@Fred is completely right about the banking situation, its practically impossible to open an account with the local banks. The alternatives are EMI's, which are also hard to open an account with (which is a good thing). Like Fred said there are not many on Malta but you can also opt for a EMI outside of Malta obviously, but most are not open for Maltese companies anymore(Like Revolut and Wise). But if you have a legitimate business and have some decent turnover you will eventually be able to open an account with a EMI, don't worry about that, but it will take a long time. I incorporated here 3 months ago and so far have been accepted by 1 EMI outside of Malta, the applications I have with Maltese EMI's are taking a lot longer and they do a lot more due diligence, I don't even bother trying to open a bank account with the local banks because I have spoken many people that have been here for a long time and tell me it's a waste of time, even for Maltese citizens with local business it can be a pain in the a*s. Maybe if you can manage to build up a relationship with a local bank here you can open business account but that would involve moving your assets to their bank and taking loans from them etc. The other alternative is to stick with crypto if that is a option with your business model.
The reason why a lot of people pick other countries over Malta is because the alternatives are usually better.
For example you need to operate 2 companies to achieve the 5% (preferably 3 if you want to pay 5% directly), that also means you need to do accounting and reporting for 2/3 companies which will cost a lot more then with just one in for example Cyprus or Bulgaria. It could cost you up to 5-10K a year depending on your situation, this is pretty much the same cost as setting up in Dubai and in Dubai you pay 0% tax in most cases.
The cost of living here is higher then in Cyprus or Bulgaria. The island is also really small which can be a downside (there is a lot going on and to do for a island this size though), it is really congested all of the Island pretty much, there is no quite spot on Malta, everywhere there are people, every piece of the island has been adjusted by human hands, there is pretty much no nature. So if you are looking for a quite place Malta is not for you, Gozo is more quite though.
Everything is really bureaucratic and slow, even a lot the private business lack good service here like car dealerships, probably because of a lack of competition.
There are a lot of pro's as well obviously.
There are direct flights to pretty much all big cities in Europe, you can also leave the island by car (1.5 hours to Sicily).
Climate is pretty much the best you will find in Europe, it can get pretty hot in July and August but you can be out of the country in July and August if you are not a fan of hot weather.
It has the lowest tax rate you will find in the EU, and a great non-dom program.
The Local Maltese people are very friendly and welcoming and everyone speaks English (its a official language)
Most services are available on Malta, cheap and fast internet, and everything is nearby.
Malta isn't a bad option but it all depends on your personal situation, and that is why a lot of people pick other countries over Malta. But if you make a nice profit every year that outweighs the downside if the high cost of maintaining the companies and the higher cost of living it is a really good option.
