TAXATION & REFUND SYSTEM IN MALTA

Transcription

1 igaming

2 THE GROUP BDO Malta, a Maltese civil partnership, is a Member Firm of BDO International Limited, a UK company limited by guarantee and one of the world s largest professional services firms. BDO provides accounting and auditing, tax and consultancy services on a globally integrated basis with over 1,300 offices in more than 150 countries. Combining our international capabilities and local market knowledge with an extensive range of skills and industry expertise, we are able to provide a one-stop shop for all accounting, audit, legal, management consulting and corporate finance needs. BDO Consult Limited and BDO Services Limited are companies registered in Malta and form part of the BDO Malta group. BDO is the brand name for the BDO network and for each of the BDO Member Firms. Moreover, BDO Consult Limited ( a fully-fledged corporate services company, has been active in servicing the international business sector since the 1980 s and accordingly its team of experienced professionals are able to provide a wide range of services to its international corporate and private clients. It offers special expertise in most aspects of company management, corporate services, taxation, accounting, auditing and administration. The company and client is serviced by a multi-disciplinary team, organised into five support units: Audit, Corporate Services, Legal & Compliance, Accounts and Operations. Licensed by the Malta Financial Services Authority to act as Company Service Provider, trustee and fiduciary, and has a team of well-trained individuals with integrity and commitment to providing an excellent service tailored to meet all of a company s requirements. Servicing clients requiring legal advice in a wide range of areas of practice, including tax planning and corporate law, financial and gaming services (including obtaining remote gaming licenses from the Malta Gaming Authority), trusts and foundations, maritime and VAT on the leasing of yachts amongst others. In this respect, please find listed hereunder the numerous services we offer: 1. Tax and VAT Consultancy 2. Tax and VAT Compliance 3. Incorporation / Formation of Companies 4. Banking Services (Maintenance and Opening of Bank Accounts) 5. Legal and Consultancy Services 6. Correspondence and Administrative Services 7. Company Secretarial Services 8. Accountancy 9. Full outsourcing of bookkeeping and accountancy services 10. Directorship 11. Audit & Assurance 12. Yachting and Marine Services 13. Licensed agents for Individual Investor Programme (IIP) 14. Acting as Key officials for Gaming Companies

3 I GAIMING MALTA TAXATION & REFUND SYSTEM IN MALTA A person, in receipt of a dividend, may claim a refund of the Malta tax paid by the company in respect of those profits distributed to him by way of such dividend. The refund is: 6/7th if the dividend is paid out of profits allocated to the company s Maltese Tax Account or Foreign Income Account; 5/7th if the profits are distributed out of the Maltese Tax Account or Foreign Income Account and derived from: i) passive interest or royalties (not derived, directly or indirectly, from a trade or business; and have not suffered any foreign tax or suffered foreign tax directly, by way of withholding, or otherwise, at a rate which is lower than 5%); and ii) dividends received from a participating holding which do not qualify for the participation exemption. 100% if the profits are distributed out of the Foreign Income Account and derived from a participating holding or from the disposal of such holding; 2/3rd if the dividend is paid out of profits allocated to the Foreign Income Account and in respect of which profits the company has claimed relief of double taxation. The refund is claimed on the tax chargeable in Malta by the company on the profits out of which the dividend is distributed. If treaty relief or unilateral relief is claimed by the company, the Malta tax chargeable is computed by reference to the Malta tax chargeable before claiming double taxation relief. In such situation, the actual refund is however limited to the Malta tax actually paid by the Maltese company. To the extent that the tax refund exceeds the Maltese tax paid on the income, the excess cannot be claimed as a refund. If the FRFTC is claimed by the company, the Malta tax chargeable is computed by reference to the Malta tax liability on profits distributed by the company. A declaration of the dividend triggers the entitlement for the shareholder to apply for a refund of the Malta tax paid at the level of the company. A declaration (even if actual payment thereof is not effected) of a dividend in favour of the shareholder is crucial to obtain the tax refund. Any accounting impairments on distributability would imply that a portion of the profits on which tax is paid cannot be distributed by the company in favour of the shareholder and, as a result, the tax paid on the corresponding profits cannot be refunded. The refund of Malta tax paid would be claimed pursuant to the submission of an application for this purpose by the shareholder to the Malta tax authorities. Such a refund application must be made within 4 years from the date on which eligibility thereto arises (that is, the date on which the dividend is received) and must be accompanied by a copy of the dividend warrant issued by the company in favour of the shareholder. The relevant refund would be payable by the Malta tax authorities in favour of the shareholder by a date not later than the 14th day following the day on which the refund becomes due and would not be subject to further tax in Malta.

