THE ACCOUNTANT
THE ACCOUNTANT ISSUE 2 | 2024
THE ACCOUNTANT magazine is issued quarterly.
Published by
EDITOR Maria Cauchi Delia
DESIGNER
Daniela Cutajar
ADVERTISING INQUIRIES theaccountant@miamalta.org
All correspondence, articles for publication and enquiries are to be addressed to:
The Editor MIA Professional Limited Level 1, Tower Business Centre Tower Street, Swatar BKR 4013, Malta.
The Institute does not necessarily concur with the views expressed by the authors in the articles published in this journal. The publishers and authors do not assume any responsibility for loss or damages incurred by any person acting or refraining from action as a result of any view expressed in this journal.
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President’s Address Mark Bugeja
It is my privilege to welcome you to another edition of The Accountant. Each article features and encapsulates the spirit of our profession and highlights the innovative approaches and collaborative efforts that define our community. It is always a pleasure to see so many accountancy professionals contributing to this publication and adding value to our readers in the industry and beyond.
Since I pen these few words a few weeks after the recent political elections, I would like to take this opportunity to extend my sincere best wishes to the six elected Maltese Members of the European Parliament. This position is of great significance and carries a high degree of responsibility, given the Institution’s growing role in the context of European policy development, not only as a colegislator but also due to the Parliament’s capacity to propose its own initiatives.
The European Parliament is a pivotal institution responsible for numerous pieces of legislation that impact our industry and our profession. In this context, it is imperative for the elected Maltese Members to always keep the interests of our jurisdiction and the industry in mind, while recognising the unique challenges faced by smaller island nations like ours. As an Institute we are always ready to offer our support on matters affecting our profession and the broader financial services sector. We look forward to maintaining an open channel of communication to ensure that new legislative initiatives do not create new hurdles and shackle our efforts towards growth.
Looking at the bigger picture, now that these elections are behind us, I express my hope that, as a nation, attention is refocused to building upon efforts to improve the country’s competitiveness and product offering, as we strengthen the unique
selling points of our jurisdiction. As members of the accountancy profession, we too have an important role to play. With many of us now exposed to international business, we are on the front lines, in different ways. We are so, because we represent our country when seeking to attract new business, new investment and new clients towards our shores. We are so because we are major stakeholders in the fight against financial crime, being uniquely positioned to detect red flags that other service providers interacting with the same customers might miss. This is due to our deeper insight and background knowledge about the individuals or funds involved in a transaction, coupled with our expertise. Indeed, the profession’s strengthened reputation has been a key reason which helped the country emerge from turbulences of recent times. Let us not rest on our laurels and keep working hard in this direction.
Our role is also important as leaders in bringing sustainable change in our country by playing a proactive role in the twin digital and green transition. Accountancy professionals play a crucial role in steering organisations towards digital innovation. Accountants can lead digital transformation by leveraging their expertise in financial data and processes to integrate advanced technologies such as artificial intelligence, blockchain, and data analytics into financial operations. By adopting these technologies, firms can streamline financial reporting and provide real-time insights that drive strategic decision-making. Our understanding of regulatory requirements and risk management puts us in a unique position to implement robust digital solutions while ensuring compliance and security. As trusted advisors, accountants can guide businesses through the complexities of digital change, fostering innovation and efficiency that can transform organisational
performance and competitiveness. This requires a deep comprehension not only of the capabilities of various tools and the added value these contribute, but also of their potential limitations. Moreover, we are well positioned to appreciate the risks posed by digital programmes, including cybersecurity threats and implications for business continuity, and therefore understand better the need to uphold strong controls and maintain accounting process integrity.
Similarly, we are leaders in driving the nation’s sustainability agenda. Companies are part of a dynamic ecosystem where their actions affect both the planet and people. Accountants need to spearhead this shift by embedding sustainability priorities into business operations through budgeting, forecasting, capital allocation, and performance evaluations. In the past few years, society has started to demand much more from organisations, with these being seen as significantly impactful on the community around it. I n an advisory role, accountants are well-placed to help businesses meet the expectations of investors and
the public, and to adapt to the changing regulatory landscape. Let’s live up to this role!
In this context, I cannot fail to acknowledge the exemplary role played by the Malta Institute of Accountants, which has emerged as a trusted and well-respected stakeholder in our industry. In the first six months of the year, amongst other work, we have brought to you three major conferences which addressed some of the hottest topics in the industry – and we have a lot more in store for you for the second part of the year. We will also keep striving to deliver our message – which is ultimately your message – in regular communication with regulatory authorities and other stakeholders, anticipating issues and providing solutions for the betterment of the profession.
To conclude, I would like to thank all the publication contributors, as well as to all members of the profession who week after week contribute in one way or another to the growth of our Institute.
info@gcsmalta.com
Message from MIA CEO Maria Cauchi Delia
Welcome to our second edition of The Accountant for this year.
Once again, I shall seek to use these few columns for a bird’s eye view to skim through some of the many activities that the Institute has been engaged in what was a very busy and dynamic first half of 2024. The accountancy profession continues to be impacted by several regulatory changes emanating from various sources, and as such, our team was constantly involved in engagements with the authorities as we sought to raise the issues that are of concern to our members while also taking proactive initiatives by putting forward proposals and recommendations.
Among the matters which alerted concern in the accountancy community, was the proposal presented in Budget 2024 which sought to introduce an audit exemption for certain entities. Having always called for simplification, we are the first to acknowledge the principle of simplifying audit requirements for certain entities, recognising the benefits of reducing administrative burdens while maintaining financial integrity. Consequently, the Institute has presented a proposed alternative assurance product for certain eligible companies that maintains some level of scrutiny while reducing the burden on smaller entities.
Discussions were also held with the Office of the Commissioner for Voluntary Organisations as part of the reform in this area. The Institute’s feedback revolved on elements of the legislation that regulates Voluntary Organisations from a financial reporting and auditing perspective. Our key message here was calling for changes that address disparities where smaller organisations at times end up with heavier regulatory burdens than larger-sized firms. This same concept was also highlighted in discussions on cooperatives, where even here, we advocated for stronger consistency in requirements related to reporting and auditing.
We also provided detailed feedback to the Consultation on the National Education Strategy, where we
presented our ideas towards a comprehensive education plan which aligns educational outcomes with the needs of industry, equipping students with the necessary skills and knowledge to contribute effectively to a rapidly changing global economy, particularly in view of the twin digital and green transition. Similarly, we have also put forward our position in response to the Consultation on the Digital Education Strategy.
As an Institute, we also been actively engaged beyond our shores, ensuring representation in key meetings and stakeholder networking to exchange best practice on solutions to key challenges in the profession, while also having a first-hand advantage in becoming aware of the key developments we are to expect in the months and years ahead. This allows us to be in a better position to anticipate trends and better prepare ourselves to advise our members accordingly. Some of the events which we participated in included the Mediterranean Finance Summit, organised by our counterparts in Cyprus, the Institute of Certified Public Accountants of Cyprus (ICPAC), during which I had the opportunity to share my views on the evolving role of financial leadership and MIA Council member, Ronald Mizzi, addressed the matter of sustainable finance and how finance leaders can drive sustainable business practices. Our IFAC Professional Accountants in Business Advisory Group (PAIBAG) representative, Charles Xuereb and myself, also participated in the IFAC PAIBAG meeting which addressed pertinent themes such as how financial and capital market regulators are incorporating nature-based risks and opportunities into their regulatory frameworks, examined how organisations are implementing ESG strategic ambitions and identified the next steps in thought leadership regarding the support Professional Accountants in Business (PAIBs) need from the profession.
We have also been actively participating in a number of Accountancy Europe working groups including physical attendance to meetings organised by the Anti-Money Laundering Party and the Sustainability Policy Group.
As CEO of the MIA, I also participate in Members Assembly meetings organised by Accountancy Europe. The recent one held in June involved several discussions including those on the status of the Corporate Sustainability Reporting Directive (CSRD) transposition, Environmental, Social and Governance (ESG) governance and Small and Medium Enterprises’ (SMEs) sustainability.
Similarly, during the past months, we continued providing our feedback with respect to upcoming changes in the regulatory environment within which the members of the accountancy profession work, including the ongoing significant developments in the field of sustainable finance. This included input with respect to the development of a European Sustainability Reporting Standards (ESRS) for listed SMEs and a voluntary reporting standard for non-listed SMEs which fall outside the scope of the Corporate Sustainability Reporting Directive, the proposed amendments to the local Code of Ethics, following the update to the International Ethics Standards Board for Accountants (IESBA) code, and European Securities and Markets Authority (ESMA) consultation on rules for External Reviewers of EU Green Bonds.
Over and above, our work in terms of addressing issues related to human resources remains as strong as ever. Besides our continuous engagement with authorities, we have also continued to strengthen our efforts at enhancing the attractiveness and the interest of the accountancy profession, putting more time and resources in our #AccountsForYou campaign. This time round, in the third edition of this campaign, we have not only continued with our now-established format of visiting schools and meeting hundreds of students this way, but, in collaboration with the Ministry for Education, Sport, Youth, Research and Innovation, we also kicked-off a series of visits to some firms in the industry. You can read more about this inside this edition of The Accountant.
As you can see, we are making significant strides for the industry, the profession, its members and firms. In this context, I would like to remind you that the MIA is now accepting membership requests from both individuals and firms. This membership offers numerous benefits, including becoming part of a robust Institute that plays a pivotal role and holds a key seat at the table on matters of national importance. Besides being a stamp of quality, I genuinely feel that this opportunity will be mutually beneficial in driving our respective objectives forward, thus ensuring mutual growth and success.
is nurtured & potential is reached.
NEWS ROUNDUP
Postgraduate diploma in regulation and compliance launched
The Malta Financial Services Authority (MFSA) Financial Supervisors Academy (FSA), in collaboration with the University of Malta, launched a new Postgraduate Diploma in Financial Regulation and Compliance. The objective of this educational qualification is designed to elevate competency levels within various fields in the Maltese financial services industry, setting a new standard endorsed by the MFSA. The curriculum is strategically developed to cover essential areas such as governance and internal audit, risk management, compliance, MLRO responsibilities, sustainable and digital finance, report writing and business ethics. Read more here.
Human Trafficking & Modern Slavery Guidance and Typology Report for Malta published
The Financial Intelligence Analysis Unit (FIAU) has announced the publication of a Human Trafficking & Modern Slavery Guidance and Typology Report for Malta. This report, representing a collaboration with the United Nations’ initiative Finance Against Slavery and Trafficking, seeks to develop an understanding of the issues surrounding human trafficking and modern slavery in Malta. It helps subject persons identify any reasonable suspicion of money-laundering associated with such criminal activity. Case-studies included in this report provide a deeper understanding of related red flags and indicators. Read more
New National Education Strategy Launched
Government has launched a National Education Strategy for 2024 to 2030, focusing on the three main pillars revolving around the welfare of educators and students, growth and fulfilment, and equality and inclusion. The strategy comprises 36 proposed measures and 153 initiatives in total. Key components of the strategy include a revision of the MATSEC examinations, a revised national curriculum, an emphasis on digital education and a new strategy for Mathematical literacy. The Malta Institute of Accountants had provided feedback during the consultation process leading to the launch of this Strategy.
