2 April 2012
Details of the Hong Kong - Malta Income Tax Agreement (2011) and protocol, signed on 8 November 2011, have become available. The agreement was concluded in the English language. The treaty generally follows the OECD Model Convention.
The maximum rates of withholding tax are:
|-||0% on dividends;|
|-||0% on interest;|
|-||3% on royalties.|
Deviations from the OECD Model include that:
|-||the term permanent establishment (PE) includes the furnishing of services, including consultancy services, by an enterprise directly or through employees or other personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same or a connected project) within a Contracting Party for a period or periods aggregating more than 183 days within any 12-month period (Art.5 (3)(b));|
|-||Art. 7 of the treaty follows the article on Business profits of the UN Model Convention (2001). Additionally it provides that no profits shall be attributed to a permanent establishment (PE) by reason of the mere purchase by that PE of goods or merchandise for the enterprise (Art.7(5));|
|-||Art. 12 of the treaty follows the article on Royalties of the UN Model Convention (2001).|
Both states generally provide for the credit method to avoid double taxation.
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