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New Grants and Incentives by the Maltese Government to bolster e-Commerce

In a recent press release on the 8th of June 2020, the Government of Malta announced that it will provide up to EUR 10,000 to businesses investing in digital promotion campaigns in new foreign markets which gives reason to believe that there is a genuine intention to grow in the sector of e-commerce in Malta. This should incentivise more companies to do away with traditional retail channels and come up with more original business strategies which may be utilised online especially in emerging markets. If online businesses were able to operate at a time when the economy was struggling, then one may only start to believe what it would be like having an online business that can double its profits by engaging in online business especially when the economy has fully recovered and back on its feet .

One may look at Covid-19 as the pandemic that brought the world to its knees. However, Covid-19 may also be seen as the pandemic that managed to incentivise entrepreneurs and businesses to adopt new and innovative ideas to pursue their business objectives. Over the last couple of months many land-based businesses were forced to close shop due to numerous government restrictions imposed to prevent the spread of the pandemic, businesses were thus forced to adapt to new ways to reach their clients.

The world of eCommerce is one of the fastest ways of conducting businesses effectively in a modern society so long as you have the correct set up, both technologically and legally. Taking businesses online and venturing into the world of e-commerce has proven to be a very practical alternative from solely operating offline for a number of reasons:

  • increasing your reach and exposure by overcoming geographical limitations
  • gaining new customers with search engine visibility
  • lowering costs
  • eliminating travel time
  • providing abundant information
  • providing services 24/7
  • easier management facilities, and so much more.

Nevertheless, there are certain legal and technological considerations to be taken into consideration.

Businesses already using or planning to use digital promotional campaigns and e-commerce in or from Malta should in particular also be wary of the provisions in the Electronic Commerce Act (ECA) and the Eidas regulation.

The ECA lays down general regulations for individuals or companies operating in certain business spheres and outlines matters relating to the enforceability of electronic contracts, electronic communication, the liability of information society service providers and the use of trust services such as electronic signatures. The eIDAS Regulation’ on the other hand deals with the use of electronic signatures and enforces their recognition. Together with electronic signatures, electronic seals provide the necessary tools for customers to purchase goods and services in a trustworthy business environment.

Aside from the above, there are also consumer law provisions which need to be observed, as well as cybersecurity and data protection implications which must be taken into consideration when operating online. Businesses must carry out a data protection impact assessment, setting out the necessary dos and don’ts pertaining to data processing and indicating the type of personal data that needs to be collected for the rendering of such services. Websites should have  the necessary privacy notices and cookie policies in place to ensure that they are in adherence to data protection laws, including the GDPR.  A data protection officer (DPO) should also be appointed, depending on the size of the business, to make sure that website visitors and users have a point of contact for the purpose of data protection queries. Other considerations to be taken when moving a business online include the protection of certain intellectual property through copyright and trademark, especially of website domain names.

Government Incentives

The Maltese Government always believed in e-commerce and information society and launched various incentives over the years and enacted regulations with a purpose to enable businesses to go digital. In 2008, the Tax Credit (Electronic Commerce) Rules (Subsidiary Legislation 123.85) were promulgated, granting tax credits for qualifying expenditures relating to the development of e-commerce systems.

The Malta Communications Authority also laid out a 6 year strategy titled the ‘eCommerce National Strategy’ (2014-2020) as well as a 3-year plan commencing from the start of 2020 which identifies a number of national strategic objectives, some of which include:

  • Maintaining open, safe and secure electronic communications
  • Facilitating digital inclusion
  • Facilitating the development of e-Commerce, and
  • Supervising the provision of electronic signatures and trust services.

The recent initiatives launched by the Maltese Government are a continuation of the effort and strategy in this area and the latest initiatives aim to facilitate the transition of businesses online:

  • the Skills Development Scheme provides financial aid for companies looking to re-engineer their business models and thus requiring a work force with ICT skills
  • financial assistance to businesses investing in digital promotion campaigns in new foreign markets.

For further legal advice and information on setting up your online business kindly contact Dr Ian Gauci.

This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.