The growth of the service-based industry and the increase in the cost of property have driven many companies and individuals to seek rental options when considering their next property move. Over the past years, Malta has witnessed a significant transformation in this regard. According to local authorities, a total of 37,976 leases were registered in 2021, a staggering increase of 49% over the previous year.

This study shows that the property rental market is a growing one and is going through a rapid transformation. This context requires finance and real estate professionals to be familiar with the elements which are driving pricing in the market, and how lease terms and rental values have an impact on the real estate lifecycle.

There are three major factors which impact the rental valuation. Firstly, the overarching economic situation, which generally reflects the profitability of the businesses that occupy and /or lease out various types of premises. Changes in rents also reflect developments in the health of the economy because such changes influence supply and demand. Being able to anticipate upcoming economic trends, understand forecasts but also economic policy direction is a key requirement to plan effectively ahead in the property sector.

Secondly, one needs to keep in mind the performance of a property investment, as the objectives of property investors are to benefit from both the rental income which is paid by the occupier, and any capital growth which they anticipate from their ownership.

The third element relates to the valuation of a property, especially investment and commercial properties, as the income approach (which is the main approach to value these types of properties) assesses Market Value by capitalising the future income obtainable from the property.

During a three-hour session held on 27th September, the speaker went through the key concepts, principles and terminology related to leases and rental value. Primarily, the course focused on long-lets for commercial properties, though the key concepts do not really differ significantly for residential properties.

In fact, participants were guided through the economics of rent and the determinants of rental value, while also pointed towards key sources of local data which will support them in their market research. The session also addressed the basics of preparing cash flows for valuations and investment appraisals, thus helped participants to decipher the contents and terms of a lease and provide advice on how to review lease terms.

Humanity is continuously faced with the dilemma of the correlation between behaving ethically and being successful. We seem to be living in a society where success depends on freedom to do as you like and ignoring ethical principles. We are living through a culture which promotes liberalism while shifting away from conformism. Yet many others are subject to stiff regulation with penalisation continuously hanging on their heads. Is this a two-speed society with different classes or will the ethical and conformist prevail in the long run?

Corporations pride themselves on their brand of culture. Companies build their own culture which plays an important part in business, employee retention, customer relations, shareholder relations, competition, and society at large.

The ethical stance of executive management and leaders of a corporation define the culture of a corporation. On the other hand, the culture influences the moral values practiced within the company. Presumably Corporate Culture and Ethical Behaviour are intertwined, and one shapes the other.

Corporate Culture is known to change over time. Many companies which started purely as a service to society and human needs have turned into profiteering behemoths dominating markets, minds, and economic well-being of consumers. Companies which humbly emerged from an invention have over years muscled out other entrants and killing choice in the process. Success of companies or individuals is known to have rendered companies and people insensitive to other people’s needs and changed the culture of their environment clearly creating a divide between providers or producers and consumers. An uncontrolled corporate culture which sidelines society is harmful and many such situations have led to the much wrongdoing prevailing over doing the right thing.

One also observes the phenomenon that in times of apparent affluence cultures and ethics may take the sidelines, while during a recession, when more and more people are suffering, societies resort to the comfort of ethical practice. One would therefore wonder whether ethical behaviour and corporate culture are cyclical concepts. Do these concepts change with phases or do phases depend on how these concepts are observed?

These issues are very pertinent to us accountants. Corporate culture should be one of the cardinal elements to consider as early as the onboarding stage. With regards to client continuation, evolving corporate culture of the client remains of significant importance.

Whether we are Practicing Accountants in Business or auditors the subject remains extremely relevant. In the former role we purport to influence the culture, while in the latter role it becomes a matter of risk management to our practice as well as somewhat exerting influence. As practitioners we may have less freedom to adopt the culture that we want because we are regulated and therefore subject to rules as prescribed for example in the Code of Ethics and other pronouncements.

The subject of ethical behaviour is not a matter of choice to anyone let alone to accountants in any activity that they engage in. It follows that whilst, in line with the argument above, ethical behaviour influences corporate culture, in the case of accountants in practice the culture in the firm is rather defined by regulation and not so much by the ethical stance of the partners or management of the firm albeit that the latter’s’ ethical standards determine the ease with which compliance is attained.

These aspects will be the addressed in detail during this three-hour session, putting forward considerations which are increasingly relevant in the corporate world of today.

If you are interested in learning more on this topic, there is a session to take place on 4th October 2022. Register here.

