Anyone thinking of [b]starting an ecommerce business[/b] should always consider the financial and tax implications such as VAT and Corporation tax before they start operating. However, it is often as the product begins its growth stage in the product life cycle that entrepreneurs and businesses start thinking of how to minimise the companies tax exposure.

Malta has become a very viable option for setting up an e-commerce business as it has an enviable and mature IT infrastructure in place and the unique [b]Malta tax[/b] system offers a favourable tax rate to e-commerce trading companies that could potentially lower the effective tax rate to just over 5%. Whilst many large organisations have already wised up to the tax advantages of moving e commerce operations to Malta, it is now becoming accessible to smaller companies at the beginning of their life cycle.

Malta, in general, has a skilled and educated work force which in comparison to other countries in the European Union is relatively low cost. The blossoming gaming and financial services industry has also seen an influx of talented and skilled foreign workers relocate to Malta. The English language alongside Maltese is recognised as an official language and virtually the whole population can speak it. All legislation in Malta is drafted in Maltese and English and business is generally conducted in English.

The option of setting up a subsidiary in Malta of a parent based in another European Union Member state also can be tax efficient and offers a number of tax planning opportunities. The EU Parent Subsidiary Directive ensuring that profits taxed in one EU member state through a subsidiary and then subsequently distributed to its parent in another EU Member state will not be taxed twice. This is relieved by either offering a tax credit or a full tax exemption on the profits already taxed in the other jurisdiction. Malta is also very well connected with over 60 double tax treaties in place with countries all over the world including the USA, UK, Canada and most of the European Union Member states. Most of the tax treaties are based on the OECD model and most offer a myriad of tax planning opportunities.

Malta is well regulated, but crucially not over regulated by the Malta Financial Services Authority with a sensible and pro-active approach that seeks to allow companies the opportunities to grow and make a meaningful contribution to the Maltese economy.