Tax News Malta Review 2010-2011

MALTA INDUSTRYINSIGHT Malta E-Gaming

In the autumn of 2000 the Maltesegovernment passed legislation enablingonline betting centres to be set up in thecountry, and this legislation, coupled withprovisions from the Income Tax Actwritten specifically for internationalcompanies, made Malta an attractivelocation for casino and sportsbookoperations.

A large number of companies fromaround the world expressed interest inMalta, including Stanley Leisure, WilliamHill, Ladbrokes, Paddy Power, Unibet,GC Sports, International Allsports, andEurofootball.

Malta became the first EU member stateto regulate internet gaming in May 2004with its Remote Gaming Regulationsunder the Lotteries and Other Games Act2001. Malta has subsequently attractedmore than 250 remote gaming companiesand issued over 350 licences.

Tax-News.com Malta Review 2010-2011. Copyright Tax-News.com 2010. All rights reserved.IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained in this publication, but accepts no responsibility for any financialor other loss or damage that may result from its use. In particular, users are advised to take appropriate professional advice before committing themselves to involvement in offshorejurisdictions, offshore trusts or offshore investments.

Malta Shipping

With its location in the heart of the Mediterranean Sea, a centuries old maritime tradition and a respectedand favourable regulatory and tax regime for shipping, it is no surprise that Malta has developed one ofthe world's largest ship registers in modern times, and in the face of stiff competition from other prominentmaritime nations.

Tax Benefits in Maltaby Verdun Group

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Tax-News.com Malta Review 2010-2011A review and forecast of Maltaís international business, legal and investment climate.

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CONTENTS

Malta: Business Hubin the Mediterranean -A quick guide of themain features ofMaltese Companiesby Fenlex

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The Malta GamingJurisdiction - QualityAttracting QuantityBy Jonathan Dalli -Head of Marketing,e-Management

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Malta Holding Companies

Malta, like Cyprus, has been obliged to dismantle its old 'offshore'companies regime as a trade-off for membership of the European Union,but this change has by no means been detrimental to the Maltese business environment, and the jurisdictionremains one of the most favourable places in the EU to locate an international holding company.

Maltese holding companies can be used for a variety of purposes, including holding real assets like property,shares and securities and intellectual property, and intangible assets such as copyrights and patents, andshareholders benefit from a full imputation system under which tax can be reduced to zero percent in certaincircumstances.

Responsible Gaming -CSR in the e-GamingIndustryBy Jonathan Dalli -Head of Marketing,e-Management

Malta E-Gaming

National Lottery and non-profit games. According to its mission statement, theAuthority's role is to ensure that "gaming is fair and transparent to the players,preventing crime, corruption and money laundering and by protecting minor and vulnerable players."

In 2002 the Malta Lotteries and Gaming Authority put together the legislative framework for a new licensingregime encompassing online casinos, sports betting, betting exchanges and lotteries, which came into effectin early 2003. Said the Authority: 'This framework has the objective of providing regulation which is strong andserious but not unnecessarily bureaucratic, ensuring vigorous protection for users of online gaming, anddovetailing with Malta's long-established and reputable financial services sector.'

There are four classes of licence available to operators in Malta, as follows:

ï Class 1 - For operators managing their own risk on repetitive games. This class covers casino-type games.ï Class 2 - For operators managing their own risk on events based on a matchbook. Under this class operators can offer fixed odds betting.ï Class 3 - For operators taking a commission from promoting and/or betting games. This class includes peer-to-peer games, poker networks, betting exchanges and online lotteries.ï Class 4 - To host and manage remote gaming operators, excluding the licensee themselves. This is intended

for software vendors who want to provide management and hosting facilities on their gaming platform.

Licenses are granted for a period of five years and licensees must have the core part of their online operationphysically located in Malta.

The amount of tax paid by online gaming companies located in Malta depends on the type of licence they hold:Class 1 licence holders pay EUR4,660 for the first six months, then EUR7,000 per month thereafter; Class 2firms involved in fixed odds betting pay a 0.5% tax on the gross amount of bets accepted; Class 3 licenceholders pay a 5% tax on real income; and Class 4 licence holder pay no tax in the first six months of operations,then EUR2,330 per month for the following six months, and EUR4,460 per month thereafter. The maximumamount of tax payable annually in respect of any one licence is EUR466,000. Application and annual licencefees are EUR2,330 and EUR7,000 respectively for all classes of licence.

Moves to tax and regulate online gaming and gambling elsewhere in the European Union have been to the benefitof the industry in Malta in recent years. In mid-2007 it was reported that applications to the Maltese gaming


In the autumn of 2000 the Maltese government passed legislation enablingonline betting centres to be set up in the country, and this legislation, coupledwith provisions from the Income Tax Act written specifically for internationalcompanies, made Malta an attractive location for casino and sportsbookoperations.

A large number of companies from around the world expressed interest inMalta, including Stanley Leisure, William Hill, Ladbrokes, Paddy Power,Unibet, GC Sports, International Allsports, and Eurofootball.

Malta became the first EU member state to regulate internet gaming in May2004 with its Remote Gaming Regulations under the Lotteries and OtherGames Act 2001. Malta has subsequently attracted more than 250 remotegaming companies and issued over 350 licences. These businesses employabout 5,200 people in Malta, and service around 10% of the world's internetgaming market. They generated tax revenues for the government of EUR26.9min 2008 and EUR52.5m in 2009.

The e-gaming industry in Malta is regulated by the Lotteries and GamingAuthority, which was established in 2002 and is responsible for the governanceof all gaming activities in Malta including casino gaming, commercial bingogames, commercial communication games, remote gaming, sports betting, the


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Malta E-Gaming Continued

principles of the freedom of services, such as that now in force in France, Maltafears that it may suffer if a new, illiberal regime is voted through based on the Green Paper. The Maltese governmentsays that the Competitiveness Council's definition does not properly take into account that Malta has a very advancedregulatory regime in full compliance with EU legislation. But clearly there are developments to be watched withregards e-gaming regulation in the EU in the coming years.

