Attractive Corporate Tax Regime
A convenient, tax efficient vehicle for carrying out gaming activities from Malta is a Limited Liability Company. The standard rate of tax on income and chargeable gains is 35%. However, due to a tax refund system the effective tax rate will range from 0% to 10%.
Basis for taxation: Companies ordinarily resident and domiciled in Malta are subject to income tax on their worldwide income and on some chargeable capital gains.
Companies that are either resident or domiciled in Malta but not ordinarily resident and domiciled in Malta are chargeable to tax in Malta on (a) income and chargeable gains arising in Malta, (b) income arising outside Malta and remitted to Malta.
Residence: A company incorporated in Malta is considered to be resident and domiciled in Malta. A company incorporated outside of Malta is considered to be resident in Malta only if the management and control of its business is exercised in Malta.
Tax Rates: The standard rate of tax on income and chargeable gains is 35% (in line with the highest personal tax rate) - flat rates of tax are payable, by way of exception, on certain categories of income such as investment income and certain transfers of immovable property in Malta. The amount of tax payable by a company may be reduced via one of the forms of double tax relief, such as the Flat-Rate Foreign Tax Credit providing relief at a rate of 25%.
Malta operates a full imputation system of taxation: When a company distributes dividends out of profits on which it had paid tax, no further tax is due by the shareholders and a credit for the tax paid by the distributing company is available to the shareholders.
Allocation of profits: Companies are required to allocate their distributable profits to one or more of 5 tax accounts, depending on the nature/source of the profits concerned: Foreign Income Account (FIA), Maltese Taxed Account (MTA), Final Tax Account (FTA), Immovable Property Account (IPA), and Untaxed Account (UA).
Tax Refunds: Distributions of profits from either of the FIA or the MTA trigger refunds of Malta tax paid by the company. The effective tax rate after refund will generally range from 0% to 10%. The standard refund is 6/7 of the Malta tax (grossed up with any relieved foreign tax – subject to certain conditions – in relation to the MTA), going up to 100% in the case of profits derived from a participating holding and down to 5/7 on profits derived from passive interest and royalties. Where the company has claimed double tax relief on profits allocated to the FIA, a tax refund of 2/3 of the Malta tax paid (grossed up with any relieved foreign tax – subject to certain conditions) on the distributed profits may be claimed. Tax refunds are Malta tax exempt and payable within a statutory deadline of a few weeks.
Participation Exemption: Income deriving from a participating holding (generally a 10% equity holding or partnership interest or alternative tests) in a non-resident entity or from the disposal thereof are exempt from tax (alternatively they may be taxed at 35% and the shareholder may, following distribution, claim a full refund of the Malta tax paid by the company thereon) – subject to certain anti-abuse provisions being satisfied.
Withholding Tax (WHT): There is (a) no WHT on outbound dividends, (b) no WHT on interest payable to non-residents (subject to certain conditions being satisfied), (c) no WHT on royalties (subject to certain conditions being satisfied), (d) no branch remittance tax.