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Malta-Singapore Double Taxation Avoidance

Malta-Singapore Double Taxation Avoidance

Malta signed a double taxation agreement with Singapore at the beginning of 2006. They amended the agreement at the end of 2009, when new provisions about the exchange of tax information were introduced. The amendments were introduced in order for both countries to comply with the Organization for Economic Co-operation and Development requirements. However, the exchange of tax information protocol is still pending ratification in both Malta and Singapore.

Definitions in the Malta-Singapore double tax treaty

The first articles in the Malta-Singapore double taxation agreement contain definitions of the following terms:

  • – resident,
  • – permanent establishment,
  • – service permanent establishment.

The term “service permanent establishment” is used to define additional services by a Singapore or Maltese company in the other state for six-month periods of time within a calendar year. The agreement also defines independent personal services which refer to the taxation of individuals comprised in the Singapore and Maltese taxation systems.

Taxation according to the Malta-Singapore double taxation treaty

The double taxation agreement between Malta and Singapore provides taxing rights for both countries. Considering both Singapore and Malta have similar tax imputation systems, incomes such as dividends may be taxed in both countries, without any final withholding tax being imposed.

Interests are taxed with 7% in both countries, if the beneficial owner is a Singapore or Maltese bank, and 10% in all other cases. Royalties will be taxed at a 10% rate. With respect to royalties, the treaty also refers to industrial, commercial and scientific equipment, which will be included in the taxation of business income. With respect to the taxation of capital gains, the double taxation treaty differentiates between the alienation of shares and immovable property.

While the shares in a Singapore or Maltese company may be taxed in both countries, the alienation of immovable property will be taxed in the alienator’s resident country. The elimination of double taxation in both countries will be done through the credit method.

For complete information about the double taxation convention with Singapore, please contact our company registration agents in Malta.