The Malta Institute of Accountants has honoured Maria Sciberras for her extraordinary achievement of placing second among thousands of students around the globe during the March 2022 Strategic Professional Exam Level Exams held by international accounting body ACCA.

The award was presented by Malta Institute of Accountants President David Delicata, CEO Maria Cauchi Delia and Thomas Galea, who is Malta's representative on the ACCA International Assembly.

Mr Delicata had words of praise for Maria's excellent performance: "Such a top placement among the global cohort of participants in such a competitive examination is an astounding achievement for this youngster. It is also another reminder that despite the limitations of our size, Maltese students perform admirably next to their international counterparts, and this achievement will go a long way in inspiring future students to take on the accountancy path. It is also testament to the quality of accountants that Malta is able to nurture, year after year. The Institute remains by the side of all those who will undertake this path, providing support, advice and direction through our dedicated team".

Mr Galea praised Maria Sciberras for her outstanding achievement, highlighting her 'can do' attitude which bodes well for her future career prospects. "An ACCA qualification opens the door to a multitude of career opportunities. I am confident that this result is just the first step of a career which brings job satisfaction and the opportunity to pursue her dreams in the near future".

Maria Sciberras, who, expressed her appreciation and joy at receiving the award. "Such a result is obtained through effort and dedication, and thanks to the support of family, friends and work colleagues. I do hope that this achievement serves as an inspiration to many young students, particularly women, to undertake studies in the accountancy sector which truly opens the door for an exciting career, one through which you can achieve true personal satisfaction by contributing to a better society for all".

“Accountancy professionals can play a key role in the country’s economic development”. Maria Cauchi Delia, Chief Executive Officer of the Malta Institute of Accountants said this during an informal exchange with students approaching the end of compulsory education at this year’s annual ‘I Choose’ event.

A panel discussion featuring Ms Cauchi Delia together with four members of the MIA’s Young Members Group who ply their trade in different sectors of the economy was one of the highlights of the MIA’s participation at this year’s event which provides a unique opportunity for students to explore further career and educational options at a vital stage of their educational pathway.

The Young Members – Kenneth Cremona, Cinzia Fenech, Julia Gingell, and Carlsten Xuereb – highlighted the transition of the accountancy profession in recent years. They described the opportunities created for such professionals as endless, sharing insights on the way that an accountancy background has shaped their career development, growth, and success.

Keen to shed light on the fascinating adaptation of the modern role of the accountancy profession, the speakers highlighted the way that their career allows them to interact on a daily basis with people from all walks of life, including athletes, farmers, artists, doctors, and gaming experts.

Ms Cauchi Delia also shared insight on the role of the Institute as the guardian of the profession, highlighting the important contribution towards career development. Describing the Institute as the only organisation which brings together all accountants and auditors, she highlighted its key activities including participation and consultation in new legislation, the organisation of educational conferences and training sessions as well as numerous networking opportunities for its members.

The Malta Institute of Accountants ensured a strong presence at this year’s event with representatives of the Young Members Group and other Institute staff members present onsite to meet the students, answer their queries and provide career tips. A number of give-away prizes also ensured that the MIA’s stand was a place-to-be for the students who flocked to this year’s job fair.

Commissioned by the Institute of Financial Services Practitioners, the Malta Institute of Accountants and the Malta Institute of Taxation, the report offers a critical snapshot of the industry

A new report outlines the significant contribution of Malta’s services sector to the national economy.

Jointly commissioned by the Institute of Financial Services Practitioners (IFSP), the Malta Institute of Accountants (MIA) and the Malta Institute of Taxation (MIT), leading economist Gordon Cordina from E-Cubed Consultants Ltd conducted the in-depth survey of the sector.

Sharing his early conclusions at the IFSP Annual Conference in April, Dr Cordina described his approach as covering a “wider perspective of policy and business behaviour, covering a range of services activities with common competitiveness concerns which include and extend beyond those normally associated with financial services.” Titled The Contribution of Export-Oriented Foreign Direct Investment in the Services (EFIS) Sector to the Maltese Economy, the report seeks to quantify the economic impact of export-oriented, foreign direct investment companies operating in the higher-value added services sector (EFIS). This sector, coined specifically for the purposes of the study, including financial services as well as other services sectors.

Based on 2019 figures, the report highlights that the three main injections to Malta’s economy – namely exports, creation of productive assets and government expenditure or private consumption – together create a substantial demand for business activity and an economic value added of more than €12 billion. It goes on to outline that firms in the EFIS sector directly generated 19 per cent of the total value added in the Maltese economy.

