Back To Top

Your Lowtax Account


Malta: E-Commerce

Introduction

Malta's economic policy encourages information technology operations, and the territory has invested heavily in state-of-the-art telecommunications. There are a number of Internet Service Providers in Malta, with clear interest being shown in offshore e-commerce development.

The most active e-commerce sector in Malta has been betting and gaming; there are said to be over 360 betting and gaming e-commerce operations in total on the island.

The Malta Communications Authority announced in March, 2002, that it intended to act as a catalyst for e-commerce rather than a regulator in the initial period of development. Although e-commerce - together with telecommunications and the country's postal service - is one of the statutory areas under the competence of the MCA, the Authority has revealed that during the developmental stages of the sector, its job would principally be to bring together the main players, provide advice and assistance, and explain the implications of new legislation as and when it is implemented.

'Given the current embryonic stage of development of this type of activity in Malta, we see ourselves acting more as a catalyst in this sector, rather than as a traditional regulator,' said Celia Falzon, Project Manager for E-Commerce.

She added that: 'We will be disseminating information, offering guidance and also help with regards to the legal implications of dealing and trading with foreign customers or merchants. We will also work to keep the public informed of their own rights when it comes to transacting electronically.'

The MCA administers Malta's Electronic Commerce Act which came into force in mid-2002.

In February, 2004, the latest e-Europe Progress Report revealed that Malta was significantly ahead of most EU accession countries in terms of internet access and utilisation of e-commerce. According to the report, 49% of Maltese homes were connected to the internet, a figure that placed the jurisdiction top of the league amongst the ten accession countries and three candidate countries (Romania, Bulgaria and Turkey) studied in the survey.

The island was ranked second place behind Slovenia in terms of Personal Computer ownership, with 58% of those polled claiming to own a PC. The study also found that Malta has 70 secure internet servers per million inhabitants, far higher than EU15 average of 48.

On the business front, the study found that 73% of Maltese firms had a website, also the highest proportion amongst the accession states. Of these, 20% had received orders online, whilst a third of the respondents reported that e-commerce generated over 1% of their revenues.

The Privatisation Unit of Malta's Ministry for Investment, Industry and Information Technology announced in January, 2006, that it had received binding offers for the sale of shares held by the Government of Malta in Maltacom plc. In May, 2006 Dubai Holding LLC, which is the ultimate parent company of Emirates International Telecommunications Malta Ltd (EIT is a joint venture between TECOM Investments and Dubai Investment Group), acquired the Government of Malta’s 60 per cent controlling stake in Maltacom.

In June 2007, Maltacom Group, was rebranded and renamed GO in a move that reflects the company's position as Malta’s sole quadruple-play organisation covering fixed voice, mobile, broadband Internet and digital television.GO came to life replacing the brands and respective logos of Maltacom, Maltanet, Multiplus and go mobile. The company has also announced three sub-brands under the new GO banner – GO Plus, GO Business and GO Mobile.

In August 2007, the Malta Communications Authority (MCA) granted rights of use of radio frequencies to 3G Telecommunications Limited, for the establishment and operation of a third generation (3G) mobile communications network. This was completed in the case of Vodafone and Go Mobile in August 2005.

In January 2008, Maltese telecoms provider GO, announced a multi-million euro investment in a second submarine cable linking Malta to Italy.

According to GO, the cable links the Mediterranean island to the Italian mainland via Interoute’s pan-European network, which connects 85 cities in 22 countries across 54,000 cable kilometres of fibre.

The submarine cable project, known as GO-1 Mediterranean Cable System, was completed by the fourth quarter of 2008, and was entrusted to an international consortium made up of Alcatel-Lucent and Elettra.

GO Chairman Sonny Portelli explained that the company would be implementing the new submarine cable system so that it can offer further resiliency for its existing international links by having a more diverse route.

“The new submarine cable will augment GO’s international capacity and cater for projected demands for broadband services which will be increasing in the coming future, especially with projects such as Smart City. Moreover, it will give GO the possibility to procure broadband capacity from Interoute,” Mr Portelli stated.

“In practical terms this means that GO now possesses world class connectivity, which in turn allows us to provide services to the most demanding clients," he added.

Speaking with regard to the project, Malta's Trade and Industry Minister Austin Gatt commented: “What is happening today is very significant. This is the most fundamental building block in the edifice we call ‘The Smart Island’. We will be anything but smart if we continue to live in fear of disconnection from the rest of the world.”

GO Director Deepak Padmanabhan added: “This multimillion euro investment is a vote of confidence from GO’s majority shareholder – EIT – in both GO and the Maltese Islands. Once the new cable is deployed, Malta will have a first-class communication backbone which serves the needs of the islands for the present and future. This is an important step to achieve the Government’s goal of making Malta a centre of excellence in ICT."

