New VAT Guidelines became effective as of 1 January 2018. The Guidelines list gaming services which are to be considered as ‘exempt without credit’ supplies in terms of Item 9 of the Fifth Schedule to the VAT Act. As from 1 January 2018, gaming services which are not included in this list are considered as ‘taxable supplies’ and no longer ‘exempt without credit’ supplies.
The list of ‘exempt without credit gaming services’ has been narrowed down to the following:
- “The provision of any facilities for the placing of bets and wagers, including the services of book-makers, betting exchanges and any equivalent facilities. The placing of bets and wagers refers to gambling on the outcome of an event, which outcome is unknown at the time of the placing of the bet or wager. The term ‘event’ includes but is not limited to: a sporting event, both real life or virtual; a competition; a lottery; the performance of an index; and a natural phenomenon. For the purposes of this guideline, ‘placing of bets and wagers’ shall exclude gambling on the outcome of (a) casino-type table games such as blackjack, poker and roulette: and (b) any games of chance, the outcome of which is determined by random generator.
- The granting of the right to participate in lotto or lottery, including Grand Lottery, Super 5, scratch cards, keno and any other lottery-type games;
- The granting of the right to participate in a bingo game;
- The provision to players of devices or equivalent for the playing of casino-type games of chance, the outcome of which is determined by random generator, including tables for the playing of roulette, blackjack, baccarat, poker when played against the house, and slot machines. The terms “devices or equipment” refers to games tables, machines and other similar objects which are physically located in such premises or location, including a studio, which is licensed, or otherwise recognized by the MGA, whether accessed by the player physically or remotely. For the avoidance of doubt, “devices or equipment” excludes “amusement machines” as defined in Chapter 438 of the Laws of Malta, and “remote gaming equipment” as defined in S.L. 438.04; and
- Supplies which are strictly required, related and essential to, and which form part of an underlying gambling or betting transaction falling within paragraphs (i) – (iv) above, as shall from time to time be determined by the MGA.”
This essentially means that gambling operators which are currently registered under article 12 and which as from 1 January 2018 offer services other than services listed above, have an obligation to change their VAT registration to an article 10 VAT registration. Gambling companies with an article 10 VAT registration would have a right to claim input VAT. Gambling companies providing both services which in Malta are considered as taxable and exempt (as per list above) would be able to claim input VAT on the basis of partial attribution.
The above does not have an effect on the 2015 changes in the VAT Place of Supply Rules. Gambling companies would still need to consider the place where the player is located and apply the VAT treatment of the jurisdiction concerned.
A second Guideline clarifies how to calculate the VAT base for gaming services which are no longer be exempt as from 1 January 2018. Essentially the considerations made are deemed to be the following:
- Where the supplier receives a rake – the consideration shall be the rake;
- In all other cases, the consideration shall be total stakes/bets placed by the players (including bets placed using bonus credits) less the winnings and other amounts paid out to the players in connection with the bet (including bonus credit comprised within the bets placed). The consideration shall be deemed to be inclusive of VAT.
These guidelines together with the announcement of VAT Grouping in the Budget 2018 have an impact on how Malta based gaming businesses are structured.