Malta Evaluates Potential Indirect Tax on Gaming

Malta Evaluates Potential Indirect Tax on Gaming

Malta's 2026 national budget has opened the door to a potential indirect tax on gaming and other high-value sectors, marking a subtle yet significant shift in the country's fiscal landscape. The proposal, which remains in the exploratory stage, reflects the government's attempt to diversify its tax base while maintaining its position as a competitive European hub for digital industries.

Currently, gaming operators in Malta are subject to a direct 5% Gaming Tax applied to revenue generated from Maltese players. Alongside this, the country applies indirect or consumption-based taxes, such as value-added tax (VAT) and excise duties on specific goods and services. Introducing an indirect tax on gaming would represent an additional fiscal layer, one aimed at capturing broader value contributions from an industry that remains central to Malta's economic ecosystem.

The budget projects an increase in gaming tax revenue, from an estimated €65 million this year to €67 million in 2026. Total tax revenue for the same year is forecast to reach €7.8 billion, with the majority expected from income tax, social security contributions, and VAT. The government's approach suggests an effort to balance fiscal expansion with targeted measures aimed at enhancing long-term revenue sustainability.

In outlining the 2026 financial plan, the government also projected a 3 percent GDP growth rate for the coming year, three times higher than the EU's average forecast of 1 percent. Within the budget, specific allocations have been made to support innovation and enterprise, including €400,000 for the Malta iGaming Incubator, €4 million for esports development, and €900,000 to assist local businesses in developing their intellectual property portfolios. These investments suggest a dual objective: sustaining Malta's established industries while fostering new growth in digital innovation and technology.

Beyond the gaming sector, the budget includes several initiatives aimed at supporting businesses and offering investment incentives. Family-owned enterprises are set to benefit from lower duty rates, advisory grants, and training vouchers. The government also introduced enterprise expenditure support, reimbursing up to half of pre-booked business costs, capped at €300,000. Additionally, the tax credit limit for the Micro Invest Scheme was increased to €65,000 in Malta and €85,000 in Gozo. A new investment tax credit was also announced, allowing companies to claim up to 60 percent of the qualifying investment value over four years for machinery, IT, and cybersecurity projects.

Finance Minister Clyde Caruana stated that the 2026 budget aims to strengthen Malta's long-term resilience through innovation, technology, and skills development. He described the plan as part of a strategy to build an economy that rewards initiative while maintaining fiscal discipline and competitiveness across sectors such as digital gaming and biotechnology. His remarks align with Malta's ongoing goal of combining sustainable growth with economic adaptability, particularly as digital industries continue to evolve.

While the proposed indirect tax on gaming has yet to be defined, its inclusion in the government's budget discourse reflects a growing recognition of the sector's broader economic footprint. Industry stakeholders are likely to closely monitor the development, as any adjustments to Malta's taxation model could influence cost structures and operational strategies across both local and international operators.