Malta market focus
obligations, but with careful planning, the tax changes can be turned into an opportunity too. It was announced by the Maltese Government that there will be a change of the tax system moving away from the tax refund regime which has been in place for around 30 years. This will be replaced by a more classical system where profits are charged separately from dividends. A system is in the pipeline and the government is determined to strike a balance between meeting its revenue needs and supporting all industries, including the gambling industry, whilst continuing to be a tax competitive jurisdiction. Malta is heavily dependent on service industries and, while tax will always be a major factor, the headline rate of corporation tax is not the complete picture. The island will continue to look for ways to make itself an attractive place to do business from a personal as well as an enterprise perspective. The change to the international tax rules will also be an opportunity for companies to rationalize their corporate structures. Many forward-thinking companies are already gathering data as to what business they do in each of the markets in which they operate in anticipation that this will help make smart decisions. The key is to co- locate value creation with the most profitable operation in an attractive tax jurisdiction and that should continue to provide Malta with an advantage. What most organisations are calling for above all is clarity. Once the rules and their method of implementation are clear, tax is likely to be manageable as an operational cost. The next twenty years Looking to the future and the next 20 years, it is clear that Malta starts from a position of strength. The unanticipated
effect of the FATF grey listing will be a business environment that is cleaner and more transparent. Its gaming and gambling companies are well regulated and see value in a Maltese license as an operating framework as well as a useful endorsement when trying to attract investment. The industry is strong and thriving but it cannot be taken for granted. Its continued success is the shared responsibility of all parts of the gaming ecosystem. The regulatory framework and the regulator are both of high quality and that in turn attracts high quality people. Malta will strive to remain an attractive place to do business and there are reasons for confidence that reforms to tax and regulation will help the country to achieve its aim. These objectives would be supported by steps to incentivise local and foreign technology investors and, in particular, start- up companies and venture capitalists. The government’s recent announcement that it will create a technology investment fund is potentially helpful but private capital should be encouraged too and investment made in technology regardless of the vehicle chosen to achieve it. Education will also play a big part in the future. Creating an attractive operating environment for companies means investing in skills, in marketing support services and the provision of payment services. Investments in those areas will make the biggest contribution to the gaming industry and in turn to the country. Investors, whether local or from overseas seek the same things: well-functioning infrastructure, affordable housing, education and adequate connectivity. The Government has the main responsibility for delivering this but they are not the only ones. Each individual and organisation connected with gaming needs to play their part in ensuring that the next 20 years are just as successful.
Ramona Azzopadi is a Tax Partner at WH Partners.
James Scicluna is co-managing partner at WH Partners. For more information contact +356 2092 5124 james.scicluna@whpartners.eu
IMGL Magazine • July 2022 • 9
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