Last year, as has been the case with other Med resorts, Malta also had an increase in arrivals.  Statisticians tell us there is safety in numbers, yet so far nobody bothers about over capacity.  

MHRA, of late woke up to point out the danger of over tourism and the need for better control on new licenses for hotels.  The island could see an additional 483 hotels crop up if all the planned tourism accommodation projects in the pipeline ever come to fruition.  But who cares.  These facts were shared during the Malta Hotels and Restaurants Association, latest hospitality forum (sponsored by Bank of Valletta) during which a presentation was delivered by Deloitte.

A pivotal aspect was the latest situation of hotel occupancy.  Inter Alia, the study revealed how a vast majority of planned new accommodations (41%) are designed to be 3-star offerings, which means such projects might not necessarily align with the national vision to accommodate “high quality” tourists.  Currently the per capita spend by tourists is a low €15.9 daily.  

At this junction, the reality of hosting a deluge of “hamburger” class arrivals, one may stop and question why are we kicking the can?  Deloitte exclaimed concern about how the incidence of 3-star and other planned accommodations which are set to have less than 100 rooms, throwing into question whether these can survive in the long term. 

Doing the sums, unless they employ more low-wage TCN’s, even new 5-star accommodations may not be sustainable.  For many years, established hotels and other stakeholders in the tourist industry are concerned seeing their share of the cake dwindling.  

This share is diminishing with the planned permits for large scale new builds.  Another MHRA study revealed a shocking message that the island would need to see 4.7 million tourists a year to keep its present occupancy rates afloat.  It is good to remind readers that regrettably we see Comino (with a unique blue lagoon beach) being flooded with day trippers, dirtying its environs, all dancing to loud dance music provided by five licensed kiosks selling spirit imbibed grapefruits.  

Blue Lagoon operators running kiosks, water sports activities, deckchair rentals and other commercial services will likely face higher encroachment and permit fees starting in summer this year.  Speaking on Times Talk last month, the new tourism minister Ian Borg vowed to “clean up” Comino, add sanitary facilities and introduce stricter and fairer concessions for boat, kiosk and deckchair operators.  He felt committed to issue tenders (instead of direct orders as was the previous practice) for all future concessions guaranteeing transparency and fairness.  

Another parallel problem facing the island is over-population which again last summer has led to persistent power cuts (sporadically supplemented by portable noisy diesel generators parked outside residential areas and clinics).  No doubt, such blackouts add to infrastructure pressures resulting from chaotic traffic and sewage issues. 

Sewage blockage issues is a key problem, with stakeholders saying sewage networks are operating “vastly beyond designed capacity in certain key areas” which often results in sewage seeping into the sea.  The consequences of Iran war have targeted Middle East resorts such as Cyprus which is very popular with British tourists.  

Some may consider Malta and eventually add to our over-capacity dilemma.  Can we do something to turn the clock back to serenity?  Yes, just notice how competitors in the central Mediterranean, such as Spain and Venice started a policy to disincentivise excessive tourism in certain periods, in line with the fragility and uniqueness of the resorts.

Needless to remind readers about rallies in the Canary Islands where residents have highlighted problems of over-tourism.  They also increasingly want a better type of tourist: one who respects local culture and nature, not one who drinks cheap beer on the beach and leaves their empty bottle behind with a cigarette butt stubbed in the sand. 

According to tourism researcher and Aalborg University professor Carina Ren, there have always been badly behaved tourists; it’s just that there are more of them now than ever.  

In Spain’s Balearic Islands, renowned for nightlife destinations such as Ibiza and Magaluf, restrictions on alcohol have come into force in a bid to regain control over its disorderly streets.  Moving on, we note how in heavily visited Venice, day trippers now are charged a fee to try to stem the flow of unending visitors.  

Whereas, in Malta citizens simply grumble in silence, regularly air their grievances in social media, yet they never unite and march to Valletta voicing their anger against a noticeable degradation in the environment.  Can we learn from other resorts to live a quieter life and protect our sensitive ecosystem.

A sustainable model requires planning, restraint and the willingness to say ‘enough’ when systems reach their limit.

The post Can we control the tide of tourist arrivals first appeared on The Malta Business Weekly.

This has always been an extremely sensitive issue. The fly in the ointment is the imposition of the ETS (Emissions Trading System), which as can be expected is putting Maltese operators at a disadvantage.

Recent estimates by the Central Bank of Malta indicate that the inclusion of aviation in the EU’s ETS results in flights to and from Malta are costing an additional €88 million per year.

New emissions-related costs are increasing the price of importing and exporting goods. Current projections by Atto, The Association of Trailer and Truck Operators, indicates an additional cost of around €700 per container. “Malta, Cyprus and Ireland are fully-fledged EU member states yet, EU policies related to maritime and road transport are not considering the specific disadvantages, insularity and geographical realities of these island states,” says Joseph Bugeja, chairman of Atto.

In practical terms, ETS means higher costs for importers, which are inevitably passed on to consumers. Worse still, these policies are distorting fair competition beyond our shores. Recently published reports showed that shipping routes from Asia to the Mediterranean can save up to €100,000 by bypassing the Malta Freeport in favour of transshipment hubs in North Africa.

