E-Commerce in Malta

Introduction

Information technology is changing the world. It has broken down all barriers of distance and time in the way dealings are made with retailers, consumers, banks, government, insurance companies and just everybody else. It is affecting everyone, everywhere and has brought people closer together creating unprecedented potential for wealth, employment and growth.

E-Commerce: a booming industry

Electronic commerce is booming. The business of buying and selling goods and services through the internet medium is already worth 17 billion € in the EU. It is expected to reach 650 billion € in 2008. In the USA, the figure for e-commerce revenues is 3 times higher.

E-Commerce and Malta

Malta’s economic policy encourages information technology operations and the territory has invested heavily in state-of-the-art telecommunications. There are, in fact, a good number of Internet Service Providers in Malta.

The Islands’ geographical location (European time-zone); good telecommunications links; sophisticated business infrastructure; and the low-cost, English speaking, highly educated work-force are all factors which attract sales, marketing and administrative departments of European retail operations.

The Government of Malta is committed to establishing e-Government services to ensure the transformation of Malta into a highly advanced information economy and information society. e-Government is to result in a virtual service provision in such a way that the particular services related to a transaction are simultaneously triggered once the episode relating to that service is activated by a user thereby attaining a veritable ‘no stop service’.

Thus, for example, the opening of a business which in the current framework requires the following from various service providers:

Registration of business Malta Financial Services Centre

Registration of VAT VAT department

Registration of company or self-employed income tax Inland Revenue Division

Registration of national insurance Social Security Department

Registration of business trading license Trading License Authority

Is, under the e-Government vision and strategy, to be collapsed into an episode which when triggered will virtually and intelligently activate the transactions across the various organizational entities to complete the service request.

Setting up an e-commerce activity in Malta

For optimal tax benefits and incentives, a foreign enterprise or undertaking wishing to operate and set up an e-commerce facility in Malta should incorporate a company carrying out international trade under the Laws of Malta and thereby benefit from a preferential tax treatment.

Accordingly, although such a company is subject to the normal corporate tax of 35% levied on all Maltese companies, the net effective rate of taxation will be reduced to 5% upon a distribution of dividends to the non-resident shareholders.

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