Ganado Advocates Partner Conrad Portanier has acknowledged that while 2024 is a year characterised by financial services industry milestones, it is also a time for a number of key legislative reforms to take place in Malta.

His reflections came during his opening address for the ninth edition of the Annual Banking & Payments Law Seminar, held by Ganado Advocates in collaboration with the Malta Bankers’ Association (MBA) on Wednesday. The event served as an opportunity for individuals in the banking and payments industry to learn more about the latest updates to their practice, as well as share insights into particular issues.

During his address, Dr Portanier covered a range of topics, particularly noting that 2024 acts as a year of anniversaries for Malta’s financial services sector. This is marked by the 10th anniversary since the first banking seminar was held, 30 years since Malta launched itself as an international financial centre, 20 years since Malta joined the EU, and 10 years since Malta joined the Banking Union.

However, he also acknowledged that at the same time, 2024 also serves as an opportunity for Malta to tackle a number of key issues within various legislative areas, all linked to financial services in some manner.

Dr Portanier remarked that in his speech for the 2023 edition of the event, he had pointed towards the construction industry, the taxation regime, and the legal and judicial system as three important areas that Malta needs to urgently focus on.

He affirmed that we are witnessing the “first seeds of a proper reform” in the construction industry, driven by the efforts Jean Paul Sofia’s family and the public inquiry which followed after he tragically passed away in 2022.

The ninth edition of the Annual Banking & Payments Law Seminar by Ganado Advocates and the MBA

The public inquiry looked into the collapse of a building on Government land in Corradino, highlighting a number of shortcomings from Malta Enterprise and INDIS, including the fact that it should not have permitted the land to the developers responsible. The report prompted a number of changes and resignations of top officials, including that of Occupational Health and Safety Administration (OHSA) Chairman David Xuereb.

“Pressure on Government should be relentless to ensure a meaningful transition to a more regulated environment,” Dr Portanier added in his address.

“We in the financial services industry know a thing or two about independent regulation and supervision and we cannot but look with concern at half-hearted measures which only serve to temporarily placate public anger,” he continued.

Away from the construction sector, Dr Portanier also pinpointed the revision of Malta’s taxation system as an “enormous challenge” for Government. He said that it will be challenging for Government to lay out a new international taxation system that does not reduce Government revenue, while also “retaining a competitive edge to attract foreign investment.”

The advantages of the Maltese taxation system have long been appreciated by the business community, yet at the start of 2024, new EU rules came into effect introducing a minimum rate of effective taxation of 15 per cent for multinational companies active in EU member states. This directive allows member states the option not to apply it for a maximum of six years, and Malta has exercised its right to defer the implementation of these rules. Additionally, the Budget 2024 speech confirmed that Malta will retain its full imputation tax system.

“We continue to look forward to further information being published by Government, conscious that it is currently in negotiations with the European Commission,” Dr Portanier continued.

Additionally, he also said that Ganado Advocates and other stakeholders within the financial services industry have been constantly “harping on the challenges being faced by the legal and judicial system.”

Both criminal and civil courts in Malta have experienced significant delays in recent years, finding it difficult to keep up with demand. This was brought to light in 2022 after it emerged that femicide victim Bernice Cassar had filed domestic violence charges against her husband, but the case against the man, who has now been charged with murder, had been delayed for 18 months.

Dr Portanier said Government has announced proposed reforms to reduce delays in criminal proceedings, especially during the compilation of evidence stage and magisterial inquiries. This is in addition to the fact that work is being done for the creation of a Commercial Court.

However, Dr Portanier noted that aside from the aforementioned legislative challenges, a new task has to now be considered: the need to implement a “proper and functioning EU Proposals Screening Mechanism.” He said that such a role had previously been performed by the Malta-EU Steering Action Committee (MEUSAC).

In 2021, MEUSAC, seen as the first point of contact for people and organisations regarding matters relating to the EU, was changed to European Services in Malta (SEM), with the aim of building on MEUSAC’s work and strengthening the services it provides.

In his speech, the Ganado Advocates Partner noted that the need for such a screening mechanism was highlighted when the EU Emissions Trading Scheme (ETS), which made headlines for the substantial impact it is set to have on Malta and other Mediterranean countries, was being discussed.

“The application of the EU ETS hit Malta disproportionately with no one seemingly realising before it is too late,” he remarked.

“Clearly, the administrative infrastructure to identify possible issues in forthcoming EU legislation is not functioning suitably and efforts to improve this must start immediately, both by increased private efforts, but also through a Government platform,” Dr Portanier added.