Malta is doing its part by investing heavily in expanding Freeport facilities and has been active in setting up “shore-to-ship” provision of electricity. Although the ETS is necessary to help address the impacts of climate change, it is significantly affecting us in a negative way. It undermines not only Malta’s position but also Europe’s broader maritime competitiveness. Atto said one operator has already announced a surcharge, adding €272 per trailer for a round trip between Malta and Genoa. This will be reflected in additional charges, starting at €734 per trailer once the ETS is implemented and potentially rising to €1,006 per trailer over time.

With the ongoing conflict in the Middle East, the partial closure of the Strait of Hormuz and Houthi’s war in the Red Sea points to reduced trade passing through the Mediterranean. These rising costs will inevitably be passed on to Maltese consumers, whereas rising bunker prices are prompting shipping lines and freight operators to review the Bunker Adjustment Factor (BAF) applied to freight rates.

When measuring trailer traffic to Genoa, then multiply a surcharge by the 650 weekly trailer movements, this results in an extra €653,900 per week. The additional costs will ultimately be borne by consumers and thus trigger higher inflation. As can be expected, circa 60% of trailers leaving Malta must return empty to Genoa. These trailers still incur the full surcharges, further amplifying costs.

It needs no further explanation to justify why members of Atto solidly voice their concern. One leading international trailer operator has registered an increase of €14,600 per week in fuel-related costs alone, before additional market adjustments. Considering the geographic isolation of islands, it can be argued that policies designed primarily for the continent disproportionately penalise island states like Cyprus, Ireland and Malta.

Let us now see the other side of the coin. Why is the EU implementing these new policies such as The Alternative Fuels Infrastructure Regulation (AFIR), ReFuelEU Aviation, FuelEU Maritime (often referred to collectively with ReFuelEU as the aviation and maritime fuel initiatives), and the revised Renewable Energy Directive (RED III)? There has been a lot of consultation with EU member countries prior to the launching of such key pillars of Fit for 55 package.

This package aims to reduce net greenhouse gas (GHG) emissions by at least 55% by 2030 (compared to 1990 levels) and achieve climate neutrality by 2050. These measures address infrastructure gaps, demand for sustainable fuels in hard-to-electrify sectors like aviation and shipping, and the promotion of renewable energy. AFIR upgrades the earlier Alternative Fuels Infrastructure Directive (AFID) into a regulation with legal binding, directly applicable as it targets all member states. It entered into force in October 2023 and applied from April 2024. Its goal is to build a dense, interoperable network of recharging and refuelling points for electricity, hydrogen, and other alternative fuels to support zero-emission road transport, shipping, and aviation while minimising oil dependence.

In connection with maritime and aviation rules these introduce obligations such as shore-side electricity supply for larger seagoing ships in ports and for inland vessels and electricity supply for stationary aircraft at TEN-T airports. Fuel suppliers at EU airports must ensure minimum SAF mix in all aviation fuel supplied. Sustainable Aviation Fuel (SAF) refers to drop-in aviation fuels that can be blended with or fully substitute conventional jet fuel (kerosene) while meeting strict sustainability levels.

The SAF content was set at 2% from 1 January 2025, increasing to 6% by 2030, with a sub-target for synthetic fuels starting at 1.2%. In conclusion, climate neutrality became legally binding in 2021, when the European Climate Law entered into force. Unless these rules are fine-tuned, there is a risk that maritime trade may avoid Malta ports and relocate to African countries with less stringent climate regulations, thereby undermining the global EU’s emission reduction efforts.

George M. Mangion is a senior partner at PKF Malta 

The post Islands face higher costs under Emissions Trading System first appeared on The Malta Business Weekly.

At the site of the largest air strike on Beirut, hours later, emergency workers were still searching the damaged buildings.  Following a deluge of bombs, Iran wants a permanent end to its conflict with America and reckons that control of Hormuz will help it achieve that goal.  It will not want to reopen the strait, and give Mr Trump a respite from soaring energy prices, in exchange for nothing more than a brief truce.  Roughly 20% of global oil and LNG normally passes through the strait, it stands to reason that this war and repeated closures have already brought tanker traffic to a near standstill.

Back to Lebanon, its leaders are angry with Hezbollah, saying it has dragged the country into an unwanted war. Despite thousands of Israeli and American air strikes, Hezbollah was still able to launch dozens of missiles and drones at Israel and the Gulf countries every day.  Many believe that America and Israel had bombed most nuclear-research centres, but Iran still has over 400kg of enriched uranium, presumably hidden underground so Israel’s desire, to topple the Iranian regime, looks further off than it did before the conflict started.  One needs to assess the financial turmoil that the brief Iran invasion has created so far.  One reads how following Iran’s announcement of a conditional safe passage during a two-week US-Iran ceasefire window, oil prices have plunged sharply.  Brent fell to around $91–95/bbl and WTI to $92–96/bbl in early trading, with intraday drops exceeding 15% in some sessions — the steepest single-day declines in years.  Some commentators and foreign‑policy analysts have argued that the ceasefire terms may disadvantage the United States, while others say the deal was the only realistic way to pause escalation.  Whether anyone was “cheated” is a matter of interpretation, not an established fact.  Certainly, it was a clever move by Iran to use the Strait of Hormuz as a bargaining chip.  This leads some commentators to say the U.S. may have given Iran room to manoeuvre. 

