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Tax Treaty News

27 May 2010

Malta continues to build relations with Qatar, Bahrain, Hong Kong and the Isle of Man instigating discussions and signing tax treaties with these jurisdictions. Taxand Malta sets out the latest on these tax treaties below.

Malta ratifies double taxation agreement with Qatar and signs treaty with Bahrain
Malta ratified the double taxation agreement with Qatar which was signed on the 23 January 2009. The treaty is applicable with effect from the 9 December 2009.

The double taxation agreement between Malta and Qatar is based on the OECD Model Convention with some minor differences. No withholding taxes are imposed on the payment of dividends and interest and thus these sources of income are only taxable in the residence state of the recipient. With respect to royalties, the treaty provides for a reduced treaty rate of 5%.

Malta and Bahrain signed a double tax treaty on the 12 April 2010. The treaty was signed by Malta's Minister of Finance during a trade delegation in the Persian Gulf States. Given Bahrain's status as the centre of financial services in the Gulf and Middle East, such treaty will undoubtedly strengthen the commercial link between Malta and these States. Malta also has signed agreements with the UAE and Kuwait

Malta to start treaty discussions with Hong Kong
Malta will start technical discussions with Hong Kong with a view to conclude a double taxation agreement between the two countries. This is very advantageous for Malta since it will be the first country in Southern Europe to have a tax treaty with Hong Kong.

Malta - Isle of Man Tax Treaty
The treaty signed between Malta and the Isle of Man becomes effective as from 1 January 2011.

The double tax treaty eliminates the imposition of withholding tax on cross-border repatriation of dividends, interest and royalties implying that only the residence state of the recipient is allowed to tax these types of income.

Taxand's Take

Malta's extensive treaty network with a number of interesting jurisdictions continues to enhance Malta's position as one of the leading financial centres for holding companies, intellectual property and treasury functions.

Your Taxand contacts for further queries are:
Walter Cutajar
T. +356 (2730) 0045

Maryanne Inguanez
T. +356 (2730) 0045

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