Malta is comprised of a group of islands located in the Mediterranean Sea, south of Sicily, and 288km northeast of Tunisia. An estimated 516,100 people (est. 2021) live within just 316 square kilometers of land, making it one of the most densely populated areas within the European Union. The population density is 1,633/km2 (4,229.5/sq mi).
The governing of Malta is based on a republic, with a new president of the republic being elected by voters on a 5-year basis. The entire country of Malta is also divided up into 68 smaller sub-districts, each with separate councils for administration purposes. In 2003 a referendum was held to decide on membership to the European Union. A narrow percentage voted in favor of joining, and in 2004 Malta became a full member of the European Union. In 2008 the euro (EUR) replaced the Maltese lira (MTR) as the country’s national currency.
The Economy of Malta
Tourism, financial, and information technology-related industries play a significant role in Malta’s economy, with the service sector employing 68% of the total workforce. A further 29% of the workforce work within the industrial sector, with Malta’s main exports being electronics, machinery, and pharmaceutical items. Major export partners include Germany, Singapore, France, the UK, and the US.
Malta has few natural resources such as hydrocarbons, water, and foodstuffs (it only produces 20% of its entire food needs); therefore, it relies heavily on goods from other countries. Malta imported $19.18 billion worth of goods in 2021, more than a quarter of which was from Italy, with other import partners being the United Kingdom, France, and Germany.
While Malta managed to survive the economic crises of 2009 and remain relatively unharmed, it has had several problems that dented the economy, such as increasingly high water rates (due to its limited water supply) and high electricity rates. The budget deficit rate in 2020 stands at 9.7% of total GDP, in breach of the European Union’s 3% maximum allowed rate. The total GDP figure is $14.65billion (2020), and a GDP per capita of $27.884,64 (est. 2020).
Infrastructure of Malta
The Malta International airport (MLA) is the only airport within Malta, and it is located 5km southwest of the capital city of Valetta. It mainly services other European cities, with the busiest routes being London Gatwick and Heathrow, although Emirates airline has several flights weekly to Dubai. After a refurbishment, the old terminal has been transformed into a cargo area, and now several airlines transport freight items to European locations.
Partly due to Malta’s large import and export requirements, it ranks as the fourth country to have the most number of marine ships engaged in the carrying of cargo – with a total figure of 8594 (est. December 2019). Malta has three major ports: Malta Freeport, Marsamxett harbor, and the Port of Valetta. The Ċirkewwa Harbour also runs a frequent ferry service to the nearby island of Gozo.
The road system in Malta totals 3,096 km. Malta has the fourth-largest car ownership in the European Union, which considering the small size of the island, can make traveling in central areas difficult due to congestion. Malta has an efficient bus service network, which offers frequent services throughout the country. Buses are a popular method of transportation with locals and tourists alike, carrying an estimated 53.4 million passengers annually (2018). There is no current railway system in operation in Malta.
Since 1995 Malta has relied solely on oil to fulfill its electricity generation needs, the amount of oil consumption has also risen by 49% since 1990. The water infrastructure in Malta is poor, with frequent shortages and bans imposed in the country. Problems relating to the water and energy infrastructure have resulted in increasingly high rates for these services, detrimental affecting established businesses within the country.
Workforce in Malta
Over 95% of the population is Maltese, British residents make up 2.3%, and the remaining foreign inhabitants come from other Mediterranean counties. The official language of Malta is Maltese and English, Italian is also widely spoken.
Malta has a robust education system, with 4.6516% of the GDP being invested back into educational facilities. Education in Malta is based on the British model, whereby it is compulsory for children to attend primary school, then secondary school until the age of 16. The University of Malta was founded in 1592 and offers undergraduate and graduate programs in eleven different faculties. Undergraduate programs are entirely free of Maltese students and citizens of the European Union. Currently, 11,300 students are enrolled in courses at the college. Literacy rates are lower than many other developed Western cities, standing at 92.8%.
Business Expenses in Malta
The tax rates for individuals residing in Malta are based on a progressive pay-scale, ranging from 0%-35%. If an individual earns less than €9,100 per annum (single person), €12,700 (married person), or €10,500 (parent), the person is exempt from paying taxes.
On the other end of the scale, any individual earning over €60,001+ (single/married/parent), must pay 35% taxes. A foreign resident working in the country is only required to pay taxes from monies earned within Malta. If, however, they stay for longer than 183 days a year, they will be classed as a permanent resident. They must pay taxes on income earned from abroad and in the country.
Corporate tax rates are relatively high at 35%. However, there is no tax deduction at source for dividends, interest, or royalties. Malta is also implementing new incentives to attract foreign investors to the area.
The standard VAT rate is 18%. However, certain goods and services (medications, some foodstuffs, etc) have a reduced rate of 7% or 5% or 0%.
Office rentals are lower than many other European countries, with major industrial parks offering ready-to-move-in office space packages.
The minimum wage rate stands at just €777,10 per month, which is lower than other counties such as France, Germany, and the United Kingdom.