It is also fair to say that the U.S. avoided a wider war, which would have led to a full US-Iran military confrontation.  From this perspective, the U.S. was not cheated but rather made a pragmatic choice to avoid escalation.  Now, Iran is reputed saying it has the right to impose tolls; but U.S. officials said the deal required free passage.  Global shares rallied to their highest levels in more than a month on 7th April, as investors rushed to buy following the announcement of a two-week ceasefire between the US, Israel and Iran. Oil prices fell the most in almost six years on the ceasefire proposal, which revived risk sentiment across global markets.  US claims it had already achieved its military objectives while on the other hand, Tehran is setting the terms for further negotiations.  Some statements from both sides point towards a strategic defeat for the US that could transform Iran’s geopolitical position and its privileged role in the Gulf.  Iran and Pakistan as a mediator said the ceasefire also applied to Israel’s campaign in Lebanon, a development that would reflect its status as a junior partner in the US-led war who must fall into line with Washington – though Israeli prime minister Binyamin Netanyahu later said the ceasefire “does not include Lebanon”.  Iran may demand that shipping companies pay tolls in cryptocurrency for oil tankers passing through the Strait of Hormuz, as it seeks to retain control over passage through the key waterway during the two-week ceasefire.  Hamid Hosseini, a spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, told the Financial Times that Iran wanted to collect tolling fees from any tanker passing and to assess each ship.  Many underwriters and clubs charge additional war-risk/Gulf-transit premiums or surcharges for vessels calling at or transiting the Strait of Hormuz, the Gulf of Oman and adjacent high-risk areas.  Cover can be restricted or subject to extra premium, higher deductibles, endorsements, or outright exclusion unless extra terms are agreed.  There will be significant additional cost per voyage in higher-risk periods; for some trades the surcharge can be material to voyage economics.  Iran states that passage is only possible “via coordination with Iran’s Armed Forces and with due consideration to technical limitations”.  This effectively gives Iran veto power over every tanker movement.  If the truce holds perhaps, one hopes that this condition limiting passage through the Hormuz Strait may be lifted. 

George M Mangion is a Senior Partner ay PKF Malta

The post Will it be business as usual following Iran cease fire? first appeared on The Malta Business Weekly.

Some argue that rising militarism and a growing appetite for conflict are reshaping the EU in ways they find unacceptable. Faced with all these developments, Malta as a neutral country will face tough choices in the foreseeable future.

What are other EU members doing in their countries to beef up defence spending? To start with, in recent years, Germany has embarked on one of the most significant military modernisation efforts in its post‑Cold War history. Driven by shifting geopolitical realities and the need to strengthen both national and European security, the country is rapidly expanding its defence industrial base.

This expansion goes beyond merely acquiring weapons systems, it also involves large‑scale investment in the domestic production of such components, technologies, and industrial capacity essential for modern warfare. Germany has committed €355 billion through 2041 for new military equipment, on top of a €100 billion special fund.

Apart from munitions, there is a vast expansion in expenditure consisting of combat vehicles, communications and electronics. These categories include thousands of components – sensors, armour systems, electronics, propulsion parts, and more – produced by German industry. By comparison, France’s defence priorities, as outlined in its 2025 National Strategic Review (RNS) and the updated 2024-2030 Military Programming Law (LPM), emphasise strategic autonomy, high-intensity warfare readiness, and a balanced “complete army” model. This contrasts with many other EU countries, which focus more narrowly on territorial defence or specific capability gaps.

Back to Germany, we observe a transformation in its long‑term financial commitment. Berlin has allocated €355 billion through 2041 for new military equipment, supplemented by a €100 billion special fund established after Russia’s invasion of Ukraine. A substantial share of this funding is directed toward categories that rely heavily on component manufacturing – munitions, combat vehicles, communications systems, and logistical equipment. Germany’s strategy also emphasises strengthening domestic defence manufacturers.

Approximately €182 billion in upcoming procurement projects are tied to German companies, with Rheinmetall emerging as a particularly prominent beneficiary. The company appears in more than 50 procurement lines worth over €88 billion, covering armoured vehicles, ammunition, weapons systems, and the specialised components that enable them.

This approach reflects a deliberate effort to ensure that critical technologies from fire‑control systems to missile housings are produced within Germany’s borders. The expansion of component production is especially visible in several key areas. In the field of munitions, Germany has placed orders for thousands of DM22 anti‑tank mines and is replenishing ammunition stocks depleted by support to Ukraine.

In ground systems, the procurement of FLW 100 and FLW 200 remote weapon stations requires domestic manufacturing of optics, stabilisation mechanisms, and electronic subsystems. Germany is also investing heavily in advanced electronics, including explosion‑proof GPS receivers and thermal imaging sights, which demand sophisticated microelectronics and ruggedised engineering.

As can be expected, we note how air defence has become another priority. Germany is constructing a layered air‑defence network centred on systems such as the domestically-produced IRIS‑T SLM, which requires local production of missile bodies, seekers, launchers, and radar components. Even when integrating foreign systems like Arrow 3 or Patriot, Germany invests in domestic infrastructure and electronic support systems to ensure operational independence.

Beyond traditional weapons, Germany is channelling resources into emerging technologies. Investments in loitering munitions, drone swarms, radar satellites, and laser‑based weapon prototypes signal a commitment to future‑oriented capabilities.

These programmes rely on advanced optics, AI-enabled power systems, and digital components – areas where Germany aims to build long-term industrial expertise. Underlying all these efforts is the National Security and Defence Industry Strategy, which seeks to reduce reliance on foreign suppliers and reinforce Germany’s role as a capable and autonomous defence producer.

