On 19 June 2018, Malta published the Double Taxation Relief (Taxes on Income) (The Republic of Botswana) Order, 2018 in the Official Gazette, which provides for the ratification of the pending income tax treaty with Botswana. The treaty, signed 2 October 2017, is the first of its kind between the two countries.
The treaty covers Botswana income tax and Malta income tax.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel if the activities continue for the same or connected project within a Contracting State for a period or periods aggregating more than 6 months within any 12-month period.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
Article 24 (Mutual Agreement Procedure) includes the provision that if any case is not resolved within three years from the presentation of the case to the competent authority of the other Contracting State, any unresolved issues arising from the case will be submitted to arbitration if either competent authority so requests.
The treaty will enter into force once the ratification instruments are exchanged. It will apply in Botswana 30 days after its entry into force in respect of withholding taxes and from 1 July of the year following its entry into force in respect of other taxes. In Malta, the treaty will apply from 1 January of the year following its entry into force.
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