Anti-money laundering: European Council adopts package of rules
The fight against money-laundering and the financing of terrorism is an ongoing one and always subject to updates and improvements. With this respect, the European Council adopted a package of anti-money laundering rules that will aid this purpose, thus protecting the European Union (EU) citizens and the EU’s financial system.
The new package will transfer all rules applying to the private sector to a new directly applicable regulation. In parallel, a Directive will deal with the organisation of national competent authorities whose aim will be to fight money laundering and countering the financing of terrorism (AML/CFT). Read more.
Malta Institute of Accountants signs Corporate Sponsorship Agreement with APS Bank
The Malta Institute of Accountants announces the signing of a new corporate sponsorship agreement with APS Bank Plc. This partnership underscores the efforts of both institutions towards supporting the development of the accountancy profession in Malta and in enhancing the standards of the industry in our country.
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SUSTAINABILITY CORNER
ISSB publishes its digital sustainability taxonomy, helping investors analyse sustainability disclosures efficiently
The International Sustainability Standards Board (ISSB) has published the IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy), fulfilling its promise to enable investors and other capital providers to analyse sustainability-related financial disclosures efficiently. Use of the ISSB Taxonomy by companies will enable investors to search, extract and compare sustainability-related financial disclosures as ISSB establishes its global baseline of Standards. Read more
EU Council adopts directive to delay reporting obligations for certain sectors and third country companies
The European Council has given its final approval to the Directive on time limits for the adoption of sustainability reporting standards for certain sectors and third country undertakings, which amends the Corporate Sustainability Reporting Directive (CSRD) to give the companies concerned more time to apply the European Sustainability Reporting Standards (ESRSs). The Directive adopted will postpone the adoption of sector-specific sustainability reporting standards for European companies and general sustainability reporting standards for non-European companies to 30th June 2026.
European Commission issues corrigendum to ESRS
The European Commission has issued a corrigendum to a Delegated Act which supplements the Accounting Directive as amended by the Corporate Sustainability Reporting Directive (CSRD). The first delegated act sets out cross-cutting standards and standards for the disclosure of environmental, social and governance information. Read more
EP approves agreement on ESG rating activities
The European Parliament has approved rules which will add considerable transparency and structure as to how Environmental, Social and Governance (ESG) ratings are undertaken and communicated. The new rules will regulate the ecosystem of ESG rating activities to allow investors to make more considered investments and fight greenwashing. Read more
CSDDD
The European Council has formally adopted the Corporate Sustainability Due Diligence Directive (CSDDD). This is the last step in the decision-making procedure.
This Directive lays down obligations and related liabilities for large companies regarding adverse impacts of their activities on human rights and environmental protection. The rules cover also the activities of the subsidiaries of these companies, and those of their business partners along the companies’ chain of activities. Read more
EFRAG ESRS Q&A Platform
To support the implementation of ESRSs, EFRAG has released the ESRS Q&A platform which aims to collect and answer technical queries that remain unresolved after comprehensive analysis by stakeholders.
Among others, through this platform one may access the 68 Explanations to respond to stakeholders’ technical questions on the European Sustainability Reporting Standards (ESRS) released by the European Financial Reporting Advisory Group (EFRAG). Read more
Implementation Guidance Documents (IGs)
EFRAG finalised its first three ESRS Implementation Guidance documents which reflect the outcome of the public feedback: EFRAG IG Materiality Assessment, EFRAG IG 2 Value Chain and EFRAG IG 3 ESRS Datapoints. Feedback statements prepared by the EFRAG Secretariat have also been released, illustrating how the public feedback is reflected in the final IGs.
The Malta Institute of Accountants participated in the consultation process leading to the publication of these documents. This was done through submission of feedback that was based on the work of the Sustainable Finance Reporting Working Group falling under the remit of the Sustainable Finance Committee. Read more.
Accountancy Europe’s ESRS Perspectives: Materiality Assessment and Value Chain
The ESRSs have been effective since 1st January 2024 for the first companies in the CSRD scope. The ESRS introduce a new reporting framework in Europe and include many new concepts which stakeholders may find challenging.
Accountancy Europe has prepared a series of publications summarising the ESRS provisions on Materiality Assessment and Value Chain, sharing their views on ESRS aspects that merit clarification and interpretation by the European Commission, as well as guidance by the European Financial Reporting Advisory Group (EFRAG). Read more
Master in Taxation
The University of Malta is again launching a two-year course leading to a Master of Arts in Taxation. The programme is offered as an interfaculty programme of the Faculty of Economics, Management and Accountancy and the Faculty of Laws. The Master of Arts in Taxation is a two-year interdisciplinary programme designed to integrate tax law with the fundamentals of corporate finance and microeconomics. Through the integration of legal,
economic, financial and governance study-units, students will acquire an understanding of how taxes affect decision-making and the financial and operational structure of firms. Students will be given the opportunity to gain multiple
skills required to undertake impact assessment exercises of existing and new tax systems, while also evaluating the economic, legal, financial, social and political considerations. Ethical principles are woven throughout the programme.
Further information about the course programme is available on the University of Malta website. Those individuals who are interested in attending the course may email Paula Cutajar on paula.cutajar@ um.edu.mt or Romina Mallia on romina.mallia@um.edu.mt for further information.
MIA diary
Education
Students get interactive glimpse into the world of accountancy
Taking strategic decisions, budgeting and planning for the unexpected in a fun and engaging way. As part of the #AccountsForYou campaign’s efforts to increase the visibility of the opportunities that an accountancy profession opens up to future professionals, earlier this Spring, the Institute hosted an engaging and interactive event aimed towards Year 10 students. With a blend of games, quizzes and real-world scenarios, the event provided an exciting glimpse into what a career in the profession entails.
179 students from private, public and church schools eagerly participated in various activities designed to stimulate their interest and curiosity about accounting.
The games included a life-size Monopoly, where students simulated scenarios mirroring real-life financial challenges, including mastering key decisions such as taking out mortgages or investing in property. From managing budgets to making strategic investment decisions, students gained insights into how accountancy professionals can provide value added to business leaders.
Following the event, positive feedback was shared by
educators and students alike.
Ms Paulianne Muscat, from St. Thomas More College Secondary (St Lucia) expressed confidence that the amalgamation of insights provided by the Accounts Education Officer from the Ministry for Education, Sport, Youth, Research and Innovation and the methods gleaned from the workshop will significantly enhance her teaching approach. “The fusion of innovative techniques and practical insights gained from the workshop will undoubtedly enrich the learning experiences of my students” she added.
Ms Lara Vella Petroni, from San Anton School said that the students loved this experience, remarking how they expressed their gratitude for the organisation of this outing.
Miett, a student from Newark School expressed his enthusiasm
for participating at this event which he described as enjoyable and fun, while auspicating a longer time allocation for such initiatives. “I found that the event engaged my skills and helped me improve”, young Miett added when questioned to assess whether he felt the event assisted his effort in learning Accounts at school.
In addition to the games, interactive quizzes tested students’ knowledge of accounting principles and concepts. With each correct – and wrong – answer, they achieved a deeper understanding of the profession’s significance in ensuring financial transparency and accountability.
Students also had the opportunity to interact with young professionals from the accountancy field thanks to the presence of various professionals
from Deloitte, Grant Thornton Malta, KPMG Malta, PwC Malta and RSM MT who participated and led the different activities.
This event tied in with several other activities held throughout the scholastic year during which the Institute continued to secure presence in several educational institutions across the island as part of its ongoing campaign.
The Institute was supported by the Ministry for Education, Sport, Youth, Research and Innovation particularly the Directorate for Learning and Assessment Programmes Accounts Department in putting up this event.
Students experience professional accountancy life during firms’ visits
Building on the successful informative sessions hosted at 16 schools as part of the #AccountsForYou campaign, the Institute has expanded its ambitiousness this year by
Conferences
MIA hosts AML Conference 2024 Accountancy and industry stakeholders were taken through the latest developments concerning money-laundering during the traditional AML Conference 2024 hosted by the Malta Institute of Accountants in collaboration with the Financial Intelligence Analysis Unit (FIAU).
The National Risk Assessment (NRA) for 2023, which had been published just a few weeks
introducing and organising visits to firms. Through this initiative, the students’ knowledge about the accountancy profession was enhanced and they were able to visualise a potential future work environment whilst understanding the day-to-day operations within a professional setting.
The initiative involved educative and engaging visits to five different firms, namely Deloitte, Grant Thornton, KPMG, PwC and RSM, offering valuable exposure to 315 students from 16 different schools from Malta and Gozo. The respective firms organised activities that enabled students to apply their soft skills alongside their accountancy knowledge, providing a comprehensive learning experience.
Speakers from the firms engaged with students, sharing their personal experiences, work insights and perspectives on the different educational paths towards accountancy, notably a university degree or ACCA qualification.
The students were also able to gather first-hand experience of the corporate lifestyle, through tours of the firms’ offices and departments.
These visits were organised with the support of the Ministry for Education, Sport, Youth, Research and Innovation.
prior to this event, served as a backdrop for the discussions, with key speakers highlighting the need for subject persons to incorporate the risks outlined in this updated NRA into their risk assessment procedures, and to thoroughly review and update controls, policies, and procedures as needed to address and mitigate the identified risks.
Different panels, with the participation of regulatory
Firm Visit
AML Conference
and private sector experts in this field, focused on the key regulatory developments impacting the AML world, including the new EU AntiMoney Laundering Directive and the establishment of AMLA, the EU-wide anti-money laundering agency.
Regulatory discussions were also backed with real-life scenarios which provided attendees with an opportunity to better understand the significance of conducting thorough checks during onboarding, understanding a client’s business model and the origin of wealth, and the importance of continuous monitoring.
An underlying element which strongly emerged throughout this event was the will of the different industry stakeholders to work together and push in the same direction to safeguard and enhance the reputation of Malta’s jurisdiction, which is a fundamental element in strengthening the country’s competitiveness.
The MIA AML Committee contributed to the organisation of this Conference, which was supported by Citadel Insurance, Thomson Reuters, Domain Academy and FinXP.
MIA PAIB Conference Beyond the Bottom Line: Redefining Success
Digitalisation, sustainability and the role of accountants in driving higher value added within their organisations and aligning with Malta’s competitiveness agenda, were among the key themes addressed during this year’s PAIB Conference hosted by the MIA at the Xara Lodge.