Malta's economic policy encourages information technology operations, and the territory has invested heavily instate-of-the-art telecommunications. There are already a number of Internet Service Providers in Malta, with clearinterest being shown in continuing offshore e-commerce development. This was confirmed in 2008 by theEuropean Commission, which recognized the jurisdiction as "well advanced in information society, with manybenchmarking indicators significantly above the EU average." the Commission's study showed that Maltesebusinesses are the 4th best connected in Europe to broadband and Maltaís population is the 5th most coveredby DSL coverage in the EU. The report also found that the ratio of Maltese employees with ICT skills is the 5thlargest in Europe, and the ratio of ICT specialists in Malta is also ahead of European average.

Malta Holding Companies

Malta, like Cyprus, has been obliged to dismantle its old 'offshore' companies regime as a trade-off formembership of the European Union, but this change has by no means been detrimental to the Maltesebusiness environment, and the jurisdiction remains one of the most favourable places in the EU to locate aninternational holding company.

Maltese holding companies can be used for a variety of purposes, including holding real assets like property,shares and securities and intellectual property, and intangible assets such as copyrights and patents, andshareholders benefit from a full imputation system under which tax can be reduced to zero percent incertain circumstances.

In March, 2006, the European Commission formally requested Malta under EC Treaty state aid rules to abolishthe tax regime for Maltese Companies with Foreign Income (CFI), and the International Trading Companiesí (ITC)regime (which had an effective tax rate of 4.2% for non-residents) by the end of 2010 at the latest. CompetitionCommissioner Neelie Kroes observed at the time that: ìThe schemes provide sizable aid to companies that areowned by non-Maltese and produce revenues outside of Malta, and are therefore highly distortive without promotinggrowth of the Maltese economyî.

regulator surged in the run up to the introduction of more stringent e-gamingregulations in the UK, with interest shown from the likes of Intercasino, WilliamHill, Littlewoods, Playboy Casino and Virgin Games. This was prompted bythe UK government's announcement that only companies based in territorieson its so-called 'white list' would be able to market their services in the UKfrom September 1, 2007, when the Gambling Act 2005 came into force. It wasestimated at the time that this could effectively ban one thousand firms fromadvertising in the UK. To gain a place on the UK white list, countries must meetstringent new standards which are designed to stop children gambling, protectvulnerable people, keep games fair and keep out crime. Countries in theEuropean Economic Area (EEA), which includes Malta, are automaticallyaccepted onto the white list. But the white list is fairly exclusive, and only asmall list of other territories, including the Isle of Man, Alderney, and theAustralian state of Tasmania, were deemed to have suitably adequateregulatory regimes.

In June 2010, Malta disagreed with the conclusions of an EU CompetitivenessCouncil meeting which adopted a definition of illegal gambling as: ìgambling inwhich operators do not comply with the national law of the country where servicesare offered, provided those national laws are in compliance with EU treatyprinciples". Having taken note of some recent European Court of Justice rulingsthat apparently support attempts to restrict Europe-wide regulation in favour oflocal monopolies, and of national legislation which appears to contravene the


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Malta Holding Companies Continued

However, capital losses can only be relieved against capital gains, so the distinction is preserved within the taxcomputation. Local-source income and foreign-source income are also treated separately within the computation;Maltese companies with foreign income maintain a Foreign Income Account for this purpose.

A Malta holding company is a company resident in Malta and pays 35% tax on its net income. However,shareholders of Malta holding companies qualify for a full refund of the Maltese tax paid by the company onprofits and gains arising from ìparticipating holdingsî when such profits are distributed. From January 1, 2008,Malta holding companies also qualify for a participation exemption subject to anti-abuse provisions introducedfrom the same date. For a Maltese resident company to hold a ìparticipating holdingî in a company incorporatedabroad, it must hold at least 10% of the equity shares in the non-resident company. To qualify for the participationexemption, the foreign subsidiary must satisfy one of three criteria: be resident in the EU; be subject to foreigntax of at least 15%; and not derive more than 50% of its income from passive income.

When dividends are paid by trading companies to the shareholders, these shareholders are entitled to claimrefunds of 6/7ths of the Malta tax paid by the company, resulting in an effective Maltese tax rate of 5%.Distributions made from profits derived from passive income such as interest and royalties, entitle theshareholder to claim 5/7ths of the tax paid by the company.

Maltese company law derives chiefly from civil or 'Roman' law, rather than common law. A new CompaniesAct 1995 replaced the old Commercial Partnerships Ordinance, and set up a new regime for commercial entitiesunder the Registrar of Companies. Companies set up under the old regime had until January 1, 1998 to convertthemselves into the new formats, except that 'Offshore Companies', which can now no longer be formed, had 10years to adapt.

Maltese holding companies can be constituted as either a public or private limited company. The private limitedcompany, (or 'partnership anonyme' in civil code terms), has the suffix 'Limited' or 'Ltd' and is formed bysubmission of the Memorandum and Articles to the Registrar (in English), together with the appropriate fee,which ranges from EUR245 to EUR2,250, depending on the level of share capital. Once all documents andinformation have been submitted to the registrar, incorporation may take as little as 24 hours. To form a privatelimited company in Malta, only one member and one director is necessary, the latter being a natural person ofany nationality and resident anywhere. There must be a company secretary, which must be a Licenced MalteseNominee Company and there must be registered office in Malta. Shares can be registered but bearer shares arenot permitted. Preference or redeemable shares are allowed and shares do not have to carry voting rights.

In May of that year, the Maltese government formally decided to graduallyabolish the existing aid schemes, a development welcomed by Kroes as "afurther important step towards eliminating selective tax incentives thatsignificantly distort the location of business activities in the Single Marketî.

Maltaís acceptance of the EC recommendation meant that the existing ITCand CFI schemes were effectively abolished by January 1, 2007 and the taxstatus of ITC was prohibited to any new company registered in Malta afterDecember 31, 2006.