GO CEO David Kay explained that the cable will link St. Paul’s Bay in Malta to Mazara del Vallo in Sicily, making the physical route of the cable different to that of the existing one that links St. George’s Bay to Catania. He further revealed that the cable would be 290km long and have four fibre pairs, of which initially only one will be lit.

The DWDM terminal equipment was initially equipped for two wavelengths at 10 Gbit/s each. Compared to the 2.5 Gbit/s available on the existing cable, this augmented the available capacity nine times.

In Malta the cable lands at GO’s existing premises at St.Paul’s exchange, whereas in Sicily it lands in a landing station provided by Interoute in Via Abetone at Mazara. From there, the cable is backhauled through Interoute’s PoP in Mazara to the rest of their pan-European network. In Sicily, the cable landing station is operated and maintained by Interoute.

“The new submarine cable network complements our strategy of growing our data, hosting and managed services business lines. Moreover, this project demonstrates GO’s investment capacity which is linked to the country’s need to become an ICT hub in the Mediterranean," Kay stated at the time.

Alcatel-Lucent designed, manufactured and commissioned the submarine cable system, based on its dense wavelength division multiplexing (DWDM) technology and cables, with the ability to be upgraded easily and cost-effectively in the future. Elettra was be responsible for the marine survey and laying of the cable. Elettra is a Telecom Italia Group company which specializes in survey, installation and maintenance of submarine cable networks.

Interoute's network is the largest in Europe. The company’s fibre optic network consists of twelve rings across more than 54,000 route kilometres of lit fibre, and has the capacity to carry a petabit (a billion megabits per second) of traffic.

Interoute’s Renzo Ravaglia announced that: “Interoute is pleased to be a part of this historic venture, made possible through the EIT/Dubai partnership. With this cable, GO and Interoute will open up opportunities for Malta in the European Union, North America, the Middle East and beyond. It will physically link Malta directly into Europe’s largest communications platform, making access to London, Paris, Amsterdam and Rome almost as easy as connecting Valletta and Gozo.”

In September 2008, the European Commission confirmed Malta’s high ICT ranking, recognising it again that year as "well advanced in information society, with many benchmarking indicators significantly above the EU average."

In its i2010 mid-term review (Preparing Europe’s Digital Future) the European Commission recognised Malta as Europe’s undisputed leader with regard to the indicator of basic public services for enterprises being fully available online.

"That leading position gives Maltese business a unique competitive advantage over all other businesses in Europe due to the fact that they are the only businesses in the entire European Union to benefit from a complete range of services online," the government observed.

Maltese basic public services available online for Maltese citizens are at 92%, the second best ranking in Europe compared with the European average of 51%, the Maltese authorities further revealed. The rapidity of the increase in these services was also noted by the Commission, which observed that in 2004, only 33% of Maltese public services to citizens were available online.

Broadband penetration in Maltese households as a percentage of households with an internet connection exceeds the European average, showing a greater take-up of Broadband among Maltese internet users. Maltese businesses are the 4th best connected in Europe to broadband and Malta’s population is the 5th most covered by DSL coverage in the EU.

Malta’s businesses use technology more than the average of their competitors in Europe, and the jurisdiction well exceeds European averages in integrating e-business in internal processes and in the use of ERP and analytical CRM systems, the government stated.

The ratio of Maltese employees with ICT skills is the 5th largest in Europe, and the ratio of ICT specialists in Malta is also ahead of European average.

The important contribution of ICT to Malta’s economy is indicated by the fact that Malta’s economy enjoys the third largest contribution to its GDP from the ICT sector, and the fourth largest employment ratio in the EU.

Minister for Infrastructure, Transport and Communications, Austin Gatt, remarked that these rankings: “once again confirm the rapid pace with which Malta is realising its ambition of becoming ‘the Smart Island’. The Smart Island means smart business, smart employees, smart schooling, smart government and smart public services. We have been confirmed as European leaders in some of those sectors and in any case very good performance on all of those fronts."

He went on to add that:

“The i2010 mid-term review is an opportunity for us to refine our weaknesses. We want to do more to stimulate take up among Maltese businesses, especially SMEs and the MCA’s work in this regard, in partnership with the GRTU and the Chamber of Commerce should improve our rankings even further by the end of the i2010 programme term."

“But the real challenge remains attracting and training more people to achieve specialist training in this sector. SmartCity will mean that we will exceed several times over our current, albeit high, rankings in ICT contribution to GDP and ICT specialist employment."

"We are getting ready for this challenge by opening up every possible opportunity for ICT training to anyone interested in taking that opportunity up. But we need to do more to get more people interested."

The Minister concluded: “The EU’s i2010 mid-term review is certainly cause for satisfaction for Malta. But the regatta is not over and we have to work harder to get further faster.”

See below for specific information on e-commerce in Malta, or go to Offshore-e-com.com for an extensive analysis of the commercial possibilities, legislation and taxation of e-commerce.

 

 

Back to Malta Index »

Malta Tax – CSB Advocates