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China-Malta Double Taxation Treaty

Dr. Trudy Marie Attard | 27 Jul 2012

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A Double Taxation Agreement has been signed between Malta and China in the latter part of 2010 and is awaiting ratification. This DTA will replace an existing tax treaty which had come into force in 1993 and constitutes another important step in the development of Malta's tax treaty network.

The Agreement retains the objective of avoiding the double taxation of income and introduces new measures to prevent tax evasion through treaty abuse, in line with the guidelines set by the OECD Model Tax Convention on Income and on Capital. The new Agreement further updates Article 26 relating to exchange of information in accordance with international standards, thus providing for better information channels in the fight against tax fraud.

It will additionally set the stage for genuine business relations and investment opportunities for both Maltese and Chinese residents. The Agreement also opens an efficient path through which Chinese investors and traders may tap into the European market, the largest single market in the world. On the other hand, Malta is granted access to the Asian market, an incredibly fast growing economy.

The provisions of the Agreement are more beneficial this time round. The withholding tax rate for dividends for a holding of at least 25% of the company distributing the dividends has been set at 5% as opposed to 10% under the existing treaty, while the withholding tax rate for royalties has been reduced effectively from 10% to 7%.

The Maltese Finance Minister said that “the signing of this DTA will be another important milestone in the relations between Malta and China and will contribute to deepen and strengthen the already very good relations between the two countries. It also strengthens our growing network of over fifty tax treaties which improves the value proposition of our country to potential investors, which is a key objective in our effort to attract new and better jobs to our shores”.

This is another step in the relationship between Malta and China. Trade flows have shown encouraging numbers in recent years and the two states have signed numerous agreements allowing their diplomatic and economic relations to flourish.

[Full List of Malta Double Taxation Agreements]

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