The strategy includes incentives for local manufacturing, streamlined procurement processes, and support for dual‑use infrastructure that enhances military mobility. By investing not only in finished systems but also in the components and industrial capacity behind them, Germany is positioning itself as a central pillar of European defence. The result is a more resilient supply chain, a revitalised industrial base, and a military better equipped to meet the challenges of an increasingly uncertain security environment.

In conclusion, tiny Malta is faced with realities of the war in Ukraine, the conflicts in the Middle East and the Gulf, so it must wisely prioritise resilience, diversification and diplomacy. Such objectives ought to be focused towards achieving an economy capable of withstanding future economic shocks while seizing opportunities in expanding its GDP levels.

George M. Mangion is a senior partner at PKF Malta

The post Discussing a new outlook for Malta’s defence strategy first appeared on The Malta Business Weekly.

Criminals are using AI-generated audio and video to impersonate trusted individuals, enabling large-scale fraud like a $25 million heist via a fake video call.  “Pig butchering” scams that mix emotional manipulation with bogus crypto investments have stolen billions from U.S. victims, often traced to overseas cybercrime rings.  Scammers continue to exploit older card holders through impersonation and fear tactics, prompting sanctions against organized cybercrime networks.  

So-called “pig butchering” scams, involve victims lured into online relationships and persuaded to invest in fake cryptocurrency platforms, resulting in significant financial losses.  Romance baiting might see an uptick in 2025 because of AI deepfake images/videos and romance chatbots.  The goal is to get the victim to believe that there is a possibility of romance or dating, with the scammers sending messages to establish trust and gain enough of it to convince the victim to share personal data or even send funds.  

A typical Romance Scam in 2025 involved deepfake images of Brad Pitt, which scammed the victim out of $850,000.  Another variation of this scam involves sexual exploitation, also known as sextortion scam.  Back in Malta, Inspector Brimmer says that defrauded amounts in cases filed with the police force between January and June 2025 totalled €8.3 million (150 cases).  

 Fraud through theft from business emails has also exploded, with fraudsters accessing emails and communicating with customers themselves and stealing money.  In the first six months of this year, it has more than doubled, to €995,563.  Multiple rulings in Malta, from the Arbiter for Financial Services (OAFS) in 2024-2025 held BOV partially responsible in scam cases.  

For instance, in ASF 050/2024, a client lost €12,345 via a fake email link; the arbiter assigned 70% blame to the victim for negligence but 30% to BOV for not detecting anomalies like same-day transfers from savings accounts.   At least 10 similar OAFS decisions involving BOV were issued in 2024 alone.  The Arbiter was not convinced, pointing out that once the mistake in the BIC code required manual intervention on the part of the bank, it should have recognised the suspicious nature of the transaction.  

This time, the arbiter questioned whether the bank, when reviewing this mistake, should have picked up on suspicious circumstances: a transaction of a significant amount being sent to a foreign account.  For this reason, it ordered the bank to pay 20 per cent of the sum as partial compensation.  The SMS spoofing BOV scam is when a client receives an SMS from the BOV number, which would usually have an alarming message asking people to click on a link.  

As tourism exploded in 2025 with over 4 million visitors (mostly using credit cards), naturally bank risks have been high. Malta has seen a rise in banking-related scams, aligning with global trends in cyber fraud as digital banking adoption increased.  Common tactics include phishing via SMS, emails, and phone calls; spoofing of bank numbers or websites; and sophisticated investment frauds like cryptocurrency schemes or business email compromise (BEC).

While scams have targeted various banks, Bank of Valletta (BOV), as Malta’s largest bank, it has been particularly prominent in reports due to its vast customer base.  BOV has frequently alerted the public to emerging threats and collaborated with authorities like the Malta Police Force to combat them. Scammers spoof BOV’s official phone numbers to pose as bank employees, tricking victims into revealing sensitive information.  

Broader investment scams, like fake endorsements (e.g. a fabricated Times of Malta interview with tenor Joseph Calleja promoting “CoinovX” in 2026), have also targeted BOV users.  A new wave of sophisticated phishing scams is targeting Bank of Valletta (BOV) clients, with fraudulent messages appearing within the same SMS thread as genuine communications from the bank, making them appear legitimate and increasing the risk of victims being deceived.  

Money is siphoned off into foreign bank accounts or crypto wallets, moving fast from one jurisdiction to another but regrettably not all jurisdictions are cooperative.  When customers called BOV as they thought the message was genuine, BOV personnel warned them not to click on any links sent via SMS or email.  Figures provided by (BOV) the Bank of Valletta show that in the first half of the year, the bank’s customers were defrauded of more than €3 million between them, an increase of more than €2.3 million when compared to the first six months of last year.  

More arrests were made following an extensive investigation by the Financial Crime Investigations Department.  Recently, the police have arrested a 25-year-old woman and an 82-year-old man in connection with an online fraud case which saw some 200 people suffer total losses of €1 million.  

Tammy Caruana, currently unemployed, was arraigned this month, where she denied all charges, including money laundering, fraud, and being part of an organised crime group and criminal association. She has been accused of duping some 200 people by impersonating local banks and defrauding the victims.  Investigations have linked the woman to an international criminal network.  

Some ask what the laws are protecting the honest card holder. Starting with PSD2 (the EU Payment Services Directive, it was transposed into Maltese law.  This distinguishes authorised from unauthorised payments. APP fraud usually involves a payment that the victim “authorised” (but under deception). PSD2 requires the payer to notify the PSP (bank) without undue delay on becoming aware of an unauthorised transaction.  

