New tax rules set to reshape Malta’s gaming framework come into effect this October

Malta’s revised VAT and gaming tax framework for the gaming sector will come into force from next Thursday, introducing new gaming tax rates while narrowing the VAT exemption applicable to gambling activities.

The changes, announced by the Malta Gaming Authority (MGA) and Malta Tax and Customs Administration (MTCA) back in April, are being presented by the authorities as an "attractive" measure intended to provide greater certainty for operators and strengthen Malta’s competitiveness as a gaming jurisdiction.

Under the new gaming tax framework, the existing gaming tax and gaming device levy will be consolidated into a single structure based on the type of game and the way it is offered. The new rates include 15 per cent for Type 1 gaming and 10 per cent for Types 2, 3 and 4, while controlled gaming premises and junkets remain subject to a 5 per cent rate.

The revised gaming tax applies to gaming services provided to players present in Malta.

At the same time, the VAT exemption for gambling services is being narrowed. The MTCA has issued guidelines defining the activities that will continue to qualify for exemption, while gambling services falling outside the exemption will become subject to VAT.

The authorities say the change will allow operators to recover eligible input VAT associated with taxable supplies. The MGA has described the revised framework as providing a more predictable tax environment and improving VAT recovery for the sector.

The changes have prompted commentary from businesses working with the gaming sector.

Vantegris, which provides services to businesses operating in regulated gaming markets, highlighted the distinction between the headline gaming tax rates and the revenue to which they apply, describing the changes in a recent LinkedIn post as a gaming tax rate that will “triple” from 5 per cent to between 10 per cent and 15 per cent from 1st October.

Professional-services firms have also been addressing the implications of the changes for businesses in the sector.

PwC Malta said the narrowing of the VAT exemption "raises discussions" around the classification of gambling activities, pricing and input-tax recovery. Its commentary also noted that the changes will affect businesses with exposure to Malta’s iGaming ecosystem, not only operators based on the island.

RSM Malta said the revised VAT framework will materially change the treatment of gambling activities from 1st October and advised gaming operators to review their activities, VAT recovery positions and compliance arrangements.

The MGA and MTCA have said that the reforms followed feedback and consultation with the gaming industry.

The MGA has said that the reforms are the result of ongoing engagement with the gaming industry and are intended to provide a clearer and more predictable framework for operators.

The changes will therefore take effect from 1st October, covering both the revised gaming tax structure and the amended VAT treatment of gambling services.