Nevertheless, with its entry into the EU, Malta has strengthened its positionand appeal to investors. Benefits include a good tax system with a networkof double taxation agreements in place with some 50 countries, a flat incometax rate of 15% on remittances by permanent residents and no municipal taxes.Other incentives include an excellent infrastructure, and a skilled workforce ofEnglish-speaking locals and an enviable location.

The Maltese Income Tax Act as amended governs company taxation. The rateof income tax is 35% on chargeable income (certain types of company benefitfrom lower rates). Malta imposes income tax on the world-wide income ofcompanies resident in the country; this includes all companies incorporated orregistered under any Maltese law if they are ordinarily resident, and any foreigncompany which is managed and controlled from Malta. The definition of incomeincludes capital gains, but there is no separate capital gains tax as such.


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Malta Shipping

A vessel is first registered provisionally under the Malta flag for six months (extendible under certain circumstances)during which period all documentation needs to be finalized. This includes, in particular, evidence of ownership andof cancellation of former registry. Authority to operate still remains linked to conformity with the relative manning,safety and pollution prevention international standards. Once a vessel is provisionally registered, registration, transferand discharge of mortgages may be effected immediately on presentation of the relative documents to the Registrar.The 1986, 1988, 1990 and 2000 amendments introduced important safeguards in respect of registered mortgages,making financing of Maltese ships more attractive.

Generally, vessels that are more than 25 years old are not accepted for registration by the Maltese Registry, andships which are older than 20 years will be required to undergo a Flag State inspection prior to provisionalregistration. Maltese law provides for both bareboat charter registration of foreign ships under the Malta flag andalso for the bareboat charter registration of Maltese ships under a foreign flag. Ships that are bareboat charter-registered in Malta enjoy the same legal privileges, and have the same legal obligations, as any other shipregistered in Malta. Maltese law also allows for the registration of ships that are under construction.

Yachts which do not carry cargo or more than 12 passengers may be registered as commercial yachts underMalta's Commercial Yacht Code 2006, which sets out standards on safety and pollution. The Commercial YachtCode was developed in line with international regulations and other industry standards and caters for both smallyachts and superyachts above 24 metres and up to 3,000 gross tons. The Code has been proving successfulwith major yacht and superyacht builders alike, with the number of commercial yachts certified in compliance withthe Malta Code increasing considerably during the past years. The registration procedure for yachts is similar tothat of other vessels, and a six month provisional registration is usually granted allowing time for the appropriatedocuments to be submitted and the registration finalized.


With its location in the heart of the Mediterranean Sea, a centuries old maritimetradition and a respected and favourable regulatory and tax regime for shipping,it is no surprise that Malta has developed one of the world's largest ship registersin modern times, and in the face of stiff competition from other prominentmaritime nations.

Vessel registration under the Malta flag and the operation of the Maltese shipsis regulated by the Merchant Shipping Act, a law based in the main on UnitedKingdom legislation, subsequently revised and amended in 1986, 1988, 1990and 2000. The main legislation is also supplemented by a comprehensive setof rules and regulations. Malta is additionally a party to most of the majorInternational Maritime Conventions and Malta-flagged ships are obliged to strictlyadhere to the provisions of these international conventions. By the end of 2008,a total of 5,015 ships, 2,311 of which were pleasure yachts, were registered underthe Maltese Merchant Shipping Act.

In January, 2006, Malta was one of only four flag states that attained the highestquality ranking following the Paris Memorandum on Port State Control's annualinspections. The Paris MoU ìWhite Listî represents quality flags with a consistentlylow detention record. By the end of 2009, the White List included 41 flag states.

In order to register a ship in Malta, it must be owned by a company incorporatedin the jurisdiction. All types of vessels from pleasure craft to oil rigs may beregistered provided that they are wholly-owned by legally constituted corporatebodies, or by European Union citizens. There are no nationality requirements forshareholders or directors of Maltese companies, and neither are there anynationality restrictions on officers and crew employed on Maltese-flagged ships.


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Malta Shipping Continued

Malta applies a tonnage tax system to vessels on its register. This varies fromEUR875 for ships not exceeding 2,500 net tons, up to EUR6,780 for vesselsexceeding 50,000 net tons (plus 5 cents for every net ton above this threshold).However, the amount of tax due can be lower or higher depending on the ageof the ship: there is a 30% reduction in annual tonnage tax for ships which areless than 5 years old; and a 15% reduction for ships which are not less thanfive years old and not more than 10 years old. Vessels which are no less than15 years old and no more than 20 years old pay an additional 5% in tonnagetax, rising to 50% for ships which are equal to or exceed 30 years of age.Commercial yachts pay an annual tonnage tax of EUR175.

Unusually for a low tax jurisdiction, Malta has entered into more than 50 doubletax treaties, and a reciprocal agreement between Malta and the United Statesexempts shipping and air operations from income tax. This agreement makes itpossible for Maltese companies owning or operating ships calling at US ports toclaim an exemption from the 4% gross transportation tax levied on transportationincome attributable to transport which begins or ends in the United States. Maltahas also concluded two maritime agreements with the People's Republic of Chinaand the Russian Federation; similar treaties with several other countries are in theprocess of negotiation.


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Tax Benefits in Maltaby Verdun Group

1.0 Tax benefits in Malta in general2.0 International Holding Companies in Malta2.1 Holdings Typically Held to Best Utilize a Malta Holding Company2.2 Benefits of Using Malta for Holding Assets in the EU/EEA2.3 Why Overseas Investors opt for Malta as the Preferred Choice3.0 The EU Directives and the 2-Tier Structure4.0 Malta Trading Companies ñ ìThe Tax-Friendly Gateway to the EUî4.1 Maltaís Strength as a Gateway to the EU4.2 Examples of Industries Currently Relocating to Malta5.0 More European Online Businesses Operate from Malta5.1 Typical Functions to Outsource to Malta5.2 Recruitment of Multi-lingual Staff6.0 VAT Rates of Only 5.4% for Yachts in Malta6.1 Lease-Purchase Agreement7.0 Shipping Registry in Malta on Global Top 5 list8.0 Leasing and Other Financial Services in Malta9.0 Expatriates in Malta Taxed at Only 15%