Public awareness campaigns, including BOV’s “Spot the Scam” initiative and partnerships with the Malta Chamber of Commerce, have aimed to educate users.  A positive note respects how banks have contractual terms and internal complaint procedures: these often set procedural deadlines for lodging complaints or requesting an internal review.

The post Latest scams involving banks first appeared on The Malta Business Weekly.

Accounting burnout is very real and the position in Malta is infamously one of the most stressful. It is considered normal for audit partners to sacrifice rest and personal time in the name of profits and in peak periods some work 60-hour weeks. That’s why it’s no surprise that many (if not most) accountants struggle with physical exhaustion, mental health challenges, and chronic stress in employment. For the audit profession January is a month of slow starts and New Year resolutions. Accountants/auditors/tax advisers are only human. They face personal challenges just like everyone else. Ideally, no matter how you’re feeling, there is always someone ready to listen. The effect on “burnout” as a formal clinical measure is less often reported directly, but many studies and vendor/consultant case studies use proxies (for example reduced hours of routine work). For the accountancy profession, it is a relentless sprint. While the “January crunch” is often discussed over coffee in hushed tones, new data suggests that the mental health toll on the industry has moved beyond seasonal stress into the territory of systemic burnout.

According to latest research from Caba, the occupational charity for the ICAEW, ACCA regimes and studies by the Accountancy Today, the true anatomy of the January crunch reveals a perfect storm of professional and personal pressures. The typical January post-holiday backlog reflects a large accumulation of work after the festive period. Institutional reports (EU‑OSHA, OECD) and professional bodies (ACCA, ICAEW) in the UK are seriously reviewing digitalisation and wellbeing to mitigate stress. Consulting‑firm studies and client case studies from Big Four and strategy consultancies (McKinsey, BCG, Deloitte, PwC, KPMG) have documented impacts on workload, cycle times some of which led to staff resignations. The case studies in the UK highlight a significant barrier to seeking help: 63% of accountants would be reluctant to seek support for mental health issues and a staggering 68% would keep quiet about personal financial struggles. Studies show how part of the reasons for this silence are rooted in professional anxiety. The fact that a high proportion of accountants report feelings of burnout in January should be a wake-up call for the audit profession. When burnout is “normalised”, it ceases to be managed as a risk and starts being accepted as a cost of doing business.

In most audit firms employing Gen Z semi seniors, this leads to high turnover, lower productivity, and, ultimately, a talent drain in an already tight labour market. The usual question arises – when the workload cannot be reduced or new staff sourced – can AI come to the rescue? Yes this may be the case with some precaution, although one must limit the AI’s retrieval corpus to up‑to‑date primary law (EUR‑Lex, national consolidation, official guidance, regulator Q&As), approved internal policies, and vetted secondary sources. It is generally advisable to treat AI as a decision‑support tool, and never as an autonomous legal adviser. To prevent increased legal risk, combine AI with strict data governance, curated legal sources, human review by qualified staff, conservative output behaviour (flag uncertainty, cite sources), formal validation and monitoring, and clear operational rules about when to escalate to lawyers or regulators. Use AI for triage, draft summaries, checklists, or extraction of obligations – not as the final legal decision-maker. Monitor metrics such as number of compliance errors traced to AI use, user override rate, and user satisfaction/trust. Train users on what AI can/cannot do, how to read provenance, and the organisation’s policies. Require staff to record when AI was used to develop advice and confirm they obtained necessary legal sign‑off. Ensure the AI environment complies with GDPR and confidentiality rules. Use trusted cloud deployments for sensitive client or personal data and avoid sending confidential documents to public API services without contractual safeguards.

Is there an audit trail and incident response process for AI‑related errors? Has the system been validated against known cases? Have the potential privacy and AI Act/GDPR implications been assessed and appropriately mitigated? As always audit partners must ascertain if any legal/regulatory liability and insurance been clarified. IT is their duty to assess whether the AI system qualifies as “high‑risk” under the EU AI Act and implement required risk‑management measures if so.

Burnout among accountants is a significant issue, with studies suggesting that up to 99% experience some level of burnout due to high workloads and job-related pressures, particularly among auditors, tax consultants, and corporate accountants.

In conclusion, one should consult professional‑liability insurers to confirm whether use of AI changes coverage and adjust disclosures/controls as required. It is recommended to establish an audit trail and an incident response procedure for AI-related errors.

The post Can AI mitigate burnouts in accountants and auditors’ offices? first appeared on The Malta Business Weekly.

I was not driven astray, since last year Vietnam’s GDP grew by 8%, beating a forecast of 7.7% but still falling short of the government’s target of 8.3-8.5%, which would have needed an extraordinary boost in the final quarter.

For the uninitiated, let me give some historical background to this phenomenal country, now counting 102 million citizens (its superficial area is 1,000 bigger than us).

Over the 20 years leading up to 1975, the country endured a heavy burden of war, which led to stagnation. Its economy was primarily agricultural, underdeveloped, and struggling with widespread poverty, largely due to years of centralised economic planning under Communist rule. It also faced international isolation with limited access to foreign markets. It comes as no surprise that its low GDP reflected significant poverty and underdevelopment, with the economy heavily reliant on subsistence agriculture, particularly rice-farming, which attracted little foreign investment.