During the Conference, discussions highlighted the need to strengthen digital knowledge and further invest in digital tools as a critical success factor in the years ahead, given business challenges including human resource scarcity, while representatives from FIAU, MBR, MFSA and MTCA acknowledged the growing regulatory complexities, largely driven by
new European and international legislation and standards.
In addition, a stakeholder panel featuring representatives from major banks aimed to strengthen ties between the profession and the banking sector, which is crucial for company success.
This year’s PAIB conference, organised by the MIA PAIB Group, was supported by Scope Solutions and Softline Computer Systems.
MIA SMP Conference Now to Next: Thriving in Transition
The MIA’s Conference targeting small and medium practitioners (SMP) served as a timely reminder of the pressing issues facing the smaller practitioner today, investigating the key elements associated with securing a successful transition to the new realities facing the industry.
With a focus on digitalisation and sustainability, experts shared insights on how these evolving trends are reshaping the profession and discussed in detail the impact of emerging regulations on accounting practices and client relationships, emphasising the factors influencing decisions regarding energy consumption, sustainability practices, and longterm corporate strategies.
The MIA’s Conference targeting small and medium practitioners (SMP)
MIA PAIB Conference
The Conference also covered the latest and upcoming developments in banking and in the realm of tax, with discussions focusing on elements such as corporate tax reform, transfer pricing and succession planning with its fiscal implications.
The Conference, organised by the MIA SMP Group, was supported by Thomson Reuters and Scope Solutions, with the latter also sponsoring Networking Drinks held at the end of the proceedings.
MIA CEO participates in FCM International Conference and General Assembly
MIA CEO Maria Cauchi Delia was invited to participate in the Federation of Mediterranean Certified Accountants’ International Conference and General Assembly, held in Lisbon in the last week of May. This year’s event addressed key issues impacting the accountancy profession in the Mediterranean region. This was done in the context of the organisation’s role of contributing to the economic development of the region. The Federation of Mediterranean Accountants (FCM) an Acknowledged
Accountancy Grouping of IFAC. It established permanent links with several relevant stakeholders in the Mediterranean area. The Institute’s participation and exposure at similar events enhances its visibility of developments in the profession and the expectations of international partners in view of expected regulatory changes, thus strengthening the MIA’s ability to adapt and prepare for the key challenges ahead in the industry.
MIA CEO joins finance leaders in Mediterranean Finance Summit 2024
Ms Maria Cauchi Delia, MIA CEO, joined a number of international finance leaders called to address the 3rd Mediterranean Finance Summit 2024, hosted by the Institute of Certified Public Accountants of Cyprus on 23rd and 24th May. The Summit, held in Limassol, addressed crucial financial challenges and opportunities shaping the global landscape, focusing on the role of digital transformation in optimising financial operations, navigating evolving regulatory landscapes, leveraging Artificial Intelligence and data analytics for informed decision-making, and fostering sustainable practices for
long-term growth. Ms Cauchi Delia shared her views during a panel discussion which addressed the evolving role of financial leadership. Mr Ronald Mizzi, an MIA Council Member, and a member of the MIA Sustainable Finance and Financial Services Committees, also participated in this event, sharing his views in a panel on green investing and Environmental, Social and Governance (ESG).
Institute represented at IFAC PAIBG meeting in Cape Town
The latest IFAC Professional Accountants in Business Advisory Group Meeting (PAIBAG) was held in Cape Town, South Africa, on 19th and 20th March 2024. This event addressed issues such as how the financial and capital market regulators are brining nature-based risks and opportunities into the scope of financial regulators. The PAIBAG also explored how organisations are operationalising ESG strategic ambitions, identifying the next steps in thought leadership on the level of support PAIBs need from the profession. Discussions also explored how Artificial Intelligence is transforming the work and role of PAIBs. The Institute was represented by its CEO, Ms Maria Cauchi Delia, and its representative on the PAIBAG, Mr Charles Xuereb.
IFAC PAIBG meeting in Cape Town
Mediterranean Finance Summit 2024 in Limassol
Company Service Providers: Gatekeepers to Malta’s Financial System
Company Service Providers (CSPs) are particularly vulnerable to money laundering and terrorist financing risks due to their role in forming companies and other legal entities. Nonetheless, they are essential gatekeepers to Malta’s financial system, often serving as the first point of contact for individuals and entities looking to invest in Malta. In this regard, CSPs play a crucial role in preventing criminals from using legal entities to obfuscate the ownership of illicit assets. The Malta Financial Services Authority (hereinafter referred to as MFSA or the Authority) recently published “The Nature and Art of Financial Supervision Volume X – Company Service Providers Reform” which outlines the reforms implemented in the CSP sector. This document elaborates on the expectations of the MFSA for current and prospective CSPs.
The purpose of this article is to briefly examine the MFSA’s CSP reform, highlighting its objectives, implementation, and the positive outcomes for Malta’s financial sector. The central argument of the article is that the comprehensive reform of the CSP sector by the MFSA has significantly strengthened Malta’s financial system by enhancing regulatory oversight, ensuring compliance with international standards, and fostering a risk-based and proportionate regulatory framework.
The CSP reform not only ensures that CSPs adhere to fit and proper standards, good business practices, and legal and AML/CFT requirements, but also categorises CSPs according to the nature and complexity of their services. As a result, the reform has effectively reduced the sector’s risk profile and contributed to a more robust, transparent, and resilient financial environment in Malta.
The MFSA’s CSP Sector Reform
In 2019, the MFSA initiated a comprehensive reform of the CSP sector, drawing on years of regulatory
experience and incorporating recommendations from international bodies such as the Financial Action Task Force (FATF) and MONEYVAL. The reform aimed to enhance regulatory clarity by removing exemptions previously available to certain professionals and “de minimis” providers. This change has allowed the MFSA to better identify and monitor those operating as CSPs in Malta.
The MFSA’s reform considered the varying business models of CSPs, recognising differences in the scale and complexity of their operations. For instance, an individual who was acting as a director for a few companies under the “de minimis” rule operated differently from a firm providing comprehensive company formation and registered office services. To address these differences, the Company Service Providers Act was amended to categorise CSPs into different classes based on their service range and complexity. A new CSP Rulebook was published in March 2021, outlining specific requirements and risk-based rules for each class. The CSP Rulebook was the result of months of consultation with stakeholders whose feedback was taken on board where possible.
Authorisation Process and Expectations
The MFSA developed a tailored application process for CSPs, considering that many applicants were already providing CSP services. The aim of the reform was to meet two objectives: ensuring fit and proper standards, basic good business standards, and applicable legal and Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) requirements are met on an ongoing basis, while applying a risk-based and proportionate regulatory approach. To achieve this, the CSP reform project centred around three main changes:
• Mandatory Authorisation: Anyone providing CSP services to third parties by way of business, including warranted professionals, was required
to apply for authorisation from the MFSA. Transitory provisions were included in the legislation to allow those needing to apply for authorisation to prepare for this change gradually.
• Classification of CSPs: The introduction of three classes of CSPs based on the services provided, as outlined in the Schedule to the amending Act. This classification allows for a more tailored regulatory approach depending on the nature and complexity of the CSP’s activities.
• Shift from Registration to Authorisation: All CSPs, including those already holding a Certificate of Registration under the CSP Act, had to seek authorisation. This shift ensured a higher standard of scrutiny and compliance.
To ensure a smooth transition, the Authority set two legal deadlines: one for CSPs classified as “under threshold” and another for those “over threshold”, allowing the latter to operate under provisional authorisation until November 16, 2022. During this period, applicants were assessed for their fitness and propriety, and their business models were scrutinised to ensure compliance with regulatory requirements.
A risk-based approach was adopted, with the MFSA conducting interviews and inspections focusing on AMLCFT, and overall compliance. By the end of the process, 276 CSPs applied for authorisation.
CSP Applications: Phase 1
Authorised
Provisionally
Authorised
Withdrawn/refused
Between 16th May 2021 and 16th November 2021, 58 applicants were fully authorised, 136 were provisionally authorised, and 82 applications were withdrawn or refused. During the second phase, between 17th November 2021 and 16th November 2022, 100 applicants were approved, while 38 applications were withdrawn.
Applications: Phase 2
Engagement with Stakeholders
Throughout the reform process, the MFSA engaged extensively with local regulators, including the Financial Intelligence Analysis Unit and the Malta Business Registry, to facilitate a smooth transition for CSPs seeking authorisation. Industry participants and their representatives were kept informed through regular updates and joint outreach webinars, explaining the new requirements and expectations.
In addition to these efforts, earlier this year the MFSA hosted an international conference highlighting Malta’s pioneering initiatives in regulating trustees and CSPs. This event provided a platform to discuss the successes and challenges of the reform, with key speakers including international experts and MFSA officials sharing insights on best practices and the importance of a robust regulatory framework. The conference underscored Malta’s commitment to maintaining high regulatory standards and fostering collaboration between regulatory bodies and industry stakeholders. This engagement reinforced the significance of continuous dialogue and knowledge exchange in achieving effective supervision and compliance.
Ongoing Guidance and Compliance
Recognising the need for clarity regarding its expectations, the MFSA issued a Guidance Note on post-authorisation requirements, encouraging CSPs to perform gap analyses to ensure compliance. The “Nature and Art” publication on the CSP Reform groups these expectations into four main categories: • Knowledge of Rules at Application Stage: Applicants should have a thorough understanding
Table 1: Breakdown of CSP Applications as at 16 November 2021
Table 2: Breakdown of CSP Applications at as 16 November 2022 CSP
of the applicable rules and demonstrate how they will adhere to these rules in practice.
• Fitness and Properness: Applicants must provide complete and transparent information, with ongoing obligations to report any changes affecting their fitness and propriety.
• Robust Governance and Compliance Culture: CSPs should instil a compliance culture within their organisations, ensuring strong governance frameworks and proactive management involvement.
• Conflicts of Interest and Risk Management: CSPs must have clear policies to identify and manage conflicts of interest effectively.
These efforts in providing ongoing guidance and ensuring compliance have laid a strong foundation for a more resilient CSP sector. By implementing a risk-based and proportionate regulatory framework, the MFSA has significantly enhanced the oversight and integrity of CSPs, ensuring they meet high standards of conduct and regulatory compliance. As a result, the MFSA has observed significant improvements in the sector’s risk profile, leading to a notable impact highlighted in the subsequent
section. This comprehensive approach underscores the MFSA’s commitment to fostering a robust, transparent, and resilient financial environment in Malta.
Impact of the Reform
The CSP Reform has had a positive impact on Malta’s financial sector. According to the National Risk Assessment 2023, the sector’s overall risk rating decreased from High in 2018 to Medium High in 2023. This improvement is largely attributed to the reform initiated by the MFSA in 2019, which effectively raised the bar for CSPs by implementing stringent regulatory measures.
