by George Farrugia
Serious gaming companies understand the importance of a reputable licence. Being perceived by players as safe and credible will provide greater credibility to online game sites and therefore assist in making them more competitive on the market. Maltese Gaming regulation can offer precisely than but also coupled with favorable tax regimes and a professional operating environment.
Malta offers the E-Gaming Industry a package that few other jurisdictions can match. The Remote Gaming Regulations issued in early 2004 by the Gaming and Lotteries Authority continue to enhance on the existing rules and further enhances Malta’s reputation as a jurisdiction to be trusted by both players and operators.
The Authority will grant licences to operate gaming offices to such persons who have demonstrated “appropriate business ability to conduct the betting office successfully”.
The new rules provide for four different classes of licences, namely:
- Class 1 – Remote Gaming Licence for online gaming
- Class 2 – Remote Gaming Licence for online betting office
- Class 3 – Promotion and abet gaming from Malta
- Class 4 - Hosting and managing only gaming operations, excluding licences itself.
Licences are issued for a minimum period of five years and may be extended for further periods of five years each.
Licensing Requirements
Obtaining a gaming licence in Malta is a serious affair and in the interest of the consumers and the local reputation, the Authority would require to know that the applicant can meet the licence obligations. The licensing procedure is quite extensive but thanks to the professionality of the persons involved, this procedure should not take more than 5 to 6 weeks.
The application for a gaming licence requires the following documentation:
- Detailed profile of the promoting company
- A copy of the last audited accounts of the promoting company, where applicable
- A business plan indicating the economic activity – including job creation if any – which will be carried out from Malta
- A plan of the premises earmarked for adoption as a call center.
- Personal details of all shareholders having more than 5% interest in the local operations.
Basic Requirements
• Both hardware and software involved in the operations must be located in Malta, and there exist companies that can provide this service without the need for the licensee to obtain its own premises.
• The activities of the International Trading Company are limited to those carried outside Malta. No Maltese resident is permitted to place bets with such a company.
Licence Fees
On submission of application form – Lm1,000 (US$2,700) for any class of remote gaming licence.
On Issue of any Remote Gaming Licence – Lm3000 (US$8100) per annum. Such a licence is normally issued for a 5 year period.
On application for renewal of any Remote Gaming Licence – Lm500 (US$1,350)
Taxation
On online gaming – Lm2000(US$5400) per month for first six months and Lm3000(US$8100) per month for the entire duration of the licence period.
On Class 4 Licences – Lm0.0 (NIL) per month for first six months and Lm1000(US$2700) per month for the next six months and Lm2000(US$5400) per month for the remaining period of the licence.
Online betting operations – one half of one per centum (0.5%) on the gross amounts of bets accepted
Online betting exchanges – one half of one per centum (0.5%) on the sum of all net winnings calculated per player per betting market.
Online pool betting – one half of one per centum (0.5%) on the aggregate of stakes paid.
Provided that in no case will the maximum of tax payable per annum by any licensee in respect of any one licence, exceed Lm200,000.
Company Registration
A Malta based gaming operation must be carried out by a Malta registered company as specified in Regulation 4 of the Remote Gaming Regulations (LN176/2004). For non resident applicants we further recommend that such e-gaming operation be carried out through an INTERNATIONAL TRADING COMPANY (ITC) registered in Malta for that purpose. Although such a company is considered an ONSHORE Malta company and taxed at the standard 35% company tax rate, through a series of refunds, the shareholders of such an ITC will end up receiving back 30.83% of the taxation paid in Malta when the company profits are distributed as dividends. This actually brings down the effective tax rate on profits to 4..17% .
EU Laws
The EU presently does not regulate gambling and in accordance with the EU principle of solidarity, EU member states are free to regulate the matter at a national level. In fact the EU welcomes Malta’s approach to attract and regulate the online gaming industry.
In a number of test cases, the European Court of Justice has held that the Treaty of Rome applies to the sector since online gaming is classified as a service and therefore guaranteed by one of the four freedoms enshrined in the treaty of Rome.
An important aspect to remember is that in order to benefit from the application of the Internal Market Principles and provide cross border services within the European Union one should be established in the EU. Malta, being an EU member since 1st May, 2004, offers such an opportunity which few other e-gaming jurisdiction can match.
What Malta Offers
Tax Advantages
- Low taxation on gaming
- A low tax onshore tax regime -4.17% of taxable profits
- A network of double taxation agreements
Other Advantages
- A sound legal and financial system
- A sound ICT infrastructure
- Legislation on betting and e-commerce
- Strong regulatory bodies
- A solid international reputation
- Skilled work force
- Low cost of doing business
- State of the Art telecommunications facilities
- An internal market of circa 500 million EU citizens.
Disclaimer
The above information is being provided as a general guide only and should not be considered as a substitute for professional advice.
George Farrugia is the founding partner of MGI Malta. He can be reached at george@mgimalta.com