1.0 Tax benefits in Malta in generalï Taxation in the hands of the shareholders could be as little as nil in Maltaï The general corporate tax rate is 35%ï Due to favorable tax credits the majority of holding companies in Malta are taxed at 0% in the hands of the investorï Similar tax credits for trading companies leave only 5% as tax paid in the hands of the shareholderï Only 5% net tax suffered after tax-credit! 6/7 of the corporate tax is credited to the shareholder(s)ï No withholding tax! No tax on dividend paymentsï Parent- Subsidary Directive is valid! Valid all over the EU/EEA areaï Only Ä240 to be paid up in share capital! Only 20% of the minimum Ä1,200 to be paid on incorporationï Full limited liability

2.0 International Holding Companies in MaltaEU membership in 2004 has made Malta one the favorite jurisdictions for international holding companies inEurope.

Malta holding companies are taxed on a worldwide basis at the standard corporate rate of 35% reduced to aneffective rate of 0% in the hands of the investor.

2.1 Holdings Typically Held to Best Utilize a Malta Holding Company:ï Aircrafts | Motor cars | Yachts | Shipsï Real estate | Shares and securities | Bank accountsï Intellectual Property |Patents | Copyrights | Franchises | Intangible rights

2.2 Benefits of Using Malta for Holding Assets in the EU/EEA:ï Full refund on all capital gains tax in the hands of the shareholdersï Full refund of all dividends in the hands of the shareholdersï No withholding tax in the hands of the shareholders

2.3 Why Overseas Investors opt for Malta as the Preferred Choice:ï Tax advantages based on EU-Directives valid within the EU/EEAï No withholding tax suffered in Malta

2.3 Why Overseas Investors opt for Malta as the Preferred Choice:ï Tax advantages based on EU-Directives valid within the EU/EEAï No withholding tax suffered in Malta



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Tax Benefits in Malta Continuedby Verdun Group

3.0 The EU Directives and the 2-Tier StructureBy taking advantage of the EU Parent-Subsidiary Directive any parent company tax resident in another EU/EEAmember state may distribute dividends tax-free from a Malta subsidiary. This corporate structure has become amajor success within the EU/EEA and is being used by some of the largest brands and business corporations inEurope to structure their international activities in a tax-favorable way.

4.0 Malta Trading Companies ñ ìThe Tax-Friendly Gateway to the EUîMalta agreed on a groundbreaking deal with the EU when joining the Union in 2004. The country has a favorablegeographical location combined with Europeís most attractive tax benefits. International companies selling to theEuropean market take advantage of the tax benefits of using Malta as their gateway to the EU.

4.1 Maltaís Strength as a Gateway to the EU:ï Access to the European marketï One of the lowest VAT rates in Europe at 18%ï Very attractive returns to the shareholders at a total tax suffered of down to only 5% (following tax- refunds in the hand of the investor of up to 6/7 of the corporate tax suffered)ï No withholding tax in Maltaï Attractive double tax treaties with more than 40 countriesï Highly developed IT ñinfrastructureï English is an official language

Companies from several industries are taking advantage of all the benefits offered by Malta as a Europeanmember state.

4.2 Examples of Industries Currently Relocating to Malta:ï Online businessesï Textile industryï Pharmaceutical industryï Call centersï Financial servicesï Insuranceï Research & Developmentï MoreÖ

5.0 More European Online Businesses Operate from MaltaOnline based business is growing rapidly and is easier to relocate than any other industry. The trend forEuropean online based businesses is to move its operations to Malta and more tax friendly environments andstill keep all the benefits of being located in an EU member state.

5.1 Typical Functions to Outsource to Malta:ï Salesï Supportï Server hostingï IT

Due to the rapid expansion of the e-gaming industry in Malta the country has developed in to a high-endprovider of IT-infrastructure. Other online businesses are starting to realize this potential and move further southin Europe.

5.2 Recruitment of Multi-lingual Staff:ï Attractive tax benefits for foreign employees with personal tax rates at only 15%ï 321 days of sun a year

6.0 VAT Rates of Only 5.4% for Yachts in MaltaThe VAT rate on leasing of yachts by a Malta company is reduced by a predetermined percentage depending onthe size and means of the yacht.



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Tax Benefits in Malta Continuedby Verdun Group

Since it is hard to determine the exact period of time a yacht spends in EUterritorial waters the conclusion has come to charge VAT based on theanticipated number of days a year the yacht will be in EU waters. The larger the yacht ñ the less time is expected tobe spent in EU territory.

The official table released by the Maltese VAT department:

Type of Yacht % of lease subject to VAT Effective VAT rateAll Yachts > 24m 30% 5.4%Sailing Yachts 20.01-24m 40% 7.2%Motor Yachts 16.01-24m 40% 7.2%Sailing Yachts 10.01-20m 50% 9.0%Motor yachts 12.01.16m 50% 9.0%Sailing Yachts < 10m 60% 10.8%Motor Yachts 7.51-12m 60% 10.8%Motor Yachts < 7.5m 90% 16.2%

6.1 Lease-Purchase AgreementWith careful planning, the Tax and VAT rates charged in Malta give the lessee of a yacht owned by a Maltacompany the option to become the owner of an EU VAT-paid yacht by paying as little as 6-7% on the originalvalue of the yacht in tax and VAT together.

7.0 Shipping Registry in Malta on Global Top 5 listShipping companies based in Malta are totally exempt from taxation on ships over 1,000 tons (ëExempted shipsí).The exemption is valid for the operation and ownership of Maltese registered vessels, including charterers andfinanciers.

Any type of vessel may be registered in the Maltese register of ships and fly the Malta flag provided it is whollyowned by Maltese citizens or by Maltese corporate bodies. The law also allows foreign ships to be bareboatcharter registered in Malta and the bareboat charter registration of Maltese ships in foreign registers.