As a result of the reform, all professionals and individuals operating as CSPs are now under the MFSA’s licensing and supervisory remit. This change has led to a 70% increase in the licensed CSP population over three years, with over 290 CSPs currently under ongoing scrutiny. These entities are subject to fitness and propriety assessments, which significantly reduce the risk of exploitation by criminals. In the interest of better regulation, the
MFSA is reviewing the CSP regime to enhance its proportionality and robustness.
Conclusion
The MFSA’s reform of the CSP sector represents a significant milestone in enhancing the integrity and transparency of Malta’s financial system. By eliminating previous exemptions and introducing a risk-based, proportionate approach to regulation, the MFSA has strengthened its oversight capabilities and aligned its practices with international standards set by bodies such as the FATF and MONEYVAL. The Authority’s commitment to a risk-based approach ensures that regulatory requirements are tailored to
References
Malta Financial Services Authority, ‘Guidance on the Fitness and Properness Assessment Applied by the Authority’ (2019) https:// www.mfsa.mt/wp-content/uploads/2019/06/20190611_Fitness-andProperness-Guide-1.pdf accessed 19 May 2024.
Malta Financial Services Authority, ‘Consultation on the Reform of the Company Service Providers (CSP) Sector’ (2019) https://www.mfsa.mt/ wp-content/uploads/2019/10/20191022-CSP-Consultation.pdf accessed 19 May 2024.
Malta Financial Services Authority, ‘The CSP Reform – Your Questions Answered’ https://www.mfsa.mt/publication/the-csp-reform-yourquestions-answered/ accessed 19 May 2024.
Malta Financial Services Authority, ‘CSP Reform – What Happens Now?’ https://www.mfsa.mt/publication/csp-reform-what-happens-now/ accessed 19 May 2024.
Malta Financial Services Authority, ‘Feedback Statement to the Consultation Document on the Updated CSP Rules’ (2020) https://www. mfsa.mt/wp-content/uploads/2020/12/20201215-Feedback-StatementCSP-Rules.pdf accessed 19 May 2024
Malta Financial Services Authority, ‘The New Company Service Providers Regime (2020) https://www.mfsa.mt/publication/the-new-companyservice-providers-regime-in-light-of-act-l-of-2020/ accessed 19 May 2024.
Malta Financial Services Authority, ‘The New Company Service Providers Regime: A Practical Overview on Implementation and Application Process (Morning Session)’ https://www.mfsa.mt/publication/the-new-companyservice-providers-regime-a-practical-overview-on-implementation-andapplication-process-morning-session/ accessed 19 May 2024.
Authors
the specific risks and complexities of different CSPs, promoting a more effective and fairer regulatory environment.
The MFSA will continue to review and adapt its regulatory framework to maintain a degree of proportionality and responsiveness to the evolving financial landscape. This ongoing refinement aims to safeguard the financial system while supporting the growth and development of the CSP sector in Malta. By fostering a culture of compliance and robust governance, the MFSA is creating a more secure and reputable financial environment, benefitting all stakeholders involved.
Malta Financial Services Authority, ‘MFSA’s Company Service Providers Reform Reduces Sector’s Risk Levels’ (2023) https://www.mfsa.mt/ publication/mfsas-company-service-providers-reform-reduces-sectorsrisk-levels/ accessed 19 May 2024.
Government of Malta, ‘National Risk Assessment 2023’ https://www.gov. mt/en/PublicNRA_Dec2023-5.pdf accessed 19 May 2024.
Malta Financial Services Authority, ‘The Nature and Art of Financial Supervision - Volume X - TCSPs’ (2024) https://www.mfsa.mt/publication/ the-nature-and-art-of-financial-supervision-volume-x-tcsps/ accessed 19 May 2024.
Malta Independent, ‘MFSA’s Company Service Providers Reform Reduces Sector’s Risk Levels’, https://www.independent.com.mt/ articles/2024/04/15/news/mfsas-company-service-providers-reformreduces-sectors-risk-levels-6736213452/ accessed 19 May 2024.
Malta Financial Services Authority, ‘MFSA Thematic Review Aims to Continue Strengthening Further Governance and Compliance Standards’ (2024) https://www.mfsa.mt/publication/mfsa-thematic-review-aims-tocontinue-strengthening-further-governance-and-compliance-standards/ accessed 19 May 2024.
Malta Financial Services Authority, ‘Malta’s Pioneering Initiatives in the Regulation of Trustees and CSPs Highlighted During MFSA’s International Conference’ (2024) https://www.mfsa.mt/news-item/maltas-pioneeringinitiatives-in-the-regulation-of-trustees-and-csps-highlighted-duringmfsas-international-conference/ accessed 19 May 2024.
Christopher P. Buttigieg is the Chief Officer responsible for Supervision at the Malta Financial Services Authority (MFSA), a member of the Board of Supervisors of the European Banking Authority and European Securities and Markets Authority (ESMA), was the Chair of the ESMA Data Standing Committee (until December 2022) and is currently the Chair of the ESMA Proportionality and Coordination Committee. He is an Associate Professor in the Banking and Finance Department of the University of Malta and has a PhD in Law Studies focusing on financial regulation from the University of Sussex (UK).
Alison Cortis is the Deputy Head (Authorisations) in the Trusts and Company Service Providers Supervision Function at the MFSA.
The opinions expressed in this paper are those of the authors at the time of writing and do not necessarily reflect those of the MFSA, ESMA or EBA. Any errors or inaccuracies are attributable exclusively to the authors.
Enhanced compliance yields dividends in fighting financial crime
Interview with Mr Alfred Zammit, Director of the Financial Intelligence Analysis Unit
The fight against financial crime is firmly at the centre of Malta’s efforts to enhance the competitiveness of the financial services jurisdiction. In this collaborative effort, accountancy professionals join major stakeholders in the industry in playing a fundamental role in achieving this objective.
Seeking to get a better understanding of where things stand in addressing money-laundering (ML) and terrorist financing (TF) on our shores, The Accountant reached out to Alfred Zammit, Director of the Financial Intelligence Analysis Unit. The National Risk Assessment (NRA), published earlier this year, provides an excellent backdrop to take stock of the current situation and discuss the way forward accordingly.
In principle, the NRA paints an improved picture over the previous exercise, with lower levels of residual risk for money laundering across various industries, including the accountancy profession. However, areas of concern persist.
“The National Risk Assessment allowed us to gauge what the situation is at the national level especially when it comes to the ML/TF risks that the country is facing”, Mr Zammit explains. “Work is now underway on drafting a national strategy to address the identified vulnerabilities, with specific action points to be assigned to the different authorities involved. This may translate into legislative proposals to address possible obstacles arising from the current law, increased guidance and outreach initiatives, and more focused supervisory and enforcement activities where higher ML/TF risks have been identified”, he adds.
We narrowed down the NRA’s assessment to issues concerning accountancy professionals and tax advisors. Overall, the NRA has lowered the moneylaundering risk associated with the accountancy
profession, which is significant recognition of the work carried out in recent years, but called for improved effectiveness in the mitigating measures and the quality and quantity of the reporting of suspicious transactions.
Mr Zammit notes that in practice, this change in approach is quite evident. “Over the past few years, subject persons have embraced compliance and the resulting responsibilities. This is evident from the investments being made by them in compliancefocused resources which have significantly increased and show no sign of dropping. Subject persons have become more open to approaching us with their difficulties for support, viewing us as more than just the regulators.”
He adds that this is a clear indication that the private sector wants to be more compliant and more proactive. “Accountancy professionals and tax advisors are no exception, and this stems from the excellent working relationship we have with the Malta Institute of Accountants that has led to several outreach initiatives within the space of AML.”
The FIAU Director however calls on improved readiness on the part of accountants to report suspicious transactions.
“Reporting is one of the best measures to assess the effectiveness of the ML/FT framework. In the accountancy profession it is undeniable that even though the reporting rate has increased over the period 2019 to 2023, there is room for improvement”, he warns.
Data extracted from the NRA shows that only 9% of accountancy professionals subject to AML/CFT requirements have submitted reports. Mr Zammit’s message to the profession is loud and clear: “Given the size of this sector, we expect more”.
Naturally, this issue goes beyond the profession, and is also present in other non-financial sectors. “The silver lining is that reports filed by the non-financial sector, tend to be of quite good quality” he notes.
Regarding tax advisors, on the other hand, the assessment acknowledges limitations faced by such practitioners, particularly the lack of sufficient guidance, including on international illegitimate tax planning. For the FIAU Director, there is an urgent need to clearly define what constitutes tax advice and secondly to ensure that all tax advisors falling under this definition are registered on the FIAU’s systems.
“There are ongoing discussions with key stakeholders, including the Malta Institute of Accountants, to define tax advice at least for the purposes of the PMLTFR. Once this issue is resolved, it will be easier to identify tax advisors and actively engage with them”, he explains.
Whilst these matters are under discussion, the FIAU has already worked with the Malta Institute of Accountants, the Malta Institute of Taxation and the Chamber of Advocates on a document outlining red flags that might be indicative of ML related to tax evasion. “This is a process which could be replicated to provide additional guidance to this specific sector, but prior to doing so, it is important to clearly define the sector”, Mr Zammit insists.
While highlighting his expectations from accountancy professionals, the FIAU head is keen to demonstrate his awareness of the challenges faced by the industry, particularly relating to regulatory expectations. In this context, he reveals that a thorough review of the risk evaluation questionnaires (REQs) is underway, aimed at gathering higher-quality data while also reducing reporting burdens where possible.
Mr Zammit also shares with The Accountant several initiatives showcasing efforts towards the streamlining of regulatory and supervisory processes across authorities. “The FIAU, the Malta Financial Services Authority and the Malta Business Registry seek to coordinate their supervisory activities focusing on Company Service Providers and the companies they service, to limit carrying out examinations on the same entity in repeat succession, or worse, at the same time”, he suggests.
Another initiative which forms part of the Malta Financial Services Advisory Council’s Strategy is to simplify the collection of data and information from
subject persons, reducing the number of returns and requests that each authority requires. Zammit argues that in the end it is also in the interest of supervisory and regulatory authorities to do away with duplication, as resources, which are also being invested from their side, could be put to better use.
Going forward, we ask Mr Zammit to provide visibility on what to expect from the FIAU in the months ahead. “As part of our milestones to enhance transparency and partner experience, the FIAU has published its supervisory priorities for the ongoing supervisory cycle. We are also steadily advancing towards synchronising our guidance and outreach efforts with our supervisory priorities, empowering subject persons to self-assess and remediate proactively ahead of examinations”, he explains.
A significant element in the fight against money laundering is definitely technology, with more tools available to all parties in the equation.
