Malta: A Smart ICT Island With over 2,500 graduates per annum, the Maltese work-force is young, flexible and highly specialised in modern medical and high-tech areas. In addition to the non-fiscal advantages which Malta manifests, the island also offers a wide range of company restructuring alternatives all aimed at maintaining tax costs at a minimum. Benefits for Malta-based ICT Companies There are good solid reasons to invest in Malta. Malta is a full EU member state with an English speaking work force. The island enjoys the sun most days of the year but it is still a known fact that the Maltese work very hard on a continuous basis. Fundamentally, it is equipped with sophisticated laws, an aptitude for business and a fiscal regime that is fair without being punitive. Today Malta hosts a significant number of local and foreign system development companies, and this gives the island one of the most modern and efficient communication infrastructures within the EU. From a fiscal point of view, a Malta ICT based company would benefit from the lowest corporate tax rate in Europe, generally at 5% together with tax exemptions on certain royalty income (for more information on the taxation of royalty income, please see our newsletter on Royalties or
our website). In addition, Malta manifests a highly attractive participation exemption regime and has an ever growing network of double taxation treaties which reduces the possibility of income being taxed twice. Also, Malta Enterprise (a Government entity aimed at assisting businesses) offers a number of incentives and favourable schemes to companies in the ICT sector, such as: Tax credits of up to 65% on all qualifying expenditure on investment of a capital nature Low interest loan financing Loan guarantees Financial assistance towards the training of employees ICT is part of Malta’s National Strategy Evidence of the importance Malta assigns to ICT is the Smart Island Strategy. This is a government strategy aimed at developing a world-leading ICT industry. Already ICT stands alongside manufacturing, tourism and financial services as a pillar of the Maltese economy. It is a major provider of jobs, a major source of wealth, and a major cause of growth.
ICT also enables the other three pillars to grow as there can be no manufacturing or tourism or financial services if there isn’t a strong ICT environment. The government has also initiated a training landscape aimed at providing specialised educational programmes to nurture professionals with a reputation of excellence and exclusivity that only Malta will be able to offer. In addition, with the development of Smart City well under way, Malta has managed to attract the reputation, the credibility and the existing client-base of one of the most respected ICT brands in the world: Dubai Internet City. This will offer a more complete and competitive platform for ICT affiliates to setup in Malta. ICT Affiliates already in Malta
Quick Facts: During recent times, the government of Malta has engaged in various efforts to boost the local ICT sector; In addition to the various fiscal benefits, in Malta, ICT affiliates could also avail themselves of various non-fiscal incentives offered by the Maltese government; Generally, royalty income is exempt; The establishment of world-class brands such as Dubai Internet City indicates how Malta has become a truly ideal jurisdiction for ICT businesses.
Malta offers the lowest effective corporate tax rate in Europe, generally ranging between 0% and 6.25%. Malta levies no withholding taxes on outbound payments of dividends, interest and royalties. Malta has no CFC, Transfer Pricing and Thin Capitalisation legislation.
Contact us Dennis Mark Gauci Partner dmgauci@ksimalta.com Christian Sultana ICT Advisor csultana@ksimalta.com
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Our Office Villa Gauci Mdina Road Balzan BZN 9031 Malta Tel: (+356) 21226176 Fax: (+356) 21226019
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