8.0 Leasing and Other Financial Services in MaltaOver the last five years a trend among multinational companies have been to set up a financial services division inMalta to serve the world wide activities of the group. The operations in Malta are local profit centers tailored toprovide for financial services like leasing arrangements for capital intensive goods and services and looking afterthe majority of the internal financing of the group activities and external financing offered to clients.

9.0 Expatriates in Malta Taxed at Only 15%Individuals not deemed ordinary resident in Malta with employment income subject to tax in Malta may as of 2010opt for a flat taxation rate of only 15% instead of the standard progressive tax rates applicable to ordinary residents.

Verdun Group (Malta)[email protected]: +356 2010 7000

Verdun Corporate Services (Malta) LimitedSuite 7 / Level 4The Plaza Commercial CenterBisazza StreetSLM 1640, SliemaMalta



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Malta: Business Hub in the MediterraneanA quick guide to the main features of Maltese Companiesby Fenlex

One of the worldís earliest, most successful and wealthiest multinational organisations made Malta its home.Malta in turn made this organisation famous. It came to be known as the Knights of Malta, and the traditionsof commerce, international trade and multiculturalism it established became ingrained in the culture of theMaltese Islands.

Maltaís exceptional location in the Mediterranean has always ensured that its geopolitical importance isestablished. Historically, this allowed Malta to punch well above its tiny size, a characteristic that continues tothis day.

Since Malta joined the European Union in 2004, its presence as a financial services centre is increasinglybeing felt. Although tourism forms the natural backbone of Maltaís industry, the financial service industry hasbeen experiencing constant growth, drawing primarily from the islandís political and economic stability. Today,it is fast becoming one of the pillars of the Maltese economy.

There are many reasons why Malta is a special place to do business or to invest in. Amongst other things, itboasts highly attractive incentive packages, a skilled and multilingual workforce, as well as a competitive fiscalregime backed up by over 50 double taxation agreements.

Company Formation in Malta

In fact, Maltaís corporate tax regime has evolved over the years to a highly sophisticated system which hascombined an interesting blend of realistic corporate taxation together with a series of favourable tax creditincentives. Today, Maltese companies have one of the most tax-advantageous corporate structures withinthe European Union because Malta operates a full imputation system on tax. This allows for no further tax tobe due by non-resident shareholders on receipt of dividends distributed out of profits of a company. Thesedistributions may also trigger refunds of Malta tax paid by the company. The standard refund is 6/7ths of a 35per cent corporate tax rate. The effective tax rate will generally range from 0% to 10%.

In addition, company formation expenses in Malta are relatively low, thus making Malta a cost effectivejurisdiction, not only for large corporationsí tax planning, but also for small and medium sized businesses.Maltese limited liability companies are allowed to carry out various activities, be it trading, holding orinvestments. The company can also mix the nature of its business.

Every company registered in Malta requires a company secretary and at least one director who may beeither a corporate entity or an individual, Maltese resident or not. The company secretary must be anindividual and preferably well versed in Maltese Company Law. In addition, a Maltese company needs to havea registered office in Malta and a minimum of two shareholders, however exemptions to this rule apply. Maltaalso has a fully fledged trustee regime and shares may be held by licensed trustees in a fiduciary capacity forand on behalf the ultimate beneficial owners. A Maltese company must have a minimal issued share capitalof Ä 1,165 on incorporation, of which at least 20% must be paid upon subscription.

Maltese legislation also allows foreign companies to change their domicile to Malta. This means that foreigncompanies can, without the need to wind-up their setup in the foreign country and incorporate a new companyin Malta, opt to continue their existing setup in Malta.

It is needless to say that Maltese companies, like in most other jurisdictions, need to adhere to statutoryobligations. Amongst others, there is a requirement to prepare annual financial statements, which must beaudited by a local independent auditor, and the filing of an annual return, as well as various tax filing matters ñtasks that are often looked after to by corporate service providers.



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Malta: Business Hub in the Mediterranean ContinuedA quick guide to the main features of Maltese Companiesby Fenlex

Established Service Provider Industry

Since the early 90ís more and more foreign owned companies have set up in Malta and have sought to outsourcea number of key functions within their organisation. It is for this reason that Fenlex Corporate Services Ltd.(ëFenlexí) was set up in the late 90ís within the Fenlex Group so as to address this specific demand from clients.Fenlex is made up of a team of multi-disciplinary professionals that include Legal, Accountancy, Economic,Banking Management and Communications graduates.

Throughout the past years, Fenlex has assisted a considerable number of international clients of all sizes presentin a very broad spectrum of business interests in establishing themselves in Malta, by assisting in pre-incorporationstructuring and incorporation of the corporate vehicle/s required in Malta and other reputable jurisdictions, as wellas setting up business in Malta.

Once the companies are set up, Fenlex offers clients a full range of corporate services that include companyadministration as well as a wide range of back office services covering accountancy, VAT and Tax complianceservices, payroll, banking and administrative support. Fenlex also offers clients, if required, full access over asecure internet connection to their Financial Information Systems allowing up to date access to importantmanagement information.

For more information please contact:

Fenlex Corporate Services Ltd., Karl Diacono, 85. St. John Street, Valletta VLT 1165, Malta.Phone: 00356 21241817, E-mail: [email protected]



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Responsible Gaming -CSR in the e-Gaming Industryby Jonathan Dalli - Head of Marketing, e-Management

Corporate Social Responsibility (CSR) in the e-Gaming industry is an issue that is taken very seriously by regulatorsand operators alike.

A responsible player is generally defined as a person, who makes a reasonable and conscious choice and acts inaccordance with this choice; based on his/her individual desires and needs, as well as his/her awareness of thepurpose of entertainment through regulated gaming. Looking for fun is implanted in human nature and can well beconsidered as an integral part of the natural development of humankind. The e-gaming industry, including the MaltaJurisdiction, responds to such a necessity, albeit in a regulated manner.

A good and reliable regulatory framework predominantly ensures the fulfilment of such needs and wants. When thefun element takes over and potentially goes beyond the limits of oneís satisfaction, delving into deeper psychologicallayers; regulatory models come into play. E-gaming regulations envisage and subsequently implement variousmeasures to prevent addiction to gambling and ensure players act in a responsible manner. Special attention inthis respect is paid to the protection of the under-aged and juvenile.

