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Malta-Vietnam

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Tax Treaty between Malta and Vietnam has Entered into Force

The income tax treaty between Malta and Vietnam entered into force on 25 November 2016. The treaty, signed 15 July 2016, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Malta income tax and covers Vietnamese personal income tax and business income tax.

Residence

If a company is considered resident in both Contracting States and its place of effective management cannot be determined or its place of effective management is in neither State, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If no agreement is reached, the company will not be entitled to any relief or exemption from tax provided by the treaty.

Service PE

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.

Natural Resources Exploitation PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise conducts activities that relate to the exploration for and exploitation of natural resources located in a Contracting State (including offshore activities).

Withholding Tax Rates

  • Dividends -
    • If paid from a Malta company to a beneficial owner in Vietnam, the tax is limited to the amount of Malta tax on the profits out of which the dividends are paid; and
    • If paid from a Vietnamese company to a resident in Malta, 5% if the beneficial owner directly holds at least 50% of the voting power in the paying company; otherwise 15%
  • Interest - 10%
  • Royalties -
    • 5% for royalties paid for the use of, or the right to use, any patent, design or model, plan, secret formula or process, or for information concerning industrial or scientific experience;
    • 10% for royalties paid for the use of, or the right to use, a trade mark or for information concerning commercial experience;
    • Otherwise 15%
  • Technical Fees for technical, managerial or consultancy services - 7.5%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State;
  • Gains from the alienation of shares of the capital stock of a company, or of an interest in a partnership, trust or estate deriving more than 50% of their value directly or indirectly from immovable property situated in the other State; and
  • Gains from the alienation of shares, other than the above, in a company that is resident of the other State, if the alienator directly or indirectly held at least 15% of the capital of the company at any time in the 12-month period preceding the alienation.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Effective Date

The treaty applies from 1 January 2017.

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