A typical Communist style of a centrally-planned economic system, linked to post-war isolation; resulted in further restricted foreign investment and trade relations. By the mid-1980s, Vietnam’s GDP per capita was stuck between $200 and $300. Gradual reforms in the economy saw rapid economic growth. It led to substantial reductions in poverty and growth of a middle-class with rising discretionary spending. However, significant changes were implemented such that the government introduced “Đổi Mới”, a series of economic and political reforms, that shifted the nation towards a “socialist-oriented market economy”.

This was a miracle cure for a mainly agrarian economy. The export basket shifted from being almost exclusively focused on garments and footwear toward higher value-added products such as electronics, mobile phones, components, and machinery, as well as more complex manufacturing. Vietnam actively courted export-oriented Foreign Direct Investment (FDI) and became an assembly and manufacturing hub for global brands. Multinationals established large factories that brought jobs, capital, and technology transfer. The creation of industrial parks, special economic zones, and logistics infrastructure (ports, roads, and power) provided turnkey locations for investors.

Swift accession to the WTO in 2007 was pivotal for investor confidence and market access. The importance of more recent trade agreements (for example, the CPTPP, the EU-Vietnam FTA, and numerous bilateral FTAs) should not be underestimated, as they further opened markets and encouraged exporters to climb the value chain. Its most dynamic economies were subjected to bold economic reforms, starting with the attraction of FDI, faster integration into global trade, and diligent educational programmes to upgrade its relatively young generation of workers.

Massive FDI inflows, especially from Korea, Japan, Taiwan and China invested in electronics, consumer goods and component manufacturing facilities. Now, it is focused on digital transformation, high-value manufacturing, and sustainable development, such that industry and construction account for around 38% of Vietnam’s GDP, reflecting a profound structural shift in the economy. The country has emerged as a major manufacturing hub in southeast Asia.

A new generation of domestic conglomerates such as Vingroup, Viettel, Masan, FPT, Hoa Phat, and Vinamilk has scaled up, investing in property, telecommunications, manufacturing, technology, and services, while rapidly integrating into the global supply chains of firms such as Samsung, LG, Intel, and Foxconn. This digital transformation has emerged as a key growth accelerator. The digital economy reached an estimated 18.3% of GDP in 2024, expanding at over 20% annually. At the same time, Vietnam’s startup scene is booming in fintech, e-commerce, logistics, AI, and green technology, attracting billions of US dollars in venture capital each year and ranking among the most vibrant in the region.

Malta’s growth since 1964, when it functioned as a fortress economy, has been driven by specific sectors such as tourism, gaming, and finance, with little or no venture capital, whereas Vietnam benefits from a broader industrial base supported by a substantial investment sector. Back home, Castille is proudly baking a roadmap styled Vision 2050. This is our magical carpet to sweep us into the promised AI wonderland. It identifies seven strategic, high-value sectors, selected not for their ability to employ large numbers of low-skilled workers. It tells us how the country wishes to address the flood of TCNs and plan for a 4% growth target in 2026.

Last September, we welcomed the Deputy Minister of Foreign Affairs Le Thi Thu Hang who was greeted by Deputy Prime Minister, Minister of Foreign Affairs and Tourism of Malta Ian Borg. Both parties agreed to continue effectively exploiting the Vietnam-EU Free Trade Agreement (EVFTA), promoting EU countries to soon ratify the Vietnam-EU Investment Protection Agreement (EVIPA), thereby enhancing investment attraction between Vietnam and the EU in general, and with Malta in particular. As a country with strengths in maritime economy and shipping, Malta affirmed its readiness to enhance cooperation with Vietnam in training sailors and crew members to international standards, developing tourism, and promoting the signing of maritime cooperation agreements.

In conclusion, can Malta, a tiny island with no natural resources, grow its economy by 2026 at a pace matching Vietnam’s target of over 8%? Only time will tell, barring the usual trade disruptions that often accompany election years.

George M. Mangion is a senior partner at PKF Malta

The post Racing to catch up with Vietnam’s success first appeared on The Malta Business Weekly.

For basis years commencing on or after 1 January 2024, the rules apply to any arrangement entered into on or after this date, as well as to pre-existing arrangements that are materially altered on or after this date. From January 2027, the rules will extend to all arrangements, regardless of the date on entry, effectively limiting the grandfathering provision to three years. The prescribed methodology is based on the internationally-recognised arm’s length principle which essentially seeks to establish what the price would have been, had the transactions been carried out under comparable conditions by independent parties. What constitutes an arm’s length principle can be defined as the amount determined on the basis of such methodologies, as shall be designated by the Commissioner in guidelines to be issued in terms of article 96(2) of the act.

It is interesting to note that taxpayers can now apply for a unilateral transfer pricing ruling. This means a ruling issued by the Commissioner that determines, in advance of an arrangement, an appropriate set of criteria for the determination of the transfer pricing for that arrangement. The said criteria include the method used to arrive at the transfer pricing, and appropriate adjustments thereto, and critical assumptions as to future events. One may ask what are the transactions taxed under the proposed rules? The answer is any cross-border arrangement which means an arrangement between associated enterprises, where any one of the following conditions is satisfied: (i) at least one party to the arrangement is not resident in Malta and at least one party to the arrangement is a company resident in Malta, and the arrangement is relevant in ascertaining the total income of that company; (ii) at least one party to the arrangement maintains a permanent establishment situated outside Malta to which the arrangement is effectively connected, and at least one party to the arrangement is a company resident in Malta and the arrangement is relevant in ascertaining the total income of that company; (iii) at least one party to the arrangement is not resident in Malta and at least one other party, not being resident in Malta, is a company which maintains a permanent establishment situated in Malta to which the arrangement is effectively connected, or otherwise derives income or gains arising in Malta, and the arrangement is relevant in ascertaining the total income of that company.