Operators also have a stake, and some are also taking the initiative to issue CSR Reports, including and outliningcontributions made to society at large, donations to charitable causes, their commitment to becoming environmentallyconscious and friendly, and the ways of implementing systems to identify and support problem gamblers. Apart fromrecognising that this is the right thing to do, remote gaming operators who conduct their business responsibly arerealising that this ultimately proves fundamental to their future success.

Thus responsible gaming is an integral part of the daily activity in a remote gaming company, particularly because theInternet in particular has opened access to the such companies 24 hours a day, 7 days a week, 365 days a year.Furthermore, as various forms of payments are accepted and access to e-gaming and betting companies is availablefrom oneís home or PC or mobile phone, solutions such as age verifications, customer limited deposit / session limitshave become increasingly important; as well as carefully planned marketing campaigns to ensure that the vulnerableare not targeted. The uncontrolled advertising of games is another issue, as well as the mail-outs of wrong andpossibly misleading advertisements, and adverts aimed and targeted towards the under-aged; as well as spamadvertising.

The playerís ongoing desire to have fun, the responsibility of the state through the regulator to establish thenecessary levers on the limitation of such a possibility, as well as the implementation of a socially responsiblemodel by the operators, serves as a basis for the development of a Responsible Gaming model.

With the Maltese Islands attracting a large number of licensees setting up shop in such jurisdiction as well as tocapitalise on the competitive advantages that the Malta Jurisdiction has to offer, the Mediterranean island hasunquestionably established itself as the hub of online gaming in Europe. It has however taken on board the issueof Responsible Gaming very seriously. The underestimation of such a potential problem will definitely affect thecredibility of a gaming jurisdiction; and will also lead to a negative social attitude towards the industry and its keyplayers. Managing social and environmental factors enhances a jurisdictionís credibility with stakeholders! Thisis further confirmed in the LGAís slogan of ìReputable, Responsible and Responsiveî as the European Hub ofRemote Gaming.

e-Management Ltd28, Cathedral StreetSliema SLM1525Malta - EU

Tel: +356 2132 EMAN [2132 3626]Fax: +356 2132 [email protected]



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The Malta Gaming Jurisdiction -Quality Attracting Quantityby Jonathan Dalli - Head of Marketing, e-Management

Malta, the Mediterranean island, has unquestionably established itself as the hub of remote gaming inEurope. When reputable operators started earmarking Malta as their new home, they also realised the variouscompetitive advantages Malta offers, including but not limited to:

ï an EU member state since May 1st, 2004 and euro-zone member since January 1st, 2008; ensuring Malta has a voice in the various EU institutions when discussing the future of the iGaming industry;ï a welcoming jurisdiction with the regulator having a pro-business attitude and approach, simultaneously being accessible and pragmatic; thus contributing to a solid reputation as a well-regulated jurisdiction which safeguards the interests of the operators as well as those of their players;ï an efficient and relatively inexpensive licensing process;ï a very attractive fiscal regime / incentives to the benefit of companies operating from the island, including the availability of tax refunds based on Maltaís full imputation system; complemented by a wide network of double tax treaties with various countries;ï the domiciliation of companies into Malta or out of the island, facilitating the notion of a company being a going-concern;ï an established and well regulated financial services industry and the presence of reputable international

financial institutions;ï a stable democratic, political and economic climate, with the government earmarking various areas, including financial services, for Malta to be a centre of excellence, this becoming the governmentís

short-to-medium term strategy and vision;ï support services provided by pro-active professionals, including major accountancy and audit firms; as

well as the presence of local and international banks;ï a highly qualified and skilled workforce, fluent in various languages with English being a mother tongue;

andï web / data hosting and co-location facilities, based on a state-of-the-art telecommunications infrastructure with four Internet connectivity submarine cables connecting Malta to Sicily and subsequently the rest of

the world.

The above advantages have meant that other operators started following suit and as such confirmed that aMalta Gaming Licence is a ëseal of qualityí. Furthermore, this confirms the LGAís slogan of ìReputable,Responsible and Responsiveî as the European Hub of Remote Gaming.



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Bio: Jonathan DalliJonathan is a graduate from the University of Malta and the Institute of Financial Services (UK). He was appointedHead of Marketing of HBM Group/e-Management in September 2009, overseeing all marketing activities in relationto the groupís service portfolio on an international level; directs the marketing & PR campaigns; event management;brand management strategies; marketing communications & media relations; and strategic collaborations. He alsoacts as Management Consultant for various business concerns. Previously, he was Marketing Manager of a quad-playerís provider in the Telecommunications Industry, following another stint in iGaming Licensing and Consultancywhereby he was already involved in the licensing of various successful iGaming license applications. He has alsoheld various marketing posts in a number of private sector enterprises and industries in Malta, Slovakia and theCzech Republic. Jonathan is also a part-time freelance lecturer at the University of Malta. He speaks fluent English,Italian and basic French. Email: [email protected]




PROFILE: Verdun Group

Our vision for Verdun Group has always been to build Europeís most transparentand service minded international corporate service provider and revolutionize theease of communicating with our clients through the use of advanced online based applications.

Our specialty is to provide small- to medium sized businesses with the benefits normally only utilized by large multi-national corporations.

With roots back to 1999, the hedge fund controlled Verdun Group has grown into a multi-million Euro corporation byclearly focusing on the goal of enabling transparent and high-quality international corporate services to anyone withan internet connection based anywhere in the world.

Verdun Groupís premium services provide low cost connectivity to public registrars in several reputable jurisdictions.Verdunís software also offers a robust set of features, including online filing of annual return, annual accounts, changeof particulars, change of directors and company secretary, change of shareholders etc.

As one of the fastest growing companies within international corporate services, Verdun Group already has thousandsof clients in several EU/EEA countries and territories. Verdun Group is currently adding a high double digit figure ofcompanies a day and has created a thriving ecosystem of products, services, developers, and affiliates. Verdun Groupis considered the market leader in virtually all European countries in which the company does business.

