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Malta-Malaysia Double Taxation Treaty

Malta-Malaysia Double Taxation Treaty

Malta has signed an agreement for the avoidance of double taxation with Malaysia in 2000. The agreement covers the following: the income tax in Malta and the income tax, the supplementary tax, the development tax and the petroleum tax in Malaysia.

The double taxation agreement was enforced in 2002.

What does the Malta-Malaysia double tax treaty contain?

The first articles of the double taxation agreement between Malta and Malaysia define the terms under which the treaty applies. According to these articles, the convention covers the territories of Malaysia and Malta, which also includes the island of Gozo and other Maltese islands. The agreement also covers territorial waters in both countries. Other provisions of the double taxation agreement Malta signed with Malaysia refers to the persons it covers:

  • – individuals,
  • – Malaysian and Maltese companies,
  • – enterprises of a contracting state defined as enterprises carried on by the resident of one of the contracting states in the other state.

The agreement also defines terms like “national” which refers to Malaysian and Maltese citizens and also corporate bodies registered in one of the contracting states. Another important term defined by the convention is “permanent establishment” which refers to any place of management, branch office or any other forms under which a Malaysian or Maltese company conducts its business activities in the other country.

Taxation of income according to the Malta-Malaysia double tax agreement

The Malta-Malaysia double taxation convention applies to the following sources of income:

  • – alienation of movable and immovable properties,
  • – business profits,
  • – shipping and air transport,
  • – associated enterprises,
  • – dividends,
  • – interests,
  • – royalties,
  • – independent and dependent personal services.

With respect to the taxes applied under the double taxation agreement, dividends paid by a Malaysian company to a Maltese resident will be exempt from any tax in Malaysia. Dividends paid by a Maltese company to a Malaysian resident may be subject to the Maltese tax on the gross amount of dividends. Interests will be taxed at a maximum rate of 15%, but tax exemptions are provided, if the interests are paid to a company owned by the Malaysian or Maltese governments.

For complete information about the avoidance of double taxation, you may also contact our agents in Malta.