New guidelines set to come into force in January will add clarity to VAT rules for gambling activities defined in a law dating back to 1998. 

A notice published in the Government Gazette this week clarifies that as from January 1, the placing of bets and wagers, including the services of bookmakers, betting exchanges and “equivalent facilities” will be exempt without credit for VAT purposes, together with other gambling activities mentioned in the new guidelines. 

Events on which betting and placing of wagers will be exempt include sporting events, both real life and virtual, competitions, lotteries, performance of an index and a natural phenomenon.

Gambling on the outcome of casino-type tables games, such as blackjack, poker and roulette, and any game of chance where they outcome is determined by a random generator will not be exempt from the tax. Similarly, any gambling with the use of remote gaming equipment will not be exempt.

At present, gambling services are already exempt from VAT, but are subject to gaming tax. 

The new regulations flesh out earlier rules which had come into force back in 1998 - an altogether different time when Malta's online gaming sector had not yet sprouted and the Malta Gaming Authority had yet to be established. 

The exemption from VAT of gambling is outlined in the Value Added Tax Act, the notice shows and it is also an implementation of a Council of Europe directive on the common system of VAT.

The EU's VAT directive obliges member states to exempt gambling services from VAT. 

Questions by this newspaper to the Finance Ministry on how this would work and how much revenue the exemption would cost the country were not answered by the time of writing.

Last year, Malta’s VAT revenue was just over €0.7 billion, which translates to 7.3 per cent of the country’s Gross Domestic Product.

Correction 12 December: A previous version of this article stated that 'Betting is to become VAT-free'. This is not technically correct and the article has been amended to reflect this. The error is regretted.

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