In addition, the report shows that firms in the EFIS sector directly employed nearly 10 per cent of the total workforce in the Maltese economy during 2019 – equivalent to almost 22,200 people. The report also spotlights that the EFIS sector significantly boosts the nation’s productivity, with labour productivity in EFIS firms in 2019 estimated at 189 per cent of that of the average level of labour productivity across the economy.

While the growth of the EFIS sector exceeded that of the overall economy, helping to accelerate overall growth, it also made direct, indirect and induced contributions in terms of value added and employment generation to the rest of Malta’s economy. Of the €3,036 million total value added generated by direct and indirect effects of the EFIS sector’s activity, firms outside the EFIS sector had a value added of around €194 million and 4,700 jobs.

The report also records that firms in the EFIS sector have a relatively low carbon and floorspace footprint in comparison to other sectors in Malta, while offering high salaries.

This report’s findings show that foreign owned entities engaged in the export of services contribute significantly to Malta’s economic output, employment, government revenue, productivity and economic growth, whilst having a relatively low impact on the environment compared to other sectors of the economy. Furthermore, this study makes it possible to gauge the full extent of the EFIS sector’s significant contribution to Malta’s economy – and its importance as part of the nation’s economic future.

The report and its salient findings were presented to the Prime Minister the Hon Robert Abela and the Minister of Finance the Hon Clyde Caruana during a meeting held at Castile, and to the Leader of the Opposition the Hon Bernard Grech, accompanied by the Opposition Spokesperson for Finance the Hon Jerome Caruana Cilia and the Opposition Spokesperson for the Economy the Hon Ivan Bartolo.

The Malta Institute of Accountants expresses its satisfaction that the Financial Action Task Force (FATF) has taken Malta off its grey-list.

A timely exit from the grey-list, which the Institute had immediately called for, was imperative to limit the impact of this decision and offer the jurisdiction the opportunity to get back on track in its efforts to place itself among the most reputable counterparts in the industry.

The Institute commends the efforts of financial services practitioners and other professionals who have worked tirelessly over the past months to ensure the strengthening of the financial services sector’s reputation, an effort which has contributed in no small way to this desired result.

Malta’s de-listing should not however, constitute a point of arrival. All stakeholders have a responsibility to remain vigilant at all times and to continue improving on the higher quality that has been reached today.

While the exit from the grey-list is an important and a welcome achievement, it is our collective duty to restore Malta’s place where it deserves – as an international financial jurisdiction of high repute, which attracts high quality investment based on substance, and contributes to sustainable economic growth and job creation.

More than 1,000 secondary school students have joined awareness sessions hosted by the Malta Institute of Accountants allowing them to discover the opportunities offered by the accountancy profession.

These sessions targeted primarily Year 8 and Year 11 students, fundamental educational milestones in which students make important choices for the forthcoming scholastic year. Participation at these sessions, which were in their majority voluntary and virtual, attracted students from more than 40 public, church, and independent schools.

The MIA embarked on this initiative at a fundamental stage for the Maltese economy, as it emerges and regenerates itself from the challenges of the pandemic, while transforming itself through a digital and green transition. In this context, accountancy is expected to play an even wider role, as international regulation puts on professionals in the field the onus of measuring not only firms’ financial performance but also their commitment to climate and social goals.

Firms expect that this profession is expected to continue to create significant new career opportunities every year within diverse economic sectors and in diverse positions, which are not necessarily restricted to financial administration, but also cover top management positions, corporate strategy, consultancy, auditing, and project management among many others.

Several industry leaders joined MIA staff in leading more than 60 physical and virtual #AccountsForYou sessions, sharing practical examples of how accountancy professionals can thrive in Malta or abroad, making the profession one which offers stability and durability. 

MIA President David Delicata said that while students will ultimately always be encouraged to opt for a career which inspires them, the Institute sought to increase awareness about the opportunities that lie ahead. "Our objective was to show students the relevance of being financially literate and the doors that accounts as a subject can open, including pursuing an accountancy qualification – but ultimately, the choice, remains in their hands.” He added that “while traditionally accountancy has been defined as the management of a company’s finances, the training and experience achieved by such professionals allows individuals to develop major skills that can be widely used throughout their professional life."

Chief Executive Officer Maria Cauchi Delia highlighted the importance of knowing what opportunities existed out there, not only in view of potential career options but also in terms of life skills that can be gained through specific study paths.  She also remarked on the evolving role of the accountancy profession. “Digital transformation, the pandemic, and other external and internal forces changing the business environment are transforming the role of the traditional accountant, making some functions obsolete whilst accelerating the creation of new ones.  The accountancy profession has consistently survived the test of time over the years and has been able to adapt and even influence evolving societal and entrepreneurial needs.” Cauchi Delia added that the Institute is evaluating the feedback received from the students themselves and their educators, in view of developing this offering further in the years ahead.