“With more firms dependent on technology to deliver their services and products, it is necessary for us to understand the tools being used by those we supervise. Whilst technology is often used by criminals to launder proceeds, it is also increasingly used to commit crimes like fraud. Being able to identify these trends and typologies allows us to provide more relevant intelligence to our law enforcement authorities and to subject persons through publications and training events”, Mr Zammit explains.
With criminals increasingly using technology in their activities, there is no option for stakeholders but to invest further in having matching or better capabilities. “AML/CFT systems have long been part of the solution for resource-intensive processes. With the increasing emphasis placed on efficiency, speed and a positive customer experience, technology can be expected to play an increasingly central role in ensuring that all relevant obligations are met with minimal disruptions to business”, he adds.
Naturally, technology will run hand in hand with regulatory standards. The past years have not been devoid of regulatory developments, but still, further changes are on the horizon. A new European Union (EU) AML/CFT legislative package has been adopted by the European Parliament earlier this Spring.
“The EU AML/CFT legislative package will bring about some major changes” the FIAU Director explains. “To mention a few, there will no longer be the need to
transpose any obligations into national law as these will result from directly applicable EU regulations. Furthermore, there will be new activities that will attract AML/CFT obligations, and a renewed emphasis on restrictive measures. These changes will impact the FIAU and other authorities having AML/CFT or sanctions responsibilities at the national level. We are already assessing what changes will be necessary to become integrated with the EU’s new anti-money laundering authority (AMLA).”
Zammit discloses that the matter is also being considered from the national perspective to evaluate the impact on other authorities and how to ensure that, as a country, Malta is fully aligned and prepared to implement the EU’s new AML framework with as little disruption to the industry as possible.
“We are heavily involved in the groundwork to ensure that AMLA can start operating within the shortest time possible. The European Commission and the European Banking Authority have set up several working groups to discuss the possible implications of AMLA for national AML/CFT supervisors and to come up with proposals on the more important drafting mandates entrusted to Anti-Money Laundering Authority (AMLA).”
Mr Zammit adds that the FIAU is actively participating in almost all these working groups. “We believe that we have a lot to contribute through our experience both as a Financial Intelligence Unit and as a supervisor. It is important to be present to ensure that smaller jurisdictions like Malta are not ignored when regulatory obligations are being drafted.”
In parallel, the FIAU continues to invest in raising awareness within the industry. It is undertaking a series of initiatives to ensure subject persons’ awareness of the AML/CFT package and what it implies. “When the AML/CFT package is fleshed out, we aim to continue informing and where possible consult with the private sector on the changes taking place.”
In conclusion, Mr Zammit’s parting message is for all stakeholders to lookout for any consultation documents issued by the FIAU or supranational authorities. “I cannot stress enough the importance to provide feedback on any proposals to ensure that our reality is considered by the European legislators and supranational authorities. I strongly encourage all sectoral representative bodies to gather feedback from their members and submit it in time”, he concludes.
Alfred Zammit, has been the Director of the FIAU since December 2023, having joined the Unit in 2010. He provides strategic direction and ensures compliance with Maltese law and international standards, represents the FIAU in global forums like the Egmont Group, EU FIU Platform, and the European Banking Authority’s AML Committee, and serves as a Moneyval assessor. Mr Zammit actively participates in AML/CFT training and Malta’s National ML/TF risk assessments. He chairs FIAU committees, including the Compliance Monitoring Committee. Mr Zammit holds a B.Com. (Hons) in Management and Economics from the University of Malta and has experience with the Central Bank of Malta and the private sector.
Malta Institute of Accountants signs corporate sponsorship agreement with Scope Solutions
The Malta Institute of Accountants announces the formalisation of a corporate sponsorship agreement with Scope Solutions, an innovative firm specialising in cloud applications for businesses and accounting firms.
This partnership between MIA and Scope Solutions also reflects commitment to driving innovation, knowledge sharing and professional development within the accounting sector.
Profile
Overview of the Investment Funds regime in Malta
Malta, a small yet strategically located island in the Mediterranean, has emerged as a vibrant hub for financial services, including Investment Funds. The country’s regulatory framework, European Union (EU) membership, professional expertise, and attractive tax regime make it an appealing destination for Fund managers, promoters, and investors alike. The national commitment to financial services innovation, underpinned by a progressive legal framework, ensures Investment Funds thrive, contributing significantly to the local economy.
Regulatory Framework
The Maltese Investment Fund industry operates under a robust regulatory framework designed to ensure transparency, protect investors, and maintain the integrity of the financial system. The Malta Financial Services Authority (MFSA) plays a central role in overseeing Fund operations, compliance, and reporting.
Key legislation includes the Investment Services Act, Chapter 370 of the Laws of Malta. This Act outlines the licensing requirements and operational guidelines for Funds and managers.
This section will explore the regulatory landscape and the impact of EU Directives on Maltese Funds.
Regulatory Authority:
The MFSA is the regulatory body responsible for overseeing Investment Funds in Malta. It supervises fund managers, ensures compliance with regulations, and maintains the integrity of the financial system.
Undertakings for Collective Investment in Transferable Securities (UCITS) Regulations: Malta has implemented the UCITS IV and UCITS V Directives, ensuring alignment with EU standards for UCITS. This framework allows for the establishment and management of UCITS funds, offering a passport for distribution throughout the EU.
Alternative Investment Funds (AIFs) Regulations:
Malta also caters for AIFs through its Alternative Investment Fund Managers Directive (AIFMD)
implementation. AIFMD regulates the management and marketing of AIFs within the EU, ensuring investor protection and market integrity.
Fund Structures:
Malta offers a variety of fund structures, including SICAVs (investment companies with variable share capital), SICAFs (investment companies with fixed share capital), and limited partnerships. These structures provide flexibility to cater for different investor needs and strategies.
Taxation:
Malta’s tax regime is favourable for investment funds, with funds being tax neutral and also a tax refund system that can reduce the effective tax rate of Management Companies domiciled in Malta on income generated by Funds. This tax efficiency, combined with the EU passporting rights, makes Malta an attractive jurisdiction for Fund establishment and management.
Service Providers:
Malta has a robust ecosystem of service providers, including fund administrators, custodians, legal advisors and audit firms, to support the operational needs of Investment Funds.
Process for Setting Up a Fund
Setting up an Investment Fund in Malta involves a series of steps, from the determination of the Fund’s strategy to regulatory approval and launch. Fund promoters must decide on the Fund structure, prepare the necessary documentation, and meet capital and operational requirements. The process includes engagement with the MFSA for licensing and adherence to legal and regulatory standards. The steps to be followed are summarised below:
1. Set-Up
Determining the Fund’s strategy, structure, and target investor base.
2. Preparation
Drafting the necessary documentation, including the offering memorandum/supplement and Articles of Association.
3. Regulatory Approval
Submitting applications to the MFSA, engaging in due diligence processes, and obtaining the necessary licences.
4. Launch
Finalising operational set-ups, such as appointing service providers and initiating Fund operations.
Types of Investment Funds in Malta
Professional Investor Funds (PIFs)
PIFs cater for qualifying professional investors, offering flexibility in investment strategies and reduced regulatory hurdles since this type of structure falls outside of the full scope of the Alternative Investment Fund Manager (AIFM) Directive.
Alternative Investment Funds
AIFs are regulated under the EU’s AIFM Directive, providing structured investment opportunities across various asset classes. They appeal to institutional and professional investors, emphasising diversified portfolio management and risk spreading.
Retail Collective Investment Schemes (CISs)
CISs are designed for the general public, offering regulated investment opportunities with lower entry thresholds. They prioritise investor protection, ensuring transparency and risk management in mutual Funds and other collective schemes.
Notified Alternative Investment Funds (NAIFs)
Introduced by the MFSA as a fast-track option to launch a Fund, NAIFs allow managers with an existing EU license to launch Funds in Malta swiftly through a notification to the Regulator rather than a licensing process. While they cannot directly market to retail investors, NAIFs offer a streamlined process for professional and qualifying investors.
Notified Professional Investor Fund (NPIFs)
This is the latest Fund structure introduced by the MFSA in December 2023. NPIFs offer a fasttrack option for de-minimis licensed investment Managers to launch a Fund product with a very quick time to market, while offering the same flexibility of a PIF.
Role of Service Providers
Service providers, including Fund administrators, custodians, and auditors, play a crucial role in the extent to which Investment Funds are successful. The diverse roles of these entities include ensuring compliance with regulatory requirements, managing Fund accounting and valuation, and safeguarding investor assets. Thus, they are pivotal to a Fund’s efficiency, transparency and reputation.
Overall, Malta’s Investment Funds’ regulatory framework offers a balance between investor protection, regulatory compliance and operational flexibility, making it a preferred jurisdiction for fund managers seeking to establish and manage investment funds in Europe.
Author Domenic Azzopardi joined Alter Domus Malta in October 2011 and was involved in both Corporate Services and Fund Services. He currently is an Associate Client Director within the Company and acts as Head of the Fund Administration Department. Domenic is also approved by the Malta Financial Services Authority to act as Compliance Officer, Money Laundering Reporting Officer and Director on regulated entities. Domenic’s academic qualifications include ACCA and a Banking Certificate issued by the Institute of Financial Services.
Local Appointments
BDO Malta has announced the appointment of Dhayalaruban (Ruban) Thangaraja as Director of Internal Audit with effect from 11th March 2024.
Updates to the Companies Act
On 17th May 2024, Parliament officially enacted the Companies (Amendment) Act, 2024 through Act XVIII of 2024 (the amending Act). The legislative amendments aim to improve the Maltese company law framework and for such reason certain provisions were introduced or amended on a national initiative. Concurrently, the amendments also include the transposition of provisions emanating from the European Union Directive (Directive (EU) 2021/2101 of the European Parliament and of the Council of 24 November 2021 amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches) hereinafter referred to as the “PCBCRD”.
Transposition of the PCBCRD
Transposing provisions relating to the PCBCRD have been introduced in the Companies Act, along with accountancy related legislation and regulations. With respect to the Companies Act, three new provisions were introduced, namely articles 213B, 213C and 213D, alongside Part II of the Fourth Schedule. The specific objective of the PCBCRD is to increase corporate tax transparency, that is, to make information on corporate income tax accessible to the public, while the broader general objectives are to:
• align the corporate income taxes which multinationals pay with their actual profits (in other words, enterprises should pay taxes where they make their profits);
• foster corporate responsibility in order to contribute to welfare through taxes; and
• achieve fairer tax competition in the EU through democratic debate.
For such reasons, the Companies Act is now aligned with the PCBCRD and provides the applicable criteria and provisos, including which undertakings are required to submit such information and which exemptions may be applied. The responsibility to draw up, publish and make accessible the report on income tax information in accordance with the provisions introduced by article 213B and Part II of the Fourth Schedule shall be in the hands of the directors of the ultimate parent undertakings or the standalone undertakings (referred to in article 213B(1) and (2)). A statement by
the statutory auditor may also be required in the cases referred to in article 213D.
