Lower Internet Gaming Taxes For Malta?
Published: Tuesday, October 18, 2005 Online-Casinos.com
LOWER INTERNET GAMING TAXES FOR MALTA?
Public meeting to discuss i-gaming regulation amendments soon
Proposed tax changes for igaming operators are one of the topics which the Malta
Gaming and Lotteries Authority wants to explore in a consultative process
announced through Malta Today this week.
The Malta Remote Gaming Council (MRGC) is to lead the consultation process
for the Authority at a public meeting on the 24 October.
The announcement devotes some space to the leading British betting exchange company
Betfair which recently licensed on the island to run a specific exchange
poker product, underlining the fact that under British tax regimes it pays 15
percent of gross profits.
The proposal speculates that higher UK taxation may be in prospect and unless
taxes are lowered suggests that this could result in "an exodus" of
online betting companies to alternative licensing jurisdictions...like Malta.
Recently Mario Galea, chief executive of Malta's Lotteries and Gaming
Authority, told The Times he had been "inundated" by enquiries from
UK firms which are showing keen interest in relocating due to concerns that
the British government is leaning towards an all-or-nothing approach whereby
any firm with a presence in the UK must have all its remote gaming operations
in-country.
Galea said the UK was playing a dangerous game by moving away from a pure regulatory
approach and adopting a business agenda, and it is interesting to note that
the proposed upgrading of igaming regulations issued this week in Malta paves
the way for a new breed of business models that includes poker and skill games.
The proposals introduce a novel concession that for time critical multiplayer
games such as poker the servers may be located in overseas locations.
There has also been a sustained effort to streamline the licensing costs, and
the tax schedule now allows for the taxing of a class 3 model.
This model caters for operators who do not partake of the risks but act as promoters
of remote gaming. This would include poker exchanges like Betfair and clubs
that collect commissions from various players on organised tournaments or virtual
poker rooms. The tax on such operations will now be 10 percent on income which
is defined as rake less the bonuses, commissions and payment processing fees.
Malta Today says the tax base has been calculated so that the effective tax
goes down to about 6.5 percent of the gross income in what seems to be an attempt
to make the juridiction more attractive to prospective British tax refugee companies.
The announcement goes on to claim that UK trade associations are now clamouring
for the new UK Gambling Commission to lower the UK tax rate to 2 percent
on gross income, and lobbyists are hoping that the industry will successfully
persuade Treasury to trim the tax on online gaming to this level for operators
licensed in Great Britain.
Britain's Chancellor of the Exchequer, Gordon Brown may consider such
a low tax rate to encourage more firms to domicile in the UK. Apparently the
CEO of Sportingbet, Nigel Payne has said a rate of 2 percent would encourage
his company to consider relocating its gaming servers currently in offshore
jurisdictions and license them in the UK.
This sort of development will clearly make for a far more competitive field
as far as jurisdictions like Malta are concerned.
