Malta: Double Tax Treaties
Malta has entered into 70 double-tax treaties (unusually for a low-tax jurisdiction), with 6 pending. Generally speaking, the treaty benefits are available to all Maltese companies. All the treaties follow the OECD Model Convention. A new treaty that follows the OECD Model Convention, signed with Switzerland in February, 2011, entered into force in July, 2012.
A treaty with Barbados was signed in December 2001. In September, 2004, Malta signed a DTAA with Iceland. In May, 2005, Malta and San Marino held discussions on the terms of a DTAA.
In March, 2006, Maltese Foreign Minister Michael Frendo and H.E. Dr. Mohammed Khirbash, Minister of State for Finance and Industry of United Arab Emirates signed an Agreement for the Avoidance of Double Taxation.
In March 2008, Tonio Fenech, Malta's Minister of Finance, Economy and Investment, initialled the text of a Treaty for the Avoidance of Double Taxation between Malta and the United States.
The Malta/US DTA was signed in the presence of US Ambassador Molly Bordonaro, on March 27th. Michael Mundaca headed the US Treasury delegation in Malta, and initialled the document on behalf of the United States.
The signing of the tax agreement was the culmination of a process which commenced with a meeting between Prime Minister Lawrence Gonzi and President George Bush in 2005. The agreement was ratified in November 2010 by both countries.
At the same time, the Maltese government also announced that the agreement between Malta and Singapore for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to taxes on income became operative on February 29, 2008.
This agreement had been signed on March 26th, 2006, and it is expected to contribute to a further expansion in trade between the two sides.
In September 2008, Malta's Finance Minister, Tonio Fenech, announced that his government had successfully concluded a protocol to the existing double taxation agreement with France.
"This protocol is beneficial to both countries as it will strengthen the already good relationship which exists and act as a catalyst to increase commerce and trade and encourage further cooperation between Malta and France," Fenech said in an address shortly before the official signing ceremony.
"These treaties ensure the removal of any potential trade barriers between respective countries by establishing internationally accepted provisions for the avoidance of double taxation on the same income. They also establish appropriate channels for exchange of information in a mutual effort to prevent fiscal evasion," Fenech explained.
"This protocol with France is a further enhancement to our comprehensive network of double taxation treaties and in the face of international developments will contribute to making our diversified economy even more attractive," he added.
In recent years, France has been one of Malta’s top three trading partners, and in 2006 France was Malta's largest export market. Statistics for the first six months of that year show that Malta imported around EUR134 million worth of goods from France and exported over EUR120 million, according to Fenech.
"Through this agreement we hope to improve quality trade even further, strengthen our communication and encourage investment," he said.
"This protocol should generate more economic activity through its commercial benefits and increased fiscal incentives. It is worth noting that Malta’s tax imputation system is fully compliant and accepted by the EU," Fenech observed.
In December 2008, Micheline Calmy-Rey, Swiss Minister of Foreign Affairs, visited Malta to sign a double taxation avoidance agreement with her Maltese counterpart, Tonio Borg.
Dr. Borg said that this agreement has the primary objective of making the two countries more attractive for entrepreneurs and will serve to improve Maltese-Swiss economic and commercial cooperation. He also said that the signing of the instrument represents a major and important step forward in the bilateral relations between both countries and represents a significant addition to Malta’s existing network of double taxation treaties.
Borg said that the agreement will enable both countries to exchange information for a more effective stand against tax evasion. The agreement was due to enter into force following ratification by both countries.
In December 2008, discussions between the Sultanate of Oman and Malta on a treaty for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income were held in Oman. An agreement was reached on most proposals contained in the draft text. A number of other clauses remained open for further discussions. For this purpose, a follow up meeting was due to be held in the near future.
It was also announced in December 2008 that Malta and Libya had signed a new double taxation agreement, which replaces the previous agreement, signed in 1972. The new Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to Taxes on Income between Malta and Libya was signed on December 28, 2008 at the Ministry of Foreign Affairs in Tripoli by Dr Joseph Cassar, Malta’s Ambassador to Libya and Ramadan Barq, Director for European Affairs at the Libyan Foreign Ministry.
The Convention entered into force following ratification by both countries.
In January 2009, the Maltese Minister of Finance, Economy and Investment, Tonio Fenech announced that an agreement on the terms for a double tax agreement with Qatar had been reached between the two countries.
The convention for the avoidance of double taxation and fiscal evasion with respect to income tax eliminates double taxation on mutual investments between the two countries and provides for the exchange of information in tax matters. The agreement promotes increased economic relations between the two parties and aims at increasing trading levels.
In a statement from the Maltese government, Fenech welcomed the agreement stating: “This agreement extends the double taxation treaty network which enables Malta to develop trade relations with other countries, attract inward direct investment and serves as an important platform for Maltese residents doing business in partner countries.”
In January 2009, the Irish Revenue Commission announced the ratification of a convention with Malta for the avoidance of double taxation and fiscal evasion with respect to income tax.
The agreement with Malta, which was signed on November 14, 2008, came into force following the Irish ratification of the convention January 15, 2009. The treaty came into effect on January 1, 2010.
The agreement covers taxes on the income of individuals and companies. It operates by either granting exclusive taxation rights to one or other country, or where the income or gain remains taxable in both, by providing that the country of residence of the taxpayer will relieve double taxation by allowing a credit for the tax paid in the other country.
The agreement with Ireland comprises of a nil rate of withholding tax on interest payments and reduced rates of withholding taxes on dividends, and royalty payments. The agreement also includes a non-discrimination article, which protects nationals of each country from discriminatory tax provisions in the other, and the exchange of information article, which is necessary to counter tax evasion.
In March 2009, Malta and Italy signed a protocol amending the existing double tax avoidance treaty between the two countries, which first came into force in July 1981.
The revised agreement was signed by Maltese Deputy Prime Minister and Minister of Foreign Affairs Tonio Borg in Rome, during the Maltese President’s official visit to Italy.
Speaking at the signing of the agreement, Tonio Borg stated: “When the protocol enters into force, it will reinforce the provisions of the existing Double Taxation Agreement with Italy and will further encourage and facilitate investment and business opportunities and commercial exchanges between Maltese and Italian entrepreneurs.”
Italian investment in Malta is strong with some 25 companies operating in various sectors either totally owned or in joint ventures. In 2009, Maltese imports from Italy totalled around EUR676.4m, with exports at EUR78.2m. Reciprocal tourism is also important, with 77,500 individuals visiting from the respective countries in 2010.
On 23 October 2009, Malta announced the imminent entry into force of a comprehensive double tax agreement with the Isle of Man. The agreement was ratified on January 19, 2010, with the Isle of Man’s Chief Minister, Tony Brown, notifying the government of Malta of its ratification.
Malta’s High Commissioner to the United Kingdom, Joseph Zammit Tabona, confirmed that Malta had completed its own ratification procedures, and as a consequence the agreement entered into force on February 26, 2010.
The double taxation agreement between the two governments is based on the model published by the Organisation for Economic Co-operation and Development (OECD).
According to the Manx government, the negotiation, signing and ratification of tax co-operation agreements demonstrates the two territories’ commitment to international standards and the effort to establish a global system based on co-operation between countries, transparency and effective exchange of information in tax matters. Both territories are currently placed on the OECD 'white list' of territories that have substantially-implemented the internationally-agreed OECD standard.
The table below shows the countries which have double-tax treaties with Malta.