4 I GAMING MALTA Example diagram - active income (taking 6/7 th refund) Tax payment & refund Net divided income (65) Refund 6/7th of Malta Tax Paid at Malta Total income (95) Combined Overall Malta Effective Tax Rate -5% Full imputation Malta 35% (35) minus Imputation Credit (35) Total Malta Tax (0) Malta Corporate Shareholder Income is Gross amount (100) Malta Company Dividend payment (65) Malta 35% (35) Income (100) Computational example Taxation of the Malta Company Amount ( ) Chargeable Income Corp. Income Tax 35% Profit for Distribution Taxation of the Shareholder (Malta Company) Net dividend income Grossed up with tax paid at Malta Company Level Gross dividend income Corp. Income Tax 35% Imputation credit (equals Malta Tax deducted at company level) Total Malta tax payable Refund of 6/7th of the Maltese tax chargeable on the gross income received by Malta Co. (i.e. 6/7th of 35) Total income (dividend + refund) (combined effective tax rate 5%) IGaming Tax Class 1-4,660 per month for the first six (6) months and 7,000 per subsequent month. Class 1 on 4-1,200 per month. Class 2 0.5% (zero point five per cent) on the gross amount of all bets accepted. Class 3 and Class 3 on 4 5% (five per cent) of real income. Class 4: The gaming tax payable by a hosting platform is nil for the first six (6) months of operation, 2,330 per month for the subsequent six (6) months (month 7 to month 12) and 4,660 per subsequent month (month 13 onwards) for the entire duration of the licence.

5 I GAMING MALTA The maximum gaming tax payable annually, per licensee in respect of any one licence is 466,000. Where a Class 4 platform provides services from Malta to operators licensed elsewhere in the EEA, a monthly gaming tax of 1,165 for each such operator is payable in Malta. The 2015 VAT changes As of 1st January 2015 the place of B2C supplies of electronic services by suppliers will shift to the country where the customer/player is established or usually resides. igaming operators having customers in different EU Member States will have to determine whether VAT is chargeable in the Member State of their customer, and, if so, charge and collect VAT accordingly. This means that operators will have to either register for VAT in the Member State of each customer, or can opt to register in only one Member State and report the VAT due in other Member States in one single electronic declaration (under the so-called mini one-stop-shop scheme). Stage One Setting up of Limited Liability Company The setting up of a tax efficient vehicle for carrying out gaming activities from Malta. Maltese companies used for remote gaming must clearly state in their Memorandum of Association that their main object is the conduct of remote gaming operations. BDO Malta is indeed a one-stop-shop and thus in a position to provide all of the services required by the gaming entity in order to fulfil the statutory obligations under Maltese company law. Stage Two Licence Application The application process is divided into five stages. These being: i) Fit and proper and business plan review: assessing all information related to persons involved in finance and management and on the business viability of the operation; probity investigations with other national and international regulatory bodies and law enforcement agencies; ii) Business Planning: in-depth financial analysis of the applicants business plan; applicant s business plan required to have a detailed forecast of the operation; inclusive of marketing and distribution strategies, HR plan and growth targets; iii) Operational & Statutory Requirements: applicant is examined on the instruments required to conduct the business; process includes examining incorporation documents, the games, the business processes related to conducting the remote games, the rules, terms, conditions; also includes procedures of the games, the application architecture and system architecture of the gaming and control systems; iv) System Audit if application was successful MGA will invite the applicant to implement onto a technical environment in preparation for Going Live; applicant will be allowed 60 days to complete this operation after which the application will be considered as suspended and subject to reapplication; within the 60 day period, the applicant may trigger a request for an external systems audit, performed by an independent third party; significant changes to the gaming system will require the applicant to re-apply through a new application; on successful completion the MGA issues a five year license; v) Compliance Audit after Going Live, a Licensee shall undergo a number of compliance audits of its operation, performed by an independent third party; the audit will have the following schedule: i) after first year of operation; ii) on the third year of operation; iii) on the implementation of gross changes in the gaming system; iv) at the discretion of the MGA if any suspicion arises; failure of a compliance audit could lead to suspension and even termination of licence.

