Malta and China sign Double Tax Agreement

On the 23^rd October 2010, Malta and China signed a new double tax agreement (DTA) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, replacing the existing one signed on 2^nd February 1993.

The new Malta-China DTA is designed to provide investors from both countries with more attractive conditions for investment; particularly in respect of Chinese investors, allowing the latter to tap into the European market more effectively and in a more efficient way than before. Not only does this DTA help to create a more attractive investment climate for genuine business transactions, but it also introduces certain provisions addressing the prevention of tax avoidance through treaty abuse. Moreover, the Malta-China DTA updates the Exchange of Information article thereby establishing better channels for the exchange of information in a mutual effort to prevent fiscal evasion.

Additional key provisions of the Malta-China DTA deal with an effective reduction of withholding tax rates for dividends from 10% to 5% (for a holding of at least 25% of the company paying the dividends), and from 10% to 7% for royalties.

 

The Malta-China DTA is subject to ratification by both Malta and China in order for it to enter into force.