Pool of support

KPMG, PricewaterhouseCoopers, Deloitte, Ernst & Young. You name them, Malta has them - the big four accountancy firms that is, and many more other professional support services firms as well. Every successful or aspiring financial centre needs a large choice of accountants, auditors, lawyers, consultants and other professionals to service their specialist needs, and Malta appears to have few deficiencies in that department.

The country's service sector is long-established and comprehensive, and serves local customers and international clientele. What's more, Maltese professionals' fees are generally lower than those charged by their counterparts in other EU member states. Their growing role is proving essential to Malta's financial services sector and the wider economy, and they have developed expertise in niche areas such as captive insurance, funds, trusts, wealth management and ship registration and management.

Ship registration is particularly interesting, since Malta has the second largest ship register in Europe and the eighth largest in the world, with about 5000 vessels registered. The Malta Maritime Authority merged with the Malta Transport Authority (primarily responsible for roads and buses) and the Civil Aviation Department in January this year into one organisation, Transport Malta. Many luxury and commercial yachts owned by wealthy individuals are registered and managed from Malta, and now Transport Malta is promoting itself as the best place to register executive jets. It targets not just the rich themselves, but also the people who handle their affairs - including their accountants, lawyers and financial advisors.

An accountant's view

The country needs more accountants than the Big Four can provide, which means there is a plentiful supply of other accounting and auditing firms, many of them owned by local companies such as Avanzia Tax Advisors and Ciantar Associates. They are all regulated by the Accountancy Board which oversees professional conduct and standards, and other aspects of practices and individuals operating in the profession.

Kevin Valenzia, territory senior partner for PwC in Valletta, says his country's professional practice firms support a broad spectrum of needs. They compare well with those in other countries, offering the same high-quality and value-added service as their foreign counterparts. "Our firm evidences this - we provide the same services at the same quality levels as all other firms within the PwC network," says Mr Valenzia. "Our people have gained significant work experience in PwC firms in, among other places, New York, London, Milan, Rome, Luxembourg and Jersey."

Major presence

PwC is by far the largest audit firm in Malta, with 15 partners, approximately 330 employees and a turnover of €15.4m in 2008. It does pretty much what it does everywhere else - provide audit, tax and business advisory services to business and financial organisations, from top-tier multinationals to small and medium-sized enterprises and public sector entities. The bedrock of its client base is "enterprises active in and committed to Malta", says Mr Valenzia, but the success of the local financial sector has given it a more financial and international orientation in recent years.

"EU membership has brought about new opportunities for overseas work which the firm has been relentlessly pursuing," he says. "International financial and tax services, and the provision of services to other firms within the PwC network, have been two areas benefiting from this trend, as has the statutory audit practice, which has enjoyed an influx of audits, conducted from Malta, of multinational companies operating in Malta. The result has been a remodelling of the practice, so that in 2008, 45% of income was derived from international clients."

A large number of law firms operate on the island, and although the major international law firms are not there, most have relationships with local legal practices. Leading advocates on the island include Fenech & Fenech, Chetcuti Cauchi, Camilleri Preziosi, David Griscti & Associates, Mamo TCV and Ganado & Associates.

The Maltese legal profession is long-established. Most lawyers have post-graduate degrees in various practice areas, financial services included, and many have had further training at major institutions and international law firms overseas, primarily the UK. The country's law firms are regularly listed in Chambers, Legal 500, and other directories based on peer recommendations.

Fenech & Fenech is Malta's oldest law firm. "We are engaged by banks, insurance companies, fund managers and promoters of investment funds to assist in setting up financial services businesses in Malta, and obtaining the necessary licences from the Malta Financial Services Authority," says Dr Rosanne Bonnici, a partner at the firm.

It has expertise in many disciplines, including aviation asset financing, ship finance, structuring special purpose vehicles to be used in collective investment structures, redomiciling offshore insurance captives or investment funds to Malta, and trusts.

"We cover the full range of legal issues, including matters such as the structuring of a group's operations from a tax planning point of view, general corporate and commercial issues, employment and immigration issues, and so forth," says Ms Bonnici. "We are the only firm with a fully dedicated marine litigation department."

"Malta is not aspiring to become a financial centre like New York, Frankfurt or London," adds Ms Bonnici. "However, the past five years have shown that Malta is well down the road to become a pillar in the economy. Malta is now a recognised domicile of choice for the funds sector. A stronger interest from international banks is also being registered, with Deutsche Bank being the latest in a string of banks to be licensed in Malta."

Reuben Buttigieg, managing director, Erremme Business Advisors

Wide range of Consultants

There are many home-grown consultants on the island. The likes of Erremme Business Advisors, Aequitas Strategy Consulting, Busuttil & Micallef and others provide advice, company formation services, contract drafting, back-office support and other services.

Erremme Business Advisors, for example, a management consultancy and accountancy firm established in 2002, has made a name for itself as a one-stop shop for start-ups and small to medium-sized growth companies in several sectors, including financial services. Managing director Reuben Buttigieg, who is also chairman of the management school at the Malta Institute of Management, spends a large part of his time promoting Malta as a potential Islamic financial centre. No sharia-compliant products are yet being offered in or from Malta, but Mr Buttigieg says it is only a matter of time before the island is used as a base to market such products to other parts of Europe and to north Africa.

One of the main problems for Islamic finance providers in Europe is that certain sharia-compliant banking products attract tax that conventional products do not. For example, the Islamic financing of a construction project in, say Italy, would involve various transfers of property from one entity to another that a conventional product would not involve, and these transfers would be subject to extra duty on documentation, capital gains tax and property tax. "However, a special purpose vehicle created in Malta to handle these Italian transfers would mitigate those taxes," says Mr Buttigieg. "One of the transfers would still be subject to tax but the second would not, creating a level playing field for the Islamic product."

He also sees opportunities for sharia-complaint funds to be domiciled in Malta, especially smaller funds which larger European jurisdictions may not consider worthwhile managing or administering. "We have a niche here which we can exploit, and I know of a number of applications for Islamic funds that are in process," he says.

In north Africa, banking services and financial regulation lack sophistication, and Islamic finance is not encouraged in some countries for fear of business rapidly draining away from conventional banks and threatening their solvency. Mr Buttigieg believes this provides an opportunity for banks to set up in Malta to offer Islamic financial services to north Africa. "They would have a registered bank here, operating within our well-regulated regime, and a representative office in, say, Morocco, selling the Islamic products. The main market would be for sharia-compliant project finance."

He points out that there are already banks using Malta to provide conventional products to north African countries - such as BAWAG Malta Bank, owned by Austrian and American interests - so it would not need a leap of faith to do the same for Islamic banking products. He admits, however, that for Islamic banking to happen in Malta, legal and regulatory changes would be needed.