Government launches eCommerce Strategy

43% of the Maltese own a smartphone and over half buy online but only 14% of local businesses have an online presence

Only 14% of local businesses currently have an online presence, Parliamentary Secretary Jose Herrera told reporters during the launch of the Malta National eCommerce Strategy for the next seven years, adding that initiatives that will be unveiled today will offer an advantage to online businesses.

“In ten years' time, there won’t be a job on the planet that won't require some form of IT skills.”

Herrera described the progress of eCommerce as staggering, however adding that the “growth potential for Maltese businesses is undisputed, but so is the risk of not innovating.”

“Staying put is not an option”, said Herrera.

He stressed, however that moving forward cannot be achieved by government alone. “Malta’s success depends on the collective effort of government, citizens and businesses alike”. 

Herrera said that he is confident that the strategy unveiled today is representative of a wide consensus and offers an unmissable opportunity. to Malta. “The limitations imposed by a small market such as ours fall in one fell swoop” in the context of eCommerce, said Herrera.

“There are more opportunities than threats and we promise our full support.”

According to MCA Chairman Edward Woods, 43% of the Maltese own a smartphone and more than half the population now buys goods online.

However, Woods noted, “the current lag on the part of the business sector in take-up of the supply of eCommerce Services, as opposed to the healthy demand for eCommerce, is cause for some concern”. The strategy aims to address this. “The road is long but it is a necessity”

Woods also launched a new online directory called “Blink”, which is meant to provide start ups and established business with an easy access to a list of entities supplying the products and services required to set up an manage an online business. He told attendees that the success of the national strategy will depend equally on the input of the State and that of the private sector. “The MCA promises its full commitment” said Woods.

Dr. Robert Attard from Ernst and Young addressed the taxation of electronically supplied services. So complex is this area of law that governments have struggled to catch up with developments in IT, creating legal loopholes that are being closed.

"The so called 2015 changes in VAT have been imposed by the EU, as it is a harmonized regulation. This came as a result of the Chinese and Americans exploiting loopholes in an anticompetitive manner."

Under the proposed changes, business to consumer (B2C) transactions are to be charged VAT in the country where the consumer is located, not that of where the service is based. If a Maltese company providing a service to a consumer in Germany, the Maltese company is bound to charge German VAT to the German consumer. This potentially requires businesses to be aware of the different rates of VAT charged in every member state and charge accordingly. 

The net result of this, according to Dr. Attard, will be more pressure to harmonize VAT rates charged by member states. "What worries me are the procedural problems of cross-border prosecutions", said Attard. "2015 is a possible nightmare."