6 I GAMING MALTA Share Capital The Authority requires a company applying for a licence to have the following minimum issued paid up share capital when registering the company with the competent authority: Class 1 - one hundred thousand euro ( 100,000) Class 2 - one hundred thousand euro ( 100,000) Class 3 - forty thousand euro ( 40,000) Class 4 - forty thousand euro ( 40,000) Furthermore, companies applying for multiple licences should have the cumulative of the requirements hereby established, up to a maximum of two hundred and forty thousand euro ( 240,000). Classes of Licenses The Remote Gaming Regulations establish four (4) Classes of Remote Gaming Licences, these being: Class 1 a remote gaming licence (eg. casino type games, online lotteries) whereby operators manage their own risk on repetitive games. It is also possible to have a Class 1 on 4 licence whereby the Class 1 licensee operates its games on the software and in certain cases through the equipment of a Class 4 licensee; Class 2 a remote betting licence (eg. fixed-odds betting) whereby operators manage their own risk on events based on a matchbook; It is possible to have a Class 2 on 4 licence whereby the operator makes use of a licenced Class 4 operator; Class 3 a licence to promote and/or abet remote gaming in or from Malta (eg. poker networks, peer-topeer (P2P) gaming, game portals). It is also possible to have a Class 3 on 4 licence whereby the operator uses a licenced Class 4 as its platform; Class 4 a licence to host and manage remote gaming operators, excluding the licensee itself, whereby software vendors provide management and hosting facilities on their platform. In essence this is a business to business (B2B) gaming licence. Duration of licensing process If all the necessary documentation and information is provided to the Authority, the process leading to the provisional licence takes approximately ten (10) to twelve (12) weeks. Once the application is confirmed by the MGA, the applicant will be invited to implement onto a technical environment and will have 60 days time to Go Live. If the operation is not completed during this time, the request will be considered as suspended and subject to re-application. On successful completion the MGA will issue a five year license. The main responsibilities of a Key Official The Key Official (KO) is the liaison person between the Authority and the licensee and therefore such person must always be abreast of all the operations of the licensee. The KO must be a director of the licensee and readily available in Malta. The KO s responsibilities are to: personally supervise the operations of the licensee; and ensure that the licensee complies with all applicable laws and regulations, the conditions of the licence and any directives issued by the Authority to the licensee We have a package of services to assist our clients through the application process, including naturally, the actual incorporation of the Gaming Company. The services offered as part of this package are as follows:

7 I GAMING MALTA Licence Application 1. Initial meeting/exchanges with the MGA to outline requirements, discuss strategy for Malta operation; 2. Collection, review and collation of due diligence documents; 3. Assistance with Business Plan and Financial Projections; 4. Assistance with filling in of Application Form, Personal Declaration Forms, and other requisite documentation; 5. Submission of Licence Application and supporting documents and liaison with MGA up to issue of Licence; Fee 10, 000 Remarks One-Time Fee Optional Services Fee Remarks Key Official 1200 (per month) Gaming companies licensed in Malta require a resident director who shall act as the Key Official, being the person responsible to ensure that the company complies with local regulation Incorporation of a Company 1800 (One -time Fee) Inclusive of drafting of Memorandum and Articles of Association, Company Registers, Appointment of first officers, Allotment of shares and carrying out initial KYC review Opening of Bank Account 300 (One -time Fee) Optional Important to note that the above fees are exclusive of Value Added Tax and work beyond the work described above. Remote gaming licence fees as applicable by the Malta Gaming Authority: Disbursements (payable to the MGA) A non-refundable application fee for a new license of any class A non-refundable application fee for the renewal of any class An annual license fee in respect of any class (to be paid within 15 days from the formal granting of the licence and annually thereafter) Approval fees for Transfer or Assignment of Licence EURO 2,330 1,500 8,500 1,500

8 CONTACT For more details please contact: Mark Attard Partner Mobile: (+356) Luke Attard Business Development and Corporate Services Mobile: (+356) BDO Malta, a Maltese civil partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO Consult Limited and BDO Services Limited are companies registered in Malta and form part of the BDO Malta group. BDO is the brand name for the BDO network and for each of the BDO member firms. BDO Malta, 2017 Tower Gate Place Tal-Qroqq Street Msida MSD 1703 Malta Tel no: (+356) Fax no: (+356) info@bdo.com.mt