared in The Commercial Courier

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Flying The Malta Flag On Land And In The Air