Issue link: https://maltatoday.uberflip.com/i/905944
maltatoday WEDNESDAY 22 NOVEMBER 2017 13 Business Today I attended last week the 11th Asia conference held at the majestic JW Mar- riott hotel in Hong Kong where I had the privilege and honour to deliver a breakfast speech promoting Malta's attrib- utes as a financial centre to a se- lect group of Chinese investors. The conference attracted 400 delegates and was organised by Henley & Partners which annu- ally promote citizenship on a lav- ish scale in a number of countries including Cyprus, Malta, and a host of Caribbean countries. Malta was represented by Fi- nanceMalta and Identity Malta while a number of practition- ers attended the three-day event mingling with the delegates and discussing investment and citizenship opportunities. The Prime Minister Joseph Mus- cat gave a didactic speech em- phasising that despite unprec- edented economic success the island has also been successful to promote its scheme for citi- zenship by investment amid stiff competition fielded by other EU countries. It will reach the target registration of 1,800 applicants which will mostly be invested in a National Sovereign fund. Joseph Muscat has revealed that a renewal of citizenship programme would be "more ex- clusive" than the first, as Malta hopes to continue attracting the "right kind of people" to its shores. Despite stiff criticism from partisan Opposition blog- gers who severely criticised the direct involvement of Muscat in such promotions, he boldly expressed his opinion that "We are open to innovative ideas to make our programme even more successful and better". Referring to his detractors at home, he reiterated that Malta was not pitching to applicants looking for an easy way to get citizenship and continues to maintain the most rigorous due diligence system in the world. It goes without saying that be- ing proactive, the government has attracted the attention of per- sons who are investing and help- ing the country through personal contacts to explore new econom- ic niches such as block chain and cryptocurrencies. It is, there- fore, no surprise that such ini- tiative has resulted in attracting business negotiations with the China Aircraft Leasing Group (CALC). This is the biggest air- craft lessor in China and is also involved in aircraft disassem- bling and recycling (see picture). CALC is no underling. It is a full value-chain aircraft solu- tions provider for global air- lines, which recently entered into an aircraft purchase agree- ment with Boeing for 50 new 737 MAX series aircraft, with a list price of US$5.8 billion. It has grown from being a market leader in China's aircraft leas- ing industry to becoming one of the most important players in the global aviation market, and now has a strong team in place, looking to capture global oppor- tunities and to diversify its fleet portfolio in an effort to meet the varying needs of airlines cus- tomers in such a dynamic mar- ket. CALC was awarded "Listed Company Award of Excellence 2017" for the second consecu- tive year by the Hong Kong Eco- nomic Journal in recognition of its robust operating results and sound corporate governance. Readers may ask what Malta can offer to Asian players in the aviation sector. The answer is simple. Entry to the Euro- pean Union and recent changes in the legislative framework has galvanised new opportuni- ties (provided these are well marketed) in the aviation sec- tor. The Aircraft Registration Act on 1st October 2010 had amended the Civil Code and the Code of Organisation & Civil Procedure. It implements the provisions of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol which is well known for its benefits to banks and aircraft leasing. Entities established or oper- ating in Malta, carrying out finance leasing activities will henceforth be exempt from li- censing requirements where owned, or are subsidiaries of or are exclusively funded by professional clients or persons recognized as eligible counter- parties in accordance with ar- ticle 30 of Directive 2014/65/ EU of the European Parliament. Finally, Malta aims to achieve the economic benefits falling under the Cape Town Conven- tion by way of declarations, including clarity of prevalence rules in the event of conflict and by permitting the use of the form annexed to the Aircraft Protocol. Observers tell us that recent enactments make Malta an at- tractive jurisdiction for both private and commercial aircraft registration within Asia, while also ensuring full adherence to the restrictions imposed by EU law on the registration and own- ership of aircraft within the EU. We may have started late in the game so there is no time to lose to catch up on lost opportunities - ideally similar roadshows are hosted by Malta Enterprise to yield rich dividends. The legis- lation now permits recognition of fractional ownership of air- craft, the registration of aircraft under construction as soon as it is uniquely identifiable; and broadening of registration pos- sibilities for non-air service aircraft. The legislation has re- moved restrictions to charging of and the compounding of interest from applying to debts and other obligations secured by mortgage or due under a lease of an air- craft or aircraft engine whether registered in Malta or otherwise. Specific provisions with re- gard to the taxation of aviation income are innovative and can be beneficial to Asian inves- tors. This means that revenue from the ownership, leasing, or operation of an aircraft or aircraft engine used for or em- ployed in the international trans- port of passengers or goods is deemed to be earned outside of Malta. This could lead to nil tax leakage since such profits are considered as not remit- ted in case of owners resident, but not domiciled in Malta. More good news is showered on owners who now qualify for accelerated depreciation - six years for aircraft airframe, en- gine, and overhaul, and four years for aircraft interiors and other parts – together with an exemption from the application of fringe benefit rules on in- come. For corporate owners the advantages are equally interest- ing. Leasing an aircraft carried by Maltese companies (along with performing other avia- tion-related activities) would mean an entitlement to benefit from the standard corporate tax rate linked to an attractive re- fund structure payable within 14 days from tax payment. Malta is also a signatory to all EU tax directives and it does not withhold taxes on dividends or interest payments outside of Malta. Such concessions need to be demonstrated to Asian in- vestors who are traditionally attracted to other EU countries particularly Ireland and UK. We are proud to have a number of European aviation compa- nies such as Lufthansa Technik, VistaJet, Avcon Jet, among oth- ers but there are opportunities to attract leading Asian pro- viders of aircraft maintenance repair and overhaul services. Can we afford to remain apa- thetic or shall we unite and set forth to showcase our quali- ties and join the club of well- organised aviation centres? As always, the early bird catches the worm. George Mangion is a senior partner of an audit and consultancy firm, and has over twenty-five years' experience in accounting, taxation, financial and consultancy services. His efforts have seen that PKF Malta has been instrumental in establishing many companies in Malta and placed PKF in the forefront as professional financial service providers on the Island. George can be contacted at gmm@pkfmalta.com or on +356 21493041. George Mangion Aviation - punching beyond our weight