E-Commerce in Malta
By George Farrugia
Updated 25 October 2007
 With
the continued increase in information technology and its widespread
diffuse to all parts of the globe, e-commerce is already having
a huge impact on how the human race does business.
E-commerce is good for business and good for the consumers since
it:
• Widens choice
• Reduces costs
• Increases competition
• Facilitates trading
Realising the potential that e-commerce can have on our economy,
the Maltese government has set up the first dedicated E-Money Enterprise
Zone in the world.
Malta is the ideal location for the establishment of an e-commerce
company. Amongst its major advantages one finds:
• Economic, social and political stability
•
Well educated and energetic workforce
•
State of the art telecommunication facilities
•
Modern legal and business climate
•
Dedicated legislation
•
A reputation as a world leader in financial services
•
Cost competitiveness
•
Real tax efficiency
In short, Malta offers any e-money operation a location that ensures
success and enhances its reputation.
Legislation
During the past 10 years Malta’s laws have been continually
reviewed and modernised to bring them up to date with current global
requirements and also in preparation for entry of the island into
the European Union, on 1 May 2004.
Malta’s laws have their root in English Common law and Roman
civil law. As such any lawyer in the world can easily understand
them, especially European lawyers.
For the E-Money sector, the Electronic Commerce Act 2001 is perhaps
the most important. Borrowing extensively from best practices across
the globe, this Act provides “for the validity of transactions
carried out and information submitted through electronic communications”
This Act also makes the misuse of electronic signatures, signature
creation devices and certificates as criminal offences, as are the
unlawful access or use of information and the misuse of computer
hardware.
In June 2000 Malta became the first European country, and one of
only six in the world, to reach an accord with the organization
For Economic Cooperation And Development (OECD) on the development
of tax practices that would help encourage greater global economic
stability. Malta is now playing a central role in working with the
OECD on policy development and in spite of the favourable tax provisions
available to companies the OECD has officially declared that Malta
is not a tax haven.
Telecommunications
During the last fifteen years Telecommunication in Malta has gone
through a period of rapid change brought about by privatisation
and de-regulation. Since 1st January 2003, the telecommunication
sector in Malta is a totally open market.
The major benefits to the consumer of such policies are:
• Drastic drop in charges (sometimes by as much as 77%)
•
Higher investment in the latest technology by the market players
•
Wider range of services
Malta has a fully digitalised national telephone network that
provides for:
• packet switching,
•
frame relay,
•
high speed leased lines,
•
ISDN, and
•
ADSL
The local cable company has invested in the creation of a Digital
Interactive Hub that can provide for:
• Interactive television
•
Telephony
•
Video on demand
•
Internet and live video streaming for commercial use
In Malta almost all homes are linked to the fixed-line telephone
network whilst the cable network passes through 98% of all properties
with 67% of all businesses and household actually using such service.
Internationally, Malta is connected through two satellites stations
(one to the Atlantic Ocean region and the other to the Indian Ocean
region) and a submarine fibre optic link to mainland Europe.
The ISP sector in Malta is highly competitive and offers many services
including:
• Hosting and virtual hosting
• Server housing and maintenance
• Brokerage and trading services
• E-payment gateways
• E-commerce integration
• Multi-currency credit card transaction processing
• On line cable internet application design and development
• ASP services and web design
• Cost Savings
When compared to mainland Europe, Malta has various cost advantages.
Amongst the most important one finds:
• Employment costs 70% less
•
Property costs 50% less
•
Professional fees 60% less
New companies may also be eligible for grants and/or subsidised
loans as well as a host of other benefits provided by the Business
Promotion Act.
Taxation
Amongst the most salient tax benefits, one finds:
• The possibility of tax efficient company structure that
can result in a 6/7ths refund of the Malta tax.
• Special tax benefits for incoming companies
• Tax benefits for expatriate staff
• Double taxation agreements with over 45 countries
• Tax incentives for software development, back office and
digital warehousing services operations.
Disclaimer
The above information is being provided as a general guide only
and should not be considered as a substitute for professional advice.
George
Farrugia is the founding partner of MGI Malta. He can be reached
at
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