Affiliates in Malta could be affected by tax regulations

According to reports, the European Commission is pondering the introduction of new tax regulations for digital companies. This could particularly affect affiliates and operators in Malta, where iGaming is an important economic pillar.

New potential laws

The possible new regulations would tax based on turnover or profits. European authorities want to primarily target the big American online companies, such as Google and Facebook. But the nature of online gambling is that it’s, well, online. So, any new laws would impact this industry in one way or another.

Analysis by the International Monetary Fund Foundation has confirmed that tax reformation may have a significant impact on Malta’s economy. This is because of the country’s high share of corporate tax revenues in total revenues.

The Maltese government has already said that it plans to contest these changes. It wants to make a case for global tax reforms, through the Organisation for Economic Cooperation and Development. Through this, worldwide taxation standards for prominent digital organisations would be set.

It’s worth noting that the European Commission is only likely to release the proposal in spring 2020. So, the actual effect of proposed tax changes is unclear for now.

iGaming in Malta

Malta is a popular destination for online gambling affiliates and operators. In total, iGaming makes up one-eighth of the island nation’s economy. Unlike other small island nations in Europe, such as Iceland, Malta doesn’t have many natural resources. So, digital industries are increasingly important.

The country joined the EU in 2004 and saw this as a big chance to maximise the opportunities of the then-new online gambling sector. It developed attractive tax rates for operators, and the current corporate rate is around 5%.

Malta has received criticism because of problems related to tax evasion and money laundering. But it has begun addressing this initiative. For example, the Malta Gaming Authority recently entered an agreement with Swedish regulator Spelinspektoren.

Power is still in Malta’s hands 

When it comes to reforming tax, the EU needs the unanimous agreement of all member countries before it can implement anything. Therefore, Malta can still stall proposed changes. Whether or not this happens, however, is still up in the air.