These sessions were held with the support of the Department of Accounting within the Directorate for Learning and Assessment Programmes (DLAP) within the Ministry of Education. The Institute also expresses its appreciation towards supporting companies as well as its member committees and student groups who provided instrumental contributions in the development of this campaign.

Malta`s Efforts to exit the FATF’s ‘Grey List`– the role of professionals.

Getting Malta out of the ‘Grey List` has been one of the priorities of the Malta Institute of Accountants (MIA) for the past months. In fact, the MIA (the “Institute”) had put forward recommendations, challenged viewpoints, and taken leadership in the development of new legislation and regulation on the subject, including on the enhancement of regulation of the profession, insisting on quality and accountability.  

During a physical conference held on 7^th December 2021, the Institute called for a timely exit from the ‘Grey List` of the Financial Action Task Force (FATF) but noted that this should not be at the cost of stifling business with “over-regulation and excessive bureaucracy”. In fact, the Institute has been listening to its members, whilst also working with different authorities and stakeholders. The MIA`s Anti-Money Laundering (AML) Committee has worked with the Financial Intelligence Analysis Unit (FIAU) on various aspects, including the drafting of the sector-specific Implementing Procedures Part II which are still to be released. Such guidance will provide sector-specific guidance to accountants and auditors in the field of anti-money laundering. Various training and discussion events have been organised together with the FIAU and the Malta Business Registry (MBR) to help support practitioners in relation to anti-money laundering obligations. The growth and success of the Maltese jurisdiction was the result of the collective effort of all stakeholders, with the Institute insisting that now again it is time for everyone to take the necessary, decisive action required from the respective ends. 

During the Conference, presentations and panel discussions centred around beneficial ownership and tax evasion, these being the two key areas on which the FATF has pushed Malta for further action. 

Key stakeholders involved in implementing the action plan agreed with the FATF noted that a change in mentality is already evident in the efforts demonstrated over the past few months. Nevertheless, focusing on their respective areas of concern, speakers emphasised the need for increased effectiveness.

The FATF has pushed Malta towards a more effective analysis of intelligence being gathered and the enhancement of investigative, supervisory and enforcement structures by competent authorities, together with the application of proportional sanctions. 

While authorities noted satisfactorily the cooperation being shown by professionals and that certain tax advisors and accountants are reluctant to service certain clients, an emphasis was made on the need for professionals to be vigilant and provide the necessary information, including submission of high-quality Suspicious Transaction Reports. Professionals do not have to be convinced beyond reasonable doubt to submit reports - a reasonable suspicion is enough.Practitioners need to have the right knowledge and right definitions so that they carry out what is expected of them without going overboard. Professionals emphasised that all staff must be provided with the necessary training on what to look out for in terms of ‘red flags’ on money laundering. There should be tailor-made training on what is to be expected and what raises concerns.

Speakers noted that we must not only focus on cases where the predicate offence of tax evasion happens in Malta. Professionals need to undertake proper due diligence to determine whether money laundering is happening. One must move away from a tick-the-box approach and really understand the due diligence. Accountants and auditors do not need to be investigators, but they need to raise concerns. Industry professionals, as subject persons, have a responsibility towards society as gatekeepers.

Practitioners need also to be alert for any changes. Compliance is not a form filling exercise but an ongoing process. The business risk assessment must be updated on a frequent basis, while also making sure to follow the risk appetite of a business. It was acknowledged that if the risk does not justify the fees, then one should not accept the client. Practitioners must have clear communication and centralisation of the AML process. If there is inconsistency between information available and the customer profile, accountants and auditors must ask the right questions and obtain supporting documentation. If something remains too complex, illogical or unreasonable even after all the questions asked, then one must consider raising this further. Care must be taken and issues must be raised both at onboarding and at termination stage. Accountants themselves emphasised the need to adopt and foster a culture of ethics, integrity and professional scepticism. Business must be carried out with a duty of care, not for the money or the client, but for the accountancy profession and our country.

Experience shows that grey listing results in actions, domestic cooperation and increased awareness, while creating knowledge and experience. This MIA Conference confirmed that this is also being experienced in Malta.

This event was supported by Lexco Compliance Solutions, InScope and Konnekt, and brought together almost 200 professionals.