Our Clients

International companies

Verdun Group has extensive experience advising clients internationally, and we have been involved in transactionsin virtually every corner of the world. From our main office in the heart of London, and through our internationaltrading centers in Malta and Cyprus, we offer a range of services to both corporations and individuals.

Verdun Group is primarily a corporate boutique providing full service solutions for international companies, trusts andfoundations ñ we provide advanced management and administrative services with care and confidentiality.

Our staff speaks English, Maltese, German, Italian and all Scandinavian languages and customers have access tothe expertise of our professional staff, independent of their base.

Sole traders

Verdun Group has helped more than 9,000 sole traders within Europe to incorporate a more sound corporatestructure by converting thousands of Sole Trading companies to limited companies with no capital requirement,offering a combination of lower tax rates, reduced personal liabilities and increased social security - all at the priceof a Sole Trading company.

Our Brands

Verdun Group has a suite of well-known and successful brands covering a global client base. Our corporateproducts cater to a wide spectrum of clients from the sole trader to the multi-national corporation.

Verdun Legal Services

Verdun Legal Services is corporate boutique based in the heart of central London, just a stone throw away fromBuckingham Palace. The London office is the groupís center for international transactions and our major hub forcoordinating our international activities.


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CONTINUED PAGE 14


PROFILE: Verdun Group Continued

Verdun Corporate Services

Verdun Corporate Services is represented by our commercial centers in Malta and Cyprus - in the heart of theMediterranean region - offering attractive gateway-solutions to the EU and looking after the groupís activities inSouthern Europe and MEA. Verdun Corporate Services is our full service brand assisting our clients with allcorporate matters from incorporations to accounting, banking and general infrastructure services - holding yourhand throughout the whole process.

Verdun Technologies

Verdun Technologies is our tailor-made state-of-the-art online corporation engine having helped thousands of peoplearound the world to incorporate and administer their Pan European corporate structures within the EU/EEA. Webelieve in transparence and bring you all the relevant information about your company to you directly through a secureonline user-interface.

Find us Contact us Verdun Legal Services Limited [email protected] 1.7 Tel: +4420 7808 70801 Warwick RowLondon SW1E 5ERUnited Kingdom Verdun Corporate Services (Malta) Limited [email protected] 7 / Level 4 Tel: +356 2010 7000The Plaza Commercial CenterBisazza StreetSLM 1640, SliemaMalta Verdun Corporate Services (Cyprus) Limited [email protected] M102 Tel: +357 2200 794025 Michalakopoulou St.Michalakopoulou Tower1075 NicosiaCyprus


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PAGE 14

PROFILE: Fenlex

Company Incorporation and Re-Domiciliation Company Administration and Maintenance Provision of Registered Office Company Secretarial Services and Support Directorship Services Accountancy Services Bank Account Administration Tax compliance and payroll services VAT registration and compliance Relocation Assistance Management & Operations (e.g. assistance in the day-to-day operations such as sourcing of property,

searching for partners, assisting in the application process for a remote gaming license)

The Fenlex Group of Companies includes Fenlex Corporate Services Limited and Fenlex Holdings & ServicesLimited.

Fenlex Corporate Services Limited is a fully fledged corporate services company. It offers special expertise inmost aspects of company management, accounting and administration. Its large international client base isserviced by a multi-disciplinary team organised into three support units: Corporate Services, Accounts andOperations.

Fenlex Holdings & Services Limited is licensed to act as trustee and fiduciary by the Malta Financial ServicesAuthority and consists of well trained individuals with integrity and a commitment to providing excellent servicetailored to meet individual client requirements.

Fenlex is closely associated with Fenech & Fenech Advocates (www.fenechlaw.com), one of Maltaís largestand longest established law firms. Clients requiring legal advice on a wide range of areas of practice, includinginternational tax planning and corporate law, financial services (including the setting up and licensing of hedgefunds and retail funds), remote gaming law, trusts and foundations, ICT law, intellectual property law, maritimeand aviation Law, and VAT on the leasing of yachts amongst others, will be serviced by the firmís experiencedlawyers.

Fenlex is also associated with Fenech & Fenech Marine Services Ltd. that provides ship registration services.

Providing tax, corporate, accountancy and advisory services, Fenlex can guarantee your freedom fromhandling the other important yet distracting areas supporting your business. This will allow you to focus onyour core target business and help unlock the full potential of your venture.

Contact Us

FenlexFenlex House85, St. John StreetVallettaVLT 1165Malta

Tel: + 356 2124 1817Fax: + 356 2599 0640www.fenlex.com


Fenlex (www.fenlex.com) was established in the 1980ís and is today oneof the largest and leading corporate services providers in Malta. The servicesprovided by the Fenlex Group include:


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PROFILE: e-Management

We are a leading specialized turnkey provider of Business Support & Corporate Services to the Online GamingIndustry.

As a professional, client oriented service provider of fiduciary services, we focus on establishing and managinginternationally engaged e-Gaming Companies based out of Curacao and Malta. With more than a decade ofexperience in assisting major software providers and operators with their corporate and licensing requirementsin both Curacao and Malta, e-Management/HBM Group was amongst the first Corporate Services Providers in1997 to enter the Online Gaming Industry. e-Management offers innovative services by assisting all e-Gaming(related) businesses to efficiently and effectively structure their enterprise in an ever changing and challengingbusiness environment without borders.

e-Management, via HBM Group, provides its Business Support & Corporate Services in the followingjurisdictions: Anguilla, Bonaire, British Virgin Islands, Cayman Islands, Curacao, Malta, New York, Panama,St. Maarten, The Netherlands and Uruguay. We are proud to offer our global clients with internationale-Commerce Company Solutions worldwide.

e-Managementís service portfolio comprises the following:

Company Set-Up, Formation & DomiciliationInternational Corporate StructuringDirectorship & Shareholder ServicesAccounting & Corporate Secretarial ServicesOpening & Operating of Corporate Bank AccountsMerchant Accounts & Payment Gateways Set-upe-Gaming Licensing Support & Consultancy in Malta, Curacao and other jurisdictionsKey Officials in MaltaOffice Facility Services such as office spaceCo-Location Solutions in multiple jurisdictionsGlobal Recruitment and Placement Solutions

Contact Us



e-Management is a dedicated business division of HBM Group (est. 1991),with offices in reputable regulated Online Gaming Jurisdictions worldwide.