A request for a unilateral transfer pricing ruling shall be made by a party to the transaction. The scope for a unilateral transfer pricing ruling is to provide certainty in relation to the application of these rules to a transaction. Such a ruling shall remain binding on the Commissioner for a period of five years from the date the tax ruling takes effect. In case the transactions have already commenced on the date of the request, the scope of the request may be extended to such transactions that took place during the previous three basis years. When the Commissioner declines to issue such a ruling, he shall issue a notice in writing and this refusal may apply where the interested party is not up to date in relation to the obligations in relation to tax returns and tax payments, at the time that such request is made. Aggrieved taxpayers may have recourse to the Administrative Review Tribunal.

What are the benefits to the international investor who chooses Malta as a domicile? One such benefit is that advance pricing agreements offer certainty of outcomes for taxpayers engaged in cross-border transactions. Who is impacted? The proposed law will target bodies of persons who will fall within the purport of associated enterprises, when there is a direct or indirect control, through a minimum holding of more than 50% of the voting rights, or ordinary share capital, or by virtue of any powers conferred by the articles of association, or other document regulating the controlled body of persons.

Specific provisions relating to dealings and arrangements between a company and its permanent establishment shall be included. It is a relief that micro, small or medium-sized enterprises shall be excluded from scope of transfer pricing rules. Readers may be pleased to know that the income chargeable to tax of companies that fall within scope of the proposed rules will be computed with reference to the arm’s length amounts of incomes and expenditures. The rules provide for corresponding adjustments to be made in computing the chargeable income of other parties to the arrangement where such income falls within the scope of local tax. One needs to assess whether prices are genuine, having regard to all relevant facts and circumstances. The rules do not apply to cross-border arrangements entered into a financial period, where during the said financial period the aggregate arm’s length amount of:

1. transactions of a revenue nature do not exceed €6 million; and
2. transactions of a capital nature do not exceed €20 million.

Separately, any arrangement between a company with a PE situated in Malta, to which the arrangement is effectively connected, or from which it derives income or gains arising in Malta, and a non-Maltese-resident party, will fall under transfer pricing rule.

In conclusion, one is encouraged to submit recommendations to the proposed transfer pricing rules to better suit the local business configurations. 

The post Taxpayers now able to apply for unilateral transfer pricing rulings first appeared on The Malta Business Weekly.

Today, it reaches high levels of bounty and affluence, spurned by the re-election of Donald Trump and his slogan “Make America great again”. Likewise, in Malta, we dread past years of poverty, rationed food and long queues of jobless workers in the 70s.

Today, we can rejoice and triumphantly welcome a thriving economy which boasts full employment aided and supported by the recruitment of thousands of third country nationals. The latter signed up for local work conditions, after facing meagre wages and difficult living conditions in East Asian countries. Most were lured by licensed temping agencies which bagged a cool million – charging them for work permits, while finding them temporary shelter and jobs.

On the subject of demography, Adrian Delia, deputy leader of the Nationalist Party, stated in Parliament that the indigenous population could not have increased naturally in such a short period, given the low female fertility rate. Alternatively, even if the government had introduced a scheme to attract back 160,000 Maltese migrants, the country would still be facing the same problem of overpopulation. So, are we classified as the isle of milk and honey – where equality reigns? Not so quick.

Data released by the Central Bank of Malta shows that the richest 10% in Malta own practically 90% of Malta’s business wealth (equivalent to €11.6 billion). The overall amount of debt (including mortgages and other personal credit) of households in the bottom half of the net wealth distribution is estimated at €6.7 billion (fourth quarter of 2023), accounting for 65.6% of total household debt in Malta.

The wealthiest 10% alone, not surprisingly, account for half of the level increase in net wealth since 2010. Yet, on a positive note, cash is everywhere as the economy floats on €25 billion of idle depositor money. Also, encouraging are tourism forecasts. Ryanair is currently forecasting that overall passenger movements will climb to over eight million next year. The tourist season has been very rewarding last year (albeit at a lower per capita return) as we picked up the slack suffered during the 2020-2022 period. A cool 4 million visitors are expected in 2025.

At the same time, sadly, not all taxpayers are rendering to Caesar the true coin. Malta has the second-highest VAT gap – an estimate of the overall difference between the expected theoretical VAT revenue and the amount collected. This can be our Achilles heel when it comes to tax avoidance. Although progress has been glacial, unresolved scandals and lingering signs of corruption have kept NGOs actively protesting. A recent IMF report warned that, despite impressive growth, Malta’s physical and public health infrastructures are creaking under rapid population growth.

We urgently need to refurbish St Luke’s, which has been abandoned and left derelict. The debacle of the Vitals/Stewards concession of three hospitals sticks to our dirty slate. Three years ago, the Court of Appeal found the deal to be fraudulent and decried government officials to be complicit. This has cost us millions. More sins of our economic success include a shortage of skilled and high-tech workers. A sombre mood lingers, over jobs’ scarcity, particularly in professional offices. Yet, the property sector is comparatively buoyant, even if their lucre rarely makes headlines, fortified with the NSO data indicating that the number of signed promises of sale remains stable compared with previous years.