Through the PCBCRD and eventual implementation of the upcoming transposition of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSRDDD), one will obtain a clearer idea of the real effective amount of corporation tax paid in a jurisdiction and the ability to compare and measure the principle of permanent establishment and economic activity taking place.
National Initiatives
The major points affected by this amending Act relate to provisions concerning share capital, the duties of the Registrar and certain procedures which may improve and reflect the developments occurring by time in the field of money laundering and digitisation. For such reasons, the amendments were undertaken to improve the general reporting requirements of companies to the Registrar and to give legal certainty, as explained below.
The requirement set out in article 79 to deliver a printed copy of the updated Memorandum and Articles of Association of a company has been amended to reflect the digital drive emphasised by the Registrar. Such a copy need not specifically be delivered physically but may now be submitted electronically through the use of an electronic signature as duly recognised by the Registrar in terms of article 82 – a qualified e-signature in compliance with the eIDAS Regulation.
As regards share capital, article 83 has been substituted to provide for a clearer procedure in instances involving the reduction of share capital of a company. The scope is now extended to include reductions of undistributable reserves. This seeks to alleviate the administrative burden of the two-stepped approach utilised prior to this amendment, whereby the undistributable reserve in question is firstly capitalised through an issue of shares, then reduced. Through the new procedure, a copy of the resolution is delivered to the Registrar, followed by the reduction to take effect immediately on the lapse of three months from the
The
Registrar is now duty-bound to carry on-site inspections at the registered offices of companies to confirm that the shareholders and beneficial owners are those as disclosed to the same Registrar, to verify that the registered office of commercial partnerships is existent and valid and to administer and maintain a central data repository.
date of publication of the statement, in terms of article 401(1)(e). Within 14 days from the effective date of the reduction, a notice is to be delivered by the company to the Registrar for registration.
Share buy-backs under article 106 may now be cancelled immediately without following the reduction procedure set out in article 83. This is another example of enhanced legal certainty in the Companies Act, since up until this day, it was only specifically provided that the provisions of article 83 need to be followed in two instances (article 107(3) and 108(2)), leaving some questioning with regards to article 106.
Acquisition of own shares in terms of article 107, thus without the need for a company to comply with the provisions contained in article 106, have been amended to follow on the mobility developments of companies following the updated legal framework of last year. Thus, cross-border as well as local mergers, divisions and conversions are now included in this article of the law.
Any reserves as referred to in paragraph (b) of article 109 may now become distributable in cases of cancellation of shares pursuant to articles 106(6) or 107(2).
It is also to be noted how certain amendments seek to clarify the duties and powers of the Registrar who acts as a gatekeeper when it comes to statutory filing by companies and obligations emanating from the company law framework. The Registrar is now dutybound to carry on-site inspections at the registered offices of companies to confirm that the shareholders and beneficial owners are those as disclosed to the same Registrar, to verify that the registered office of
commercial partnerships is existent and valid and to administer and maintain a central data repository.
The disqualification criteria for directors and company secretaries are being widened through the amending Act. A person shall be considered as disqualified from being appointed or holding such an office in case that such a person is convicted of an offence of money laundering, associate predicate offences to money laundering and financing of terrorism. The duty of directors concerning the organisation of an extraordinary general meeting is being clarified, and through an amended article 129 of the Companies Act, directors shall not only proceed to convene a meeting, but shall hold the meeting within a two-month period from the date of the deposit of the requisition.
Companies having appointed an auditor are required to deliver a new statutory form, as provided in article 151(9) of the Companies Act, notifying the Registrar of such an appointment. This would be required upon the first auditor’s appointment and following a change of the previous auditor. Therefore, when the same auditor is chosen following an expiry of the term, there would be no need of such reporting. The statutory form will be made available upon publication of the respective Legal Notice and will be effective in accordance with the provisions thereof. For this reason, all stakeholders may utilise such time to familiarise themselves with the emanating obligations up until they become legally enforceable.
All the foregoing serves in ensuring that company law provisions in the Maltese legal framework reflect the latest regulatory developments and be at the forefront in maintaining the jurisdiction’s good repute on an international level.
Author Dr Damian Paul Cassar is the Head of the Legal and Enforcement Unit at the Malta Business Registry. He graduated with a Doctor of Laws from the University of Malta in 2017 and was admitted to the Bar to exercise the profession of an advocate following more than two years of practice with one of the leading lawyers on the island. In 2019, he obtained a Professional Award in Taxation from the Malta Institute of Taxation and graduated with a Master’s degree in Blockchain and Distributed Ledger Technologies (Law and Regulation) from the University of Malta in the year 2021, focusing on aspects relating to information technology law, DLT uses and smart contracts.
How Does Internal Audit Contribute to the Governance Process within an Organisation?
Internal Audit professionals around the world rely on the Internal Auditing Standards and the International Professional Practices Framework to help them navigate the complex world of governance, risk management and control. Recently we have seen a slight change in the definition of Internal Auditing which now reads: “An independent, objective assurance and advisory service designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management, and control processes.”
In this revised definition, governance has been brought before risk management and control. The purpose of Internal Audit is to enhance the organisation’s successful achievement of its strategic, operational, financial and compliance objectives. This is done by enhancing an organisation’s governance, risk management and control processes. Through its independent work, Internal Audit helps to contribute towards decision-making and oversight. For this to happen, the Internal Audit Function needs to be independently positioned with direct accountability to the Board / Audit Committee.
Standard 9.1 of the newly published Standards by the Institute of Internal Auditors (IIA), which Standards will become effective as of 9th January 2025, requires the Chief Audit Executive to understand the organisation’s governance, risk management and control processes to develop an effective internal audit strategy and plan.
Assurance services are intended to provide confidence about governance, risk management and control processes to the organisation’s stakeholders, especially to the Board, Senior Management and the Management of the activity under review. Through assurance services, internal auditors provide objective
assessments of the differences between the existing conditions of an activity under review and a set of evaluation criteria. Internal auditors need to evaluate the differences to determine whether there are reportable findings and to provide a conclusion about the engagement results, including reporting about processes that are found to be effective.
The Three Lines Model
In the IIA’s Three Lines Model, the Governing Body is accountable to stakeholders for organisational oversight through integrity, leadership and transparency. Management, through its first line role, provides products/services to clients and manages the risk brought about by the business activity. The second line role conducted by management is to provide expertise, support, monitoring and challenge on riskrelated matters. The third line role is that of Internal Audit which, through its independence and objectivity, provides the Governing Body assurance and advice on all matters related to the achievement of objectives.
Internal Audit’s role in governance is key as through its work, which should be based on the IIA Standards, it should perform objective assessments which will give rise to findings and observations which will be reported upon.
In its work, Internal Audit identifies and assesses the different risks across the organisation. It also evaluates the design and effectiveness of internal controls during its fieldwork. Internal Audit seeks to determine whether controls are sufficient to mitigate risks and safeguard assets. It also assesses and monitors compliance with internal policies as well as laws and regulations. Through its testing, Internal Audit also seeks to obtain objective assurance on the effectiveness of the controls put in place by management. The findings supporting the audit assurance obtained are then communicated to the
Management and the Board/Audit Committee, which is responsible for the direction of the entity. The report will be followed up by Internal Audit given that it will include recommendations to improve the processes with the intention to reduce risk and enhance controls with the ultimate aim of adding value. The Board and Management can take informed and unbiased decisions related to governance, risk management and internal control on the basis of the internal audit reports, which aim to include insight on areas of improvement as well as foresight.
The need for independence in internal audit
For Internal Audit to contribute to an Organisation’s governance process, the Internal Audit Function needs to be adequately positioned to safeguard its independence, soundly resourced and staffed with a diverse skill-mix of competent personnel who have a good understanding of the purpose of the business and are aware of the strategic objectives that need to be achieved. The risk-based Audit Plan needs to be aligned with these objectives. In order for Internal Audit to be most effective, it is important that the Chief Audit Executive is aware of what is going on in the business. This can be done through sitting in at governance meetings as an observer.
Internal Audit, through its work, is in a position to provide insight and provoke positive change within an organisation. Furthermore, Internal Audit can also provide foresight. This is done through trend analysis and by flagging emerging challenges for Management and the Board to be aware of and take informed decisions. Internal Audit also has a role to play in governance through its advisory services. The ultimate aim should be that of adding value to the organisation it is serving in an independent capacity.
The direction for any organisation lies with the Board that is empowered to set up various subcommittees to assist it. Such committees include
the Audit Committee and the Risk Committee. In fact, the ultimate responsibility is retained by the Board. The Internal Audit Function is there to assist the Board, usually through the Audit Committee, in the discharge of its duties. Ideally, the Internal Audit reports functionally to the Audit Committee and administratively to the Chief Executive Officer. The Internal Audit Function, through its risk-based Audit Plan, looks at the full portfolio of risks which includes not only financial risks but a full array of risks including operational, technology, cyber, reputational and emerging risks. Through its work, the Internal Audit Function provides the Board with evidenced based data on which it can base its decisions. It strives to support and drive continuous improvement in an organisation as a result of identifying any weaknesses and inefficiencies, and providing recommendations where enhancements can be made. Through these recommendations for improvement, Internal Audit strives to contribute to strengthening governance processes over time.
All this results in the Internal Audit work providing transparency into the operations and the internal controls supporting them and fosters accountability.
The effectiveness of any Internal Audit is dependent on the level of trust placed in the Function. Internal Audit Functions should be considered by the Governing Body as trusted advisors that are the currency to drive change in any organisation. The valuable input that can be provided by Internal Audits in the form of insights into the risks associated with different courses of action, and the foresight from trend analysis performed, can assist Governing Bodies in taking informed strategic decision-making, aligned with the objectives of the business.
The various functions performed by Internal Audit through evaluating risks and controls, ensuring compliance, providing independent assurance, coming up with recommendations, enhancing transparency and accountability and providing insight and foresight, all contribute to the governance process within an organisation.
Author
Ingrid Azzopardi is the Group Internal Auditor at GO plc. She is an Independent Non-Executive Director at HSBC (Malta) where she chairs the Bank’s Risk Committee and sits on the Audit Committee of the Bank. Ms. Azzopardi is a Chartered Director and holds a Master in Accountancy, a CPA Warrant and the Practising Certificate in Auditing. She is a Committee Member of IIA (Malta) and a fellow member of MIA. Ms. Azzopardi is also Vice Chair of the Board of Administrators of the Malta ESG Alliance (MESGA).
