Malta triple tax exposure threatens domicile of tier-1 operators
Malta is set to introduce a new corporate tax rate in 2023, according to the Times of Malta, which could have a substantial impact on the revenue of a number of international businesses registered on the island.
Quoting government sources, the outlet stated that between 18 and 20 foreign companies could pay up to three-times as much tax as they do currently, with tax exposure set to increase from 5% to 15%.
Only companies with annual revenues of €750 million or more will be affected by the tax hike, with the current statutory tax rate standing at 35%.
The new tax measures could severely impact the island’s status as Europe’s prominent igaming hub, providing the operating centres for international gaming groups such as Betsson AB, Kindred Group and Tipico Sportwetten.
Of significance, online gambling accounts for 12% of the island’s GDP, generating €700 million and employing 9,000 people. Malta’s domicile has secured backing from industry leadership as Johan Styren, CEO of LeoVegas – which operates its largest office in the country – has described it as an ideal operating environment for betting and gaming providers.
Citing Maltese Ministry of Finance estimates, the Times of Malta reported that local companies affected by the new tax rates will pay out between €50 million and €60 million collectively per year.
The new rates have been enforced by the Organisation of Economic Cooperation and Development (OECD) with the goal of generating €130 billion in international tax revenues annually.
However, although the Times of Malta’s sources suggest that the tax rise is set to occur, the issue is still being debated in the upper echelons of the European Union (EU), with Maltese authorities hoping to secure favourable concessions in negotiations.
This is not the first financial scare to hit the island or its sports betting industry over the past year, as the sector faced a scare when the Financial Action Task Force (FATF) placed the territory on a financial greylist of potentially unsafe locations.
Despite this, no immediate impact on the country’s ratings or those of its domestic rated banks occurred, according to Fitch Ratings, although authorities have moved forward with efforts to strengthen national anti-money laundering procedures in order to achieve greater security and stability.
In an update published in September, the Maltese government published an action plan – in accordance with FATF requirements – to overhaul its AML and financial safeguarding procedures and practices.
Following the aftermath of COVID-19 and against tighter international scrutiny, betting and gaming faces increased corporate taxes across its operating domiciles.
This summer, Gibraltar PM Fabian Picardo signed off on the British overseas territory’s budget that raised corporate tax rates across the board from 10-to-12.5%.
Sanctioning Gibraltar’s first business tax rise since 2009, Picardo underlined that Gibraltar needed to raise approximately £250 million to overcome its deficits as COVID-19 had drained its coffers out of funds.
sOURCE : /sbcnews.co.uk