Internationally, particularly in the US, one notices aggressive, almost belligerent “disruptors” appearing virtually out of nowhere, dominating new markets, or driving long-established top firms to ruin with radical business models lacking industry experience. In Europe, the latest AI Act, introduces the concept of classification of the risks posed by the use of an omnipresent AI system. Simply put, there are four tiers of risks, the highest of which applies to those uses that are considered unacceptable for people’s security and fundamental rights, such as social scoring.

The second, and perhaps most significant tier, identifies “high-risk” AI systems, subjecting them to a myriad of ongoing obligations, including testing, risk mitigation, human oversight, data governance, cybersecurity, accuracy and detailed documentation. Finally, the third and fourth tiers consist of limited-risk systems where minimal transparency requirements are imposed to strike a balance between innovation and regulatory oversight; and minimal/no-risk AI systems, where voluntary codes of conduct are encouraged.

In conclusion, the nostalgic picture of US housewives buying staples from an open-air truck in Manhattan, reminds us how today, the procurement of family needs in Malta, has vastly improved by the opening of a galloping number of mega discount stores, each competing to offer a wider product choice.

Cheers, let us pray in Yuletide, that Malta succeeds to sustain an economy with full employment, reduce inequality, foster meritocracy and good governance.

Merry Christmas

George M. Mangion is a senior partner PKF Malta 

The post Yuletide and the AI revolution first appeared on The Malta Business Weekly.

This year, in a bid to tackle overtourism, Barcelona, Nice, Cannes, and Isafjordur in Iceland introduced plans to reduce the number of cruise ship passengers allowed to disembark in European ports. It appears that 2026 will be another year of reining in unbridled tourism , at a time when locals are feeling the heat and politicians are heading their complaints.

In 2024, nearly 13 million cruise passengers arrived in Spain, with almost four million of these disembarking in Barcelona. The city of Venice introduced the Venice Tourist Tax pilot project in 2024 to curb overtourism and to return a little balance to the ancient city, particularly for locals, to help the economy and environment. A number of articles are being published locally touching on the social and ecological costs of over tourism. We are reaching a consensus that the tourism industry is operating beyond its’ carrying capacity.

Have we been overtaken by the economic sweeteners that inbound tourism generates. Are we too blind to notice crowded residential streets, overstretched utilities, rising waste problems and localities losing the characteristics that supposedly attract tourists in the first place. Yet, the hotel lobby is dominant and stands to gain from keeping the status quo. Hotel owners and other operators have continued to invest heavily to build top luxury amenities enjoying sea front vistas and are not so worried that the average tourism per capita daily spend is a mere €178.

Adherents to the sector have always singled out the benefits of this milking cow. It supports jobs and drives economic activity. The fly in the ointment is that nobody likes to step down from the revolving charismatic, never ending jam jar carousel. The current model, built primarily on ever-increasing visitor numbers, is not sustainable anymore. In this volume trade, one closes both eyes to the stern fact that had it not been for thousands of imported third country nationals, there are not enough locals to row the boat. Is it sustainable? Check out how the infrastructure is coping. With sewage odours in certain coastal areas during the summer and a number of swimming bays closed is a reminder that the sewage and wastewater treatment systems are operating beyond capacity.

Traffic and air pollution worsen as more arrivals choke the airport, as Y plate cars, shuttle buses and tourist transport lord over the narrow roads. For residents, this means slower commutes, worse air quality, and increasingly inaccessible streets. Many onlookers plead with Castille to set up a new policy objective to reduce excessive peak‑day and peak‑month tourist pressure while protecting tourism revenue and supporting business transition to a flatter seasonality curve. MTA ideally implements it for next season, combined with fiscal levers, regulatory controls, operational measures and demand‑shaping interventions with clear responsibilities, pilot plans and an implementation timetable.

Why not impose a higher seasonal accommodation surcharge during peak months (June to October) with a suggested €3–€7 per room‑night (sliding scale by accommodation class: budget €3, mid €5, premium €7). This shall apply to all hotels, licensed short‑term rentals and registered holiday lets. Introduce variable airport/port passenger charges or landing/slot fees higher in peak periods; coordinate with airlines/cruise lines to smooth schedules. Obviously, there needs to be proper and extensive consultation with all affected sectors. To speed such an important roadmap, Castille shall dutifully create a (bipartisan) Peak Demand Taskforce. This involves the Ministry for Tourism as a leader, with representatives: ACE, MRHA, Local Councils, Transport Malta, Ports/Harbour Authority, Malta Tourism Authority, NSO, legal counsel.

Three years ago, Deloitte had been directly engaged by the Malta Hotels and Restaurants Association on a study that inter alia revealed  how the sector to survive has to attract almost five million tourists to fill up the accommodation supply at 80 per cent capacity. Five million is a disaster pill.

This year has been a bumper year for arrivals and four million are predicted. Total inbound tourists for October 2025 were estimated at 417,103, an increase of 17.3 per cent when compared to the corresponding month in 2024. The largest share of guest nights (89.5 per cent) was spent in rented accommodation establishments. Malta is not alone to feel the pang of over tourism, as other European cities are responding to similar pressures with the noble goal to reclaim public space for people who live there. 

With resolve and prudence, we shall prevail. 

The post 2026: A cure for overtourism first appeared on The Malta Business Weekly.