The Role of the Compliance Officer within the Governance Structure
The last few years have seen a meteoric rise in the importance given to governance within both regulated and non-regulated organisations. High profile corporate governance failures have driven a slew of corporate governance legislation and the adoption of increasingly onerous standards by regulators and authorities worldwide. While this was initially focused on the composition and quality of the board of directors, this has evolved and today, an effective governance framework requires an overarching application of good governance principles, a ‘compliance first culture’, which must be cascaded throughout the organisation. This view was recognised by the United Kingdom’s Financial Conduct Authority, when they stated during a thematic review, “We believe that governance goes beyond formal governance at the board and in the most senior levels of leadership”.
This deluge of regulation and standards seeks to ensure alignment between the interests of individuals, corporations, and society as wider stakeholders, representing a fundamental shift in the traditional myopic view that the duty of a company and its management is solely owed to the shareholders. The core principles around good corporate governance are those of transparency, accountability and responsibility. Ultimately, a good governance structure should not be seen as an end to itself but should seek to build trust between the corporation and the wider stakeholders, including regulators and society at large, with the aim of facilitating the organisation’s efforts to achieving its commercial aims including facilitating access to capital. The Corporate Governance Code (for unauthorised entities) published by the Malta Financial Services Authority (MFSA) provides a set of principles, which are broadly categorised as follows:
• An Effective Board;
• Internal Controls;
• Stakeholder Engagement; and
• Corporate Culture, Corporate Social Responsibility and Environmental, Social and Governance.
The Financial Intelligence Analysis Unit in Malta has indicated that the Implementing Procedures will be
updated to include principles of good governance applicable to the Prevention of Money Laundering and Financing of Terrorism, with guidance around the roles of the Money Laundering Reporting Officer and the day-to-day monitoring officer, and the role they play within the governance structure.
In most guidance published by regulators, the Compliance Officer is defined as an employee within an organisation who is responsible to ensure that the entity complies with the applicable regulatory and legal requirements as well as abiding by internal policies and procedures. Typically, the duties of a Compliance Officer would include:
• reviewing and setting standards;
• designing and updating internal policies;
• setting up a compliance programme (including communications, training, monitoring and reporting); and
• advising and assisting the entity in complying with the evolving legal and regulatory obligations.
In order to be effective, a Compliance Officer must have a thorough knowledge of the organisation’s business at a granular level, understand the applicable legal and regulatory framework within which it operates and have a deep understanding of the commercial context. The effectiveness of a Compliance Officer in establishing the policies and procedures to mitigate the risks arising from the business model and appropriate monitoring and redress functions is directly linked to the Officer’s understanding and exposure to the commercial realities faced by the business.
During the course of this work, it must be kept in mind that the compliance function must operate independently of the business lines and not get involved in the performance of services or activities which they monitor, maintaining independence and objectivity. The tension which often arises between the commercial and the compliance function generally stems from a lack of mutual understanding and exposure to the common aims and realities of the two.
Governance, Risk and Compliance
Establish organisational and governance structures Implement Governance, Risk and Compliance programme management
Build risk and compliance culture Manage Governance, Risk and Compliance Technology
Source: Adapted from OCEG (2016) A Maturity model for integrated GRC
Taking a slightly deeper look at the role of a Compliance Officer, The International Compliance Association classifies such role into two key components:
• compliance with the external rules that are imposed upon an organisation as a whole; and
• compliance with internal systems of control that are imposed to achieve compliance with the externally imposed rules.
Therefore, a Compliance Officer is expected to formulate appropriate policies and procedures to ensure compliance with the regulatory framework. Additionally, the Officer must develop appropriate solutions for ongoing compliance (typically assisted by technology) and provide ongoing guidance and training to ensure that the procedures put in place remain appropriate, effective and proportionate to the evolving context.
When executed effectively, this role is a key component in the governance structure, serving to identify and prevent compliance issues and also an effective mitigation of those which may arise limiting any reputational damage and regulatory fallout from such breaches. As such the importance of this function within the organisation should not be understated. However, it is not the Compliance Officer/team alone who can achieve these ends. It requires an
undertaking and support of the entire leadership of the organisation to set the right tone and to instil a culture of compliance where management and employees work together in the long-term interest of the organisation.
On the other hand, an article published by Thomson Reuters holds that the Compliance Officer should think like the Chair of a Board of Directors. At times, Compliance Officers run the risk of applying a rule-based approach, whereas a good governance structure warrants positive influence and foresight to mitigate potential risks to the business. The following characteristics of the board will need to be replicated in the Compliance Officer role in order to achieve this:
• Strong ethical principles.
• Fairness – understanding all facts and circumstances before making any judgements.
• Competence in the business area and the legislative framework the organisation operates. Keeping up to date with any changes in the regulations and legislation is key.
• Seniority to be able to challenge and question, and also to have access to data, records and information.
• Proactive - having reporting policies in place to be able to detect and address risks at an early stage.
• Clear accountability — for their own work and understanding other roles’ responsibilities.
• Personality – to be able to take and stand by challenging decisions and setting the right tone within the organisation.
• Meticulous - to be able to see an issue through to resolution.
The role of a good Compliance Officer goes beyond that of an oversight role or of ensuring that all the compliance requirements are being adhered to. The person responsible for compliance should have a holistic overview of the business and compliance matters and apply a proactive approach in identifying and mitigating risks. This involves the understanding and the monitoring of the industry trends, being aware of any regulatory and legislative changes being proposed and enacted and obtaining feedback from customers and stakeholders. This will ultimately lead to building trust internally and with the organisation’s stakeholders.
Author
Ariane Azzopardi is a Director within the Quality and Risk Management function. She has over fifteen years’ experience in this field and is the delegate of the Risk Management Partner at KPMG in Malta, where she is involved in the implementation and monitoring compliance with quality and risk management policies and procedures. Ariane is the chairperson of the AML Committee at the Malta Institute of Accountants and a committee member of the PMLFT sub-committee at the Institute of Financial Services Practitioners.
MTCA UPDATES
The Malta Tax and Customs Administration’s (MTCA) VAT Section: Navigating the Domestic and International VAT Landscape
As part of the tapestry of fiscal governance within the MTCA lies a cornerstone Section: the VAT Section within the Legal, Policy, Technical, and International Relations Directorate. Operating both within the domestic and international VAT landscape, this Section is tasked with a broad spectrum of responsibilities, playing a pivotal role in shaping and implementing VAT policies in Malta whilst also playing an important role in the representation of Malta’s interests in key international VAT-related fora.
The multifaceted responsibilities that define its significance on both the domestic and international fronts are explored below.
Domestic Responsibilities
At the domestic level, the VAT Section serves as a linchpin in the drafting, interpretation, and implementation of VAT law and supporting guidelines as well as the transposition of European Union (EU) Directives into domestic legislation.
Charged with advising central Government on tax policy matters, the VAT Section also plays a pivotal role in shaping Malta’s fiscal landscape. Through rigorous research, stakeholder consultations, and technical analysis, the Section contributes to the formulation of tax policies that are equitable, efficient, and conducive to economic growth whilst ensuring that VAT regulations are clear, effective and in line with EU law.
Moreover, the VAT Section provides indispensable guidance both internally to other sections within the MTCA as well as externally to taxpayers, tax practitioners, and other stakeholders on technical and legal matters. Whether it is advising the tax administration’s tax auditors and inspectors on complex cases, guiding stakeholders on complex provisions, determining interpretations, or navigating dispute resolutions, the VAT Section’s expertise serves as a beacon for stakeholders seeking to navigate the intricacies of the VAT world.
Amongst other responsibilities, the VAT Section also undertakes the vital responsibility of training staff within the MTCA, ensuring that personnel are equipped with the requisite knowledge and skills to enforce VAT laws effectively. Through continuous professional development programs and capacity-building initiatives, the Section fosters a culture of excellence and professionalism within the MTCA.
THE MIA TAX CONFERENCE
International Engagement
The VAT Section plays a critical role in representing Malta’s interests in various international VATrelated fora, wielding influence and advocating for Malta’s interests on the international stage. Key among these fora are the EU Council’s Working Party for Tax Questions, the EU VAT Committee, and the Group for the Future of VAT.
Through these international platforms, the VAT Section engages in dialogue, negotiation, and consensus-building to contribute toward the shaping of EU VAT policies and Directives. By leveraging Malta’s voice and expertise, engaging with counterparts from other EU Member States, exchanging best practices, and advocating for Malta’s interests, the VAT Section ensures that Malta’s voice is heard and its concerns are addressed whilst contributing to the development of a harmonised EU VAT framework that is conducive to fair and efficient taxation across the EU.
Moreover, the VAT Section plays a crucial role in fostering collaboration and knowledge exchange with international counterparts by actively participating in other international projects such as EU Fiscalis project groups and EU Fiscalis
workshops. Through bilateral engagements, technical assistance programs, and participation in global and EU initiatives, the VAT Section is pivotal in Malta’s efforts to contribute towards the development of harmonised VAT standards and frameworks across the European Union as well as enhancing Malta’s standing as a responsible and proactive member of the international tax community.
Harmonising Domestic and International Efforts
The dual nature of the VAT Section’s responsibilities underscores the interconnectedness between the domestic and international VAT landscape. The VAT Section’s involvement in international discussions enables Malta to anticipate and adapt to emerging trends and challenges in the global tax landscape enabling it to apply its expertise and insights in a domestic context. As part of the afore-mentioned Directorate and through coordination with other sections within this same Directorate, whether it is addressing digital taxation, combating tax evasion, promoting administrative cooperation, or tackling other complex VAT matters, the VAT Section ensures that Malta remains at the forefront of any developments in the VAT landscape.
This section is written by Mr Nico Sciberras, Chief Tax Officer heading the VAT Legal, Policy, Technical & International Relations Section.
Legislation Updates
The MTCA has published an Overview of Recently Published Legal Notices (L.N.) spanning the period January to April 2024. The summary provides a review of a number of important legal notices including L.N. 32 of 2024, European Union Global Minimum Level of Taxation for Multinational Enterprise Groups and Large-Scale Domestic Groups Regulations, 2024 which puts in place Malta’s limited transposition obligations stemming from the so-called Pillar 2 Directive (Council Directive (EU) 2022/2523 of 14 December 2022 laying down rules on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union). The Regulations apply to constituent entities located in Malta who are
members of a multinational enterprise group or of a large-scale domestic group, which have an annual group-wide revenue of €750,000,000 or more. Other important Legal Notices include L.N. 5 of 2024 Pensions (Tax Exemption) (Amendment) Rules, 2024 and L.N. 6 of 2024 Tax Rebate (Pensioners) (Amendment) Rules, 2024, outlining revised thresholds for pension exemptions and tax rebates applicable for basis 2024 respectively.
Further information about these and other Legal Notices is available under the legislation developments section of the MTCA website - https://cfr.gov.mt or by clicking on the following link .
This article is written and compiled by Dr Carmel Said Formosa, Senior Lecturer at the University of Malta and MTCA Technical Advisor, Legal, Policy, Technical and International Relations.