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PAGE 16


PROFILE: UHY Pace, Galea Mus˘ & Co.

Hacker Young International Limited, a UK company. Each member of UHY is a separate and independent firm.The services described herein are provided by UHY Pace, Galea Mus˘ & Co. and not by Urbach Hacker YoungInternational Limited or any other member of UHY. Neither Urbach Hacker Young International Limited nor anymember of UHY has any liability for services provided by other members.

UHY International

UHY is one of the worldís leading business advisory, consulting and accounting networks, with teams operatingacross 242 offices in 76 countries worldwide. Our member firms are modern businesses in their respectivecountries, knowledgeable of local regulations, market practice and cultural norms.

In the global marketplace, UHY member firms offer full service support in every major financial centre worldwide,creating opportunities for extending business interests across all services and sectors.

UHY is present in Malta providing financial accounting, business consulting and taxation services through UHYBusiness Advisory Services Limited which specialises in advice and services to small and medium sized enterprises.

UHY Pace, Galea Mus˘ & Co. is the audit arm. We see the annual audit as being more than a statutory obligation.It should also serve as an opportunity to take a close look at your business ñ an opportunity which could prove avery important one. Which is why we make careful recommendations and suggestions, based on our findings,discussing with the client the best way forward.

Services offered:

Management consultancy, accountancy and Book-keepingVAT Advice, Registration and complianceVAT - preparation of forms supported by management accountsLocal and International Taxation - Corporate and personal tax services, computations, planning,submissions, payments and compliancePayroll bureau servicesBusiness planning and and cashflow forecastingCorporate services ñ formation, domiciliation and administrationShipping ñ finance, registration and administrationBanking assistanceiGaming ñ registration, management and support

Contact Us

UHY Pace, Galea Mus˘ & Co.Matilda Court, Apartment No. 2,Giuseppe Cali` Street,Ta' Xbiex XBX 1423,MALTA

Tel: + 356 2131 1814 / 2133 1710Fax: + 356 2131 [email protected]://www.uhymalta.com

UHY Pace, Galea Mus˘ & Co. is a member of UHY, an international associationof independent accounting and consulting firms, whose organising body is Urbach


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PROFILE: HBM Group

HBM Group, established in 1991, is the leading independent financialservices provider headquartered in Curacao, Dutch Caribbean. As aprofessional, client-oriented family of service companies, HBM Group is focused on delivering comprehensiveinternational company solutions. We assist in the formation and management of international companies forbusinesses and individuals, ensuring compliance with international legislation.

HBM Group is dedicated to providing a complete range of services and solutions to meet and exceed thedemands of our clients in an ever-changing global market. Our team of professionals, with over a decade ofexperience, offers premier and personalized service to each client, individually. We understand each client isunique. Therefore, our comprehensive services are based on understanding your priorities and desires foryour company or trust. By building on our tradition of excellence, and protecting the integrity and reputation ofour clients, HBM Group is committed to providing our clients with all the necessary services for economicsuccess.

To ensure the right solution, HBM Group is dedicated to understanding the clientís priorities. HBM Group canguarantee the highest standard of business ethics, the utmost confidentiality, and state-of-the-art technology.

HBM Groupís service portfolio comprises the following:

- Company set-up and incorporation services;- Regulatory and licensing consultancy;- Directorship and management services;- Accounting and administrative services;- Back-office and support services; and- Fiduciary and trustee services.

HBM Group, provides its Business Support & Corporate Services in the following jurisdictions:

Anguilla, Bonaire, British Virgin Islands, Cayman Islands, Curacao, Malta, New York, Panama, St. Maarten, TheNetherlands and Uruguay.

Contact Us

HBM Group28, Cathedral StreetSliema SLM1525Malta - EU

Tel: +356 2132 3626Fax: +356 2132 [email protected]



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PAGE 18

PROFILE: AeroNautica

AeroNautica is an organisation acting in the fields of aviation and maritime law,corporate services, business support services, company management andmarketing, providing services for business, corporate and registration affairs, such as guidance through theCorporate and Legal Requirements, and the Aircraft and Maritime Registration process.

AeroNautica (Malta) Limited is the synchronization of synergies between HBM Group, a corporate & fiduciaryservices provider offering international company & management solutions; and City Consult, a leading Malta basedcorporate & commercial law firm offering legal and advisory services.

AeroNautica played an instrumental role in the launch and promotion of the aircraft registry especially in Malta, andthe company keeps a close working relationship with all government departments particularly the Civil AviationDirectorate, a division of Transport Malta. AeroNautica operates a secondary office at Malta International Airport.

AeroNauticaís service portfolio, available in various jurisdictions, includes but is not limited to:

Aviation & Maritime ConsultancyAircraft, Ship & Yacht RegistrationMalta Aircraft & Maritime Register SearchPurchase & Sale Transaction ManagementCo-Ordination of Aircraft, Ship & Yacht FinancingDrafting & Reviewing of AgreementsLegal & Tax SolutionsCompany Set-Up, Formation & DomiciliationInternational Corporate StructuringDirectorship & Shareholder ServicesAccounting & Corporate Secretarial ServicesOpening & Operating of Corporate Bank Accounts

Contact Us

AeroNautica (Malta) Limited28, Cathedral Street, Sliema SLM1525, Malta - EUArea 3, Security Gate 1, Malta International Airport, Luqa LQA3290, Malta - EU

Tel: +356 2258 3631Fax: +356 2258 [email protected]



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PAGE 19

Tax News Malta Review 2010-2011

Documents

Transcript of Tax News Malta Review 2010-2011