The Malta Institute of Accountants notes with disapproval the introduction of Legal Notice 419 of 2021, which allows taxpayers to offset tax payable on property transfers against their existing tax arrears.

This measure is tantamount to a tax amnesty and is a slap in the face to all professionals and entrepreneurs who operate their business in full compliance with legal and ethical considerations, while rewarding defaulters who abusively failed to pay their dues towards society.

Beyond ethical considerations, the MIA expresses deep concern that the enactment of the Legal Notice in question was carried out against the spirit of the collective effort of authorities, institutions, and professionals, to contribute to enhance Malta’s international reputation.

This Legal Notice risks derailing the country’s efforts on one of the most pressing issues for the country, notably its commitment, both nationally and to the international community, to fight tax crimes. By rewarding defaulters that have abusively failed to abide by legal requirements, Malta is risking undermining the progress the country is seeking to make in this regard.

The Malta Institute of Accountants has been working closely with the authorities to ensure that Malta strengthens its fight against money laundering and improve its reputation in this regard. It therefore believes no stone should be left unturned to achieve this crucial objective.

In this context, the Institute appeals to Government to withdraw this legal notice.

David Delicata appointed as new MIA President

The Institute of Accountants has held its 57th Annual General Meeting on Friday 1st October, during which it elected seven fellows of the same Institute to its Council. The members are Ms Charmaine Baldacchino, Mr Edmond Brincat, Mr Mark Bugeja, Mr Christian Gravina, Mr Mr Noel Mizzi, Ms Lucienne Pace Ross and Mr William Spiteri Bailey. They join Mr Fabio Axisa, Mr Christopher Balzan, Mr David Delicata, Dr Jonathan Dingli, Mr Shawn Falzon, Dr Ivan Grixti, and Ms Annabelle Zammit Pace on the 14-member Council.

During the event, the MIA members, who joined the AGM online, were able to raise questions to the Institute and also vote on a series of statutory changes proposed by the Council.

Introducing his final Annual General Meeting, outgoing President Fabio Axisa highlighted the Institute’s efforts to strengthen and elevate the quality and standards within the accountancy profession. While insisting that the accountancy profession in Malta offers a high-quality, highly-regulated industry, he acknowledged that there was always scope for improvement. With the objective of covering as many accountants as possible, the MIA has also instituted a programme for the purpose of including expatriate accountants, Axisa explained, adding that the Institute would like to see better numbers in this regard over the coming years.

Recalling that the Institute comprises some 3,700 members, the absolute majority of which reflect the body’s ideals and standards, Axisa highlighted the efforts to improve the disciplinary proceedings of the Institute. “Every single complaint against any of our members was investigated, and where necessary, disciplinary proceedings were undertaken”, Axisa explained.

The Institute had strengthened its voice and the respect among its peers on a national level over the past few years, the outgoing President said: “Our voice is considered reliable, relevant and constructive.  Our credibility has been attained through our incessant work with respect to formulation of feedback to formal and informal consultations carried out by all relevant regulatory authorities”. Fabio Axisa insisted that the body will continue to take a leading role in future changes, arguing that not only will the MIA continue to provide feedback to matters of national importance but also being proactive with proposals on issues such as the role and structure of the Accountancy Board, which regulates the profession.

Mr Axisa also highlighted the importance of investing further in driving more young people towards the accountancy profession, referring to an ongoing campaign directed at secondary students, indicating that increasing the supply of quality professional accountants will remain one of the MIA’s priorities. “We have recently launched a landmark education campaign targeting Year 8 & Year 11 students, to educate these children on the attractiveness of our profession and other topics related to accountancy”.

Mr Axisa thanked his fellow Council Members, Committee Members, the Management and employees of the Institute for their sterling work in favour of the accountancy profession in Malta.

During the first meeting of the same council held shortly after, the four Officers of the Council were elected. David Delicata was elected as the Institute’s new President, Mr Noel Mizzi as Vice-President, Mr Mark Bugeja as Secretary and Mr Christian Gravina as Treasurer.

Mr Delicata, who served as Vice-President of the Institute for the past two years, thanked the Council members for their trust while expressing his appreciation towards outgoing President Fabio Axisa for his sterling contribution throughout the past challenging two years, during which the Institute’s voice was strengthened and has become an important stakeholder in matters of national interest.

Going forward, Mr Delicata expressed his commitment to continue to guide the Institute in elevating the standards of the profession and working closely with Regulators and other stakeholders to support the country in shoring up its reputation, which is essential in Malta’s post-pandemic recovery.