KPMG - your Blockchain Partner - KPMG Malta
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KPMG - your Blockchain Partner

KPMG - your Blockchain Partner

Malta is in the lead. As many jurisdictions grapple with evolutions in blockchain and Distributed Ledger Technology (DLT) in general, Malta sits atop the DLT ladder as the first jurisdiction to have actually designed an entire ecosystem for DLT. KPMG Malta has been instrumental to these developments and we are therefore poised to walk you through Malta’s blockchain terrain - to seize the opportunities and to bring your blockchain innovations to life.

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KPMG each year examines the importance of tax and commercial factors for organisations deciding where to re/locate their business functions. Malta consistently scores highly in the top 10 factors below.

KPMG - your blockchain partner

Spanning across all functions, KPMG in Malta’s blockchain team includes accountants, tax experts, lawyers, bankers, software developers, auditors and analysts trained to focus on detail whilst basing their delivery on the bigger blockchain picture.

 

Tax impact

Not only has Malta created the Malta Digital Innovation Authority for robust and investor-friendly oversight, Malta has addedyet another feather to its DLT cap by its recent issuance of 3 guidelines to address income tax, value added tax (VAT) and dutyimplications arising in connection with DLT Assets.

— For tax purposes, Malta broadly classifies DLT Assets either as Coins or as Tokens. Tokens are further classified into twosubcategories: Financial Tokens or Utility Tokens.

— A distinguishing feature of Malta's tax rules is its recognition of cryptocurrencies as any other currency rather than assets,thus excluding cryptocurrencies from the purview of capital gains tax. Utility Tokens are similarly untouched by capital gainstaxation under Malta's rules. On the other hand, gains arising from the transfer of Financial Tokens would generally be subjectto tax in Malta, to the extent that such Financial Tokens are analogous to securities. Stamp duty exemptions are neverthelessavailable, provided that requisite conditions are met.

— DLT business income: Applying Malta’s attractive tax system, transactions of a capital nature are untaxed while transactionsin the nature of trade are subject to the standard 35% corporate tax rate. A shareholder in receipt of a taxed dividend wouldthen be entitled to claim a tax refund, resulting in an effective 5% or lower tax rate.

— Upon an ICO of Coins or an STO of Financial Tokens, Malta’s rules preclude tax on the generated proceeds, given that Maltadoes not levy taxes on capital. A Utility Token offering would however be treated as an issue of vouchers, with the realisedproceeds thereof being subject to tax. Being a voucher, a Utility Token attracts VAT obligations for the issuer, the extent of whichare determined based on the nature of the underlying good, service or benefit attached to such Utility Token.

 

The KPMG tax team:

Our niche specialists focus on all angles of DLT to ensure a holistic understanding of the issues encountered. With expert colleagues across the globe, our assistance goes beyond borders. We can assess and advise you on efficient corporate structures and evaluate the tax treatment of your blockchain business. We understand the need for speed, while strictly adhering to anti-money laundering policies. We assist upon inception of your plans, implementation and maintenance, ensuring a seamless one stop-shop wherever you are.

 

Corporate set-up for your blockchain venture

In order to kick-start your blockchain venture you will need to set up a legal entity in Malta,with companies and private foundations being particularly suited.

— A Maltese company may be either public or private. The incorporation of companies isa quick and cheap process with registration completed upon the issue of a certificate ofincorporation within a week of delivery in good order of all requisite documentation to theRegistrar.

— Malta’s civil law has also been adapted to meet the new demands of blockchain. Purposefoundations may now be the authorised ICO and TGE medium in Malta. Availing themselvesof procedural efficiencies and tax advantages, foundations are now well placed to own,administer or otherwise operate innovative technology arrangements.

 

Corporate, Tax and Regulatory assistance

Blockchain is great, but execution is key. Our goal is to provide the corporate, tax, regulatoryand legal support that will give your blockchain ideas a solid footing. Whether you areincorporating a token exchange, launching a crypto fund or about to undertake an ICO we arehere to help you:

• Incorporate and register the most suitable entity

• Ensure your structure is both tax compliant and efficient

• Comply with regulatory laws where applicable

• Assist in determining the nature of the token most suited for your plan

• Assistance with assessing the asset through the application of thefinancial instrument test

• Review your White Paper

• Assistance with token purchase and crowd token offer agreements

• Support with setting best practice terms use and privacy policy

• Advice and assistance with your ICO private placement offering documentsand other related documentation

• Navigate the rules in Malta and your other markets.

 

With the new regulatory regime in place you may also require an analysis of potential regulatory compliance as well as compliancewith other legislation, in particular, GDPR and data protection. We have niche teams ready to help.

 

Action point

Blockchain is here and the time to act is now. As you roll-out your blockchain ideas, we have positioned ourselves as yourtrusted advisor, competent at providing the corporate, tax and regulatory structures on which your ideas can take-off. The DLTsphere is fast-paced and KPMG has hopped onto the front seat to help business and investors set up in Malta.

 

 

© 2019 KPMG, a Malta civil partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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