Deadlines
July
• Recapitulative Statement Period Ending June 2024 – 15th July*
• VAT Return Quarter Period Ending May 2024 –Electronic Submission 22nd July
• CESOP Report for Quarter period ending June 2024 – 28th July
• FS5 Payer’s Monthly Payment Advice for June 2024 – 31st July
• Company Tax Return – Financial Year ending 31st
October 2023 – Manual Return Deadline – 31st July
• Company Tax Return – Financial Year ending 31st
January 2023 – Web Extension Deadline – 31st July
• Company Tax Return – Financial Year ending 28th
February 2023 – Web Extension Deadline – 31st July
• Company Tax Return – Financial Year ending 31st
March 2023 – Web Extension Deadline – 31st July
• Company Tax Return – Financial Year ending 30th
April 2023 – Web Extension Deadline – 31st July
• Company Tax Return – Financial Year ending 31st
May 2023 – Web Extension Deadline – 31st July
• Company Tax Return – Financial Year ending 30th
June 2023 – Web Extension Deadline – 31st July
• Company Tax Return – Financial Year ending 31st
July 2023 – Web Extension Deadline – 31st July
• Company Tax Return – Financial Year ending 31st
August 2023 – Web Extension Deadline – 31st July
• Individual Tax Return – Online Submission and payment Y/A 2024 – 31st July
• DAC 4 / CbC Reporting by Ultimate Parent Entity/Surrogate Parent Entity – Group’s fiscal year ending 31st July 2023 – 31st July 2024
• DAC 4 Annual Notification by Local Constituent Entities – Financial year ending 31st October 2023 – 31st July 2024
August
• Eco-Tax Quarter Period April to June –15th August
• Recapitulative Statement Period Ending July 2024 – 15th August*
• VAT Return Quarter Period Ending June 2024 –Electronic Submission 22nd August
• CESOP Report for Quarter period ending July 2024 – 28th August
• FS5 Payer’s Monthly Payment Advice for July 2024 – 31st August
• SSC Self Employed (Class 2) payments – 31st August
• Provisional tax Payments Y/A 2025 – May to August 2024 – 31st August
• Company Tax Return – Financial Year ending 30th November 2023 – Manual Return Deadline – 31st August
• Company Tax Return – Financial Year ending 30th September 2023 – Web Extension Deadline –30th August
• DAC 4 / CbC Reporting by Ultimate Parent Entity/Surrogate Parent Entity – Group’s fiscal year ending 31st August 2023 – 31st August 2024
• DAC 4 Annual Notification by Local Constituent Entities – Financial year ending 31st November 2023 – 31st August 2024
September
• Recapitulative Statement Period Ending August 2024 – 15th September*
• VAT Return Quarter Period Ending July 2024 –Electronic Submission 22nd September
• CESOP Report for Quarter period ending August 2024 – 28th September
• FS5 Payer’s Monthly Payment Advice for August 2024 – 30th September
• Company Tax Return – Financial Year ending 31st December 2023 – Manual Return Deadline – 30th September
• Company Tax Return – Financial Year ending 31st October 2023 – Web Extension Deadline – 30th September
• DAC 4 / CbC Reporting by Ultimate Parent Entity/Surrogate Parent Entity – Group’s fiscal year ending 30th September 2023 – 30th September 2024
• DAC 4 Annual Notification by Local Constituent Entities – Financial year ending 31st December 2023 – 30th September 2024
* Recapitulative Statements are due on the 15th day of the following calendar month. Where the total quarterly amount (ex. VAT) is less than €50,000 the recapitulative statement is due by no later than the 15th day of the following calendar month.
Upcoming CPEs 2024
Brunella Bugeja Elevating Expertise
Interview with Brunella Bugeja, Senior Manager (Forvis Mazars)
For some, taxation is perceived as complex and is associated with forms or the occasional surprise bill. Yet, this is only one side to the story. For the second edition of The Accountant for this year, we caught up with Brunella Bugeja, who not only understands the intricacies of taxation but also sees beyond the stereotypes, harnessing its power to create value and drive success.
For the past decade, Brunella has specialised in Indirect Taxation, supporting clients in the most diverse of fields. As we trace back the early days of her career at the firm where she works, she tells us that she had spent the first three to four years with the accounting team. That exposure gave her visibility of the different options possible at the firm and at a rather early stage, the possibility of working on tax-related measures intrigued her.
“I loved my job, but I sought out something which would be more challenging in nature”, she begins. At first, she worked on both direct and indirect tax, before specialising further on VAT matters.
VAT and indirect taxes have become increasingly significant for companies. The growing complexity, driven primarily by frequent changes in legislation, along with a lack of harmonisation across EU member states, not only makes it challenging to accurately assess specific issues related to indirect taxes but also complicates the fulfilment of global VAT and indirect tax obligations in daily operations.
“The biggest challenge here is that the businesses we support do not always appreciate the
significance and the extent of the variances which exist in the world of indirect taxation”, she explains, noting that “at times, just one word can literally change the nature of a VAT transaction”. Considering the complexity involved, this begs the question: so is specialisation recommended? Definitely, Brunella tells us. “Having focused expertise increases the value added of the professional, it ensures compliance with industryspecific regulations and maximises efficiency in managing financial tasks unique to their sector. This specialisation ultimately adds significant value to businesses by optimising financial performance and mitigating risks.
Another important element of specialisation stems from the fact that accountancy has evolved so much in recent years that it is hard to be on top of everything. Thus, focusing on a specific area will allow you to deliver much better quality to the firm or clients you serve, she explains.
But there’s a twist.
Ironically enough, Brunella cautions not to specialise too quickly. While this argument may feel contradictory, she is quick to explain that it is not. “Yes, I am the first to recommend accountancy professionals to find a niche subject
and develop their expertise in it. At the same time, a few years in the generic accountancy sector gives you visibility of what’s around and will come handy in the years ahead”.
How? “First of all, it gives you better exposure of the options out there, facilitating your choice rather than depending solely on instinct. Secondly, having experienced different scenarios and looked at different perspectives, will eventually make your job easier”. We seek a better understanding of the second point, and Brunella immediately has a very simple example at hand.
When, for example, you are specialising in tax, you are working with data, with accounts prepared by accountants, and your previous experience in doing that job will help you understand how such data was sourced, or how certain conclusions were reached. This allows you to develop better relationships with your clients and enhances your ability to deal with the matters which arise.
Our discussion keeps revolving on the uniqueness of working in the realm of tax.
“Tax involves many moving parts, making each day a new challenge. VAT is constantly evolving, you’ll be continuously learning and adapting. Year after year, you’ll develop smarter strategies to stay ahead and provide clients with sensible, yet innovative financial advice. One thing is certain – a career in tax will keep you engaged and interested”.
Questioned where this perception comes from, she argues that one reason could relate to the fact that the study of tax constitutes a very small part of the academic route towards accountancy. “There’s a very limited focus on taxation, when considering the centrality of taxes to life. With such limited exposure, it is difficult to encourage young people to take on this direction”, she adds. “To me, once you haven’t been really exposed to something, it is highly unlikely that you would want to then specialise in it”.
We ask Brunella whether the perceived workload and stress is a real issue here, but she quickly disagrees. “Tax is very compliance and deadline driven, but stress is ultimately what you make of it”. She explains how despite her professional commitments, she makes sure to exercise daily, eat healthy and finds time for family and friends. Brunella is also keen about her voluntary work,
where for the past eight years, through the voluntary organisation Kids , she manages a childcare facility in Africa together with other volunteers.
“With effective planning, there is time for everything. However, I cannot stress enough the importance to find time for yourself. Yes, work hard, but make sure that you invest in your personal life too”, she suggests, as she shares her passion for fitness and travel.
To this end, she emphasised the importance of flexibility at the place of work and to establish boundaries between personal and working life, including through finding the time to disconnect completely from work matters. “Work efficiency is about give and take. Industry professionals must be ready to work longer hours when necessary, but their space must be respected when they are not on the job. That’s the recipe for success”, she insists.
Brunella also finds time to give back also to the accountancy profession, being a member of the MIA’s Indirect Tax Committee, a role she is very proud of. “This is a very rewarding experience as it allows me to share and understand different perspectives. We share challenges, difficulties and seek solutions together. We also listen to what the authorities and regulators have to say, thereby giving us visibility of why certain changes are required, while also putting forward recommendations where we consider a change is necessary.”.
In concluding, we ask our interviewee for one final piece of advice. Many times, she argues, we tend to complain about stress because we are constantly connected, checking out emails, receiving calls, answering Whatsapp messages. “We tend to blame work for that, but do you really need to check your phone at 6 in the morning? The answer is no!” she insists.
“I don’t look at my mobile for the few hours in the morning. This makes me feel less anxious and I start my days off in a much better mood. I don’t get bogged down by social media or any outside influence”, Brunella concludes.
Meet the Team
SUSAN CUTAJAR
What do you bring to the MIA?
I bring strong analytical skills and a collaborative mindset. Additionally, I feel that I foster a positive and friendly atmosphere within the office.
How would you describe life at the Institute?
A workplace with outstanding colleagues and supportive leadership. Team-building activities and social events contribute to stronger team bonds and cohesion within the Institute.
On a personal level, I feel fortunate to work in such a fantastic environment surrounded by wonderful colleagues who inspire and support me every day.
What’s the best book you’ve read recently?
I usually prefer to read articles on current affairs over books, however, recently I’ve been reading “The Hobbit” by J.R.R. Tolkien. It’s a timeless adventure that offers an escape from reality.
If you could travel anywhere in the world, where would you go and why?
I’m drawn to destinations which offer lush landscapes and natural beauty such as Ireland, Scotland, and Switzerland. Embracing nature, helps me to detach from the daily routine and focus more on personal well-being.
Any good movie you’d recommend from lately?
Recently I watched “The Ministry of Ungentlemanly Warfare”. I would recommend it as it is based on real life events. I find movies based on true stories more appealing as they provide a profound sense of authenticity and relatability.
What kind of music are you likely to listen to?
My preference in music shifts with my mood. I appreciate genres such as soft rock and pop. There are days where I prefer chill-out music as I find it relaxing.
What’s one skill you wish you could learn overnight?
This is an easy one! Learning how to play the piano overnight would be incredible. I can only imagine being able to sit down at the piano and effortlessly play beautiful melodies and harmonies without hesitation.
What’s the most memorable meal you’ve ever had?
Not a meal but a dessert from a local restaurant in Valletta. It was a chocolate and Irish liqueur cheesecake. It was exceptional!
Do you have a favourite quote or motto that you live by?
‘Be yourself, everyone else is already taken’.
I firmly believe that everyone should celebrate their individuality and embrace what makes them unique.
Do you have any pets? If so, tell me about them!
Yes I do! I adore animals. At home, I have a dog, two birds, and a fish tank.
