Digital Gaming and the Role of Malta

MEDIA ROOM

Malta’s service economy has experienced staggering developments over the past ten years. The benefits that have been gained through the dedicated improvement of the island’s technological infrastructure are marked and clear, and most importantly are paying off.

This year Malta was established as the European leader in e-Government further to a European Commission bencharking report placing Malta first in e-government services in Europe. The 9th e-Government Benchmarking Report, which measured public sector performance in the deployment of e-Government in 32 countries (the 27 European Union member states together with Croatia, Iceland, Norway, Switzerland and Turkey) found Malta to be the best performing country by achieving 100% in five of the six core indicators measured.

E-commerce businesses are perfectly mobile and work equally as effectively from Valletta, Vienna, Vilnius or Valencia, provided that the technological infrastructures, economic resources and positive business environment (favourable tax rates and investment incentives) are available to such businesses. Once these factors are duly addressed, other “soft” factors such as quality of life, weather, languages and the physical environment could have some bearing.

Malta’s position as a full member state of the European Union having an attractive corporate tax systems and specialised incentives targeted at the digital gaming sector has placed it in good stead to attract a leading company in the digital gaming sector, namely TRC Family Entertainment Ltd in Malta which is headed by Chris Deering, formerly the CEO of Sony Computer Entertainment Europe, and continues to raise significant interest in the industry.

In May 2011, the Digital Games Initiative Group, which comprises Malta Enterprise, Malta Council for Science and Technology, University of Malta and the Creative Economy Working Group, engaged an external audit company to advise on the development of a national policy relating to the setting up of a Digital Games Industry in Malta. The report was primarily intended to (i) attract foreign direct investment (FDI) and (ii) identify ways of stimulating, supporting and expanding Malta’s digital game development industry.

Malta’s attractions as a hub for the development of digital gaming software can be summarised as follows:

  • An attractive full-imputation corporate tax system which can reduce the tax suffered by non-resident shareholders on distributed profits to a typical rate of 5%;
  • Availability of tax credits in respect of development of educational or promotional digital games;
  • 15% personal tax rate applicable to expats performing key commercial functions;
  • Assistance with the financing of employee salaries, leasing of equipment and provision of other facilities;
  • Assistance with the financing of up to half of the market development costs;
  • Protection of intellectual property;
  • A highly skilled workforce possessing cross-disciplinary skills;
  • A rapid and responsive legislative process.

Malta’s efforts to accelerate the development of the digital media cluster and the initiatives being taken to create an environment that helps in the growth of this industry are further recognised via the introduction of the Digital Games Fund. By means of the Malta Digital Games Fund, registered companies in the media, entertainment, IT or audiovisual sectors can be granted between €15,000 and €50,000 to cover up to 75 per cent of the expense.

Each of these factors serves to render Malta’s overall offering very attractive to international operators in the digital gaming sphere. During 2012 there have already been significant breakthroughs which bode well for the island’s course into more high-knowledge and high value added territories and this trend is likely to increase in momentum with more operators choosing Malta as a base for some or all of their operations.

Article by Dr Andrew J.Zammit – Managing Partner – CSB Advocates – Director- Legal & Regulatory – CSB Group