MINISTRY OF FINANCE
(Depatemnt of Revenue)
NOTIFICATION
New Delhi, the 5th August, 2014
(INCOME–TAX)
S.O. 1996.(E).— Whereas, the Agreement and the Protocol (hereinafter referred to as the said Agreement and the Protocol) was
entered into between the Government of the Republic of India and the Government of Malta, for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income.
2.
And whereas, the date of entry into force of the said Agreement and the Protocol is the 7th day of February, 2014, being the date of
later of the notifications of completion of the procedures as required by the respective laws for entry into force of the said Agreement and
the Protocol, in accordance with paragraph 1 of article 29 of the said Agreement.
3.
And whereas, sub-paragraph (a) of paragraph 3 of Article 29 of the said Agreement provides that the provisions of the said
Agreement shall have effect in India in respect of income derived in any fiscal year beginning on or after the first day of April next
following the calendar year in which the said Agreement enters into force;
4.
Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central
Government hereby directs that all the provisions of said Agreement and the Protocol between the Government of the Republic of India
and the Government of Malta for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,
as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from the 1st day of April, 2015.
Notification No. 34/2014/ F.No. 504/06/2003-FTD-I
AKHILESH RANJAN, Jt. Secy.
AGREEMENT
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDIA
AND
THE GOVERNMENT OF MALTA
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of India and the Government of Malta, desiring to conclude an Agreement for the
avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to
promoting economic cooperation between the two countries, have agreed as follows :
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Article 1
PERSONS COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
Article 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions
or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes
on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid
by enterprises.
3. The existing taxes to which the Agreement shall apply are in particular:
(a) in India, the income tax, including any surcharge thereon;
(hereinafter referred to as "Indian tax");
(b) in Malta, the income tax;
(hereinafter referred to as “Malta tax”).
4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature
of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall
notify each other of any significant changes that have been made in their respective taxation laws.
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires:
(a) the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as
any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian
law and in accordance with international law, including the U.N. Convention on the Law of the Sea;
(b) the term “Malta” means the Republic of Malta and, when used in a geographical sense, means the
Island of Malta, the Island of Gozo and the other islands of the Maltese archipelago including the
territorial waters thereof, as well as any area of the sea-bed, its sub-soil and the superjacent water column
adjacent to the territorial waters, wherein Malta exercises sovereign rights, jurisdiction, or control in
accordance with international law and its national law, including its legislation relating to the exploration
of the continental shelf and exploitation of its natural resources;
(c) the terms "Contracting State" and "the other Contracting State" mean the Republic of India or Malta as the
context requires;
(d) the term "person" includes an individual, a company, a body of persons and any other entity which is treated
as a taxable unit under the taxation laws in force in the respective Contracting States;
(e) the term "company" means any body corporate or any entity that is treated as a body corporate for tax
purposes;
(f) the term “enterprise” applies to the carrying on of any business;
(g) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively
an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other
Contracting State;
(h) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a
Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting
State;
(i) the term "competent authority" means:
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(i) in India: the Finance Minister, Government of India, or its authorized representative;
(ii) in Malta: the Minister responsible for Finance or his authorized representative;
(j) the term "national" means:
(i) any individual possessing the nationality of a Contracting State;
(ii) any legal person, partnership or association deriving its status as such from the laws in force in a
Contracting State;
(k) the term “tax” means Indian or Malta tax, as the context requires, but shall not include any amount which is
payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which
represents a penalty or fine imposed relating to those taxes;
(l) The term “fiscal year” means:
(i) in the case of India: the financial year beginning on the 1st day of April;
(ii) in the case of Malta: the year immediately preceding the ‘year of assessment’ as defined in the
Income Tax Act (Cap. 123).
2. As regards the application of the Agreement at any time by a Contracting State any term not defined therein shall,
unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes
of the taxes to which the Agreement applies and any meaning under the applicable tax laws of that State prevailing over a
meaning given to the term under other laws of that State.
Article 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of
that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a
similar nature and also includes that State and any political subdivision or local authority thereof. This term, however,
does not include any person who is liable to tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status
shall be determined as follows:
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he
has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with
which his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent
home available to him in either State, he shall be deemed to be a resident only of the State in which he has an
habitual abode;
(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the
State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall
endeavour to settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If
the State in which its place of effective management is situated cannot be determined, then the competent authorities of
the Contracting States shall endeavour to settle the question by mutual agreement.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which
the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
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(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a sales outlet;
(g) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; and
(h) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources including an offshore
drilling site.
3. (a) A building site or construction, installation or assembly project or supervisory activities in connection therewith
constitutes a permanent establishment only if such site, project or activities last more than six months.
(b) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel
engaged by the enterprise for such purpose constitutes a permanent establishment, but only where activities of that nature
continue (for the same or connected project) within a Contracting State for a period or periods aggregating more than 90
days within any 12-month period.
4. Notwithstanding the preceding provisions of this Article the term "permanent establishment" shall be deemed not to
include:
(a) the use of facilities solely for the purpose of storage, display or occasional delivery of goods or merchandise
belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of
storage, display or occasional delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of
processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other
activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in
subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an
independent status to whom paragraph 7 applies - is acting in a Contracting State on behalf of an enterprise of
the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-
mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such
a person:
(a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise,
unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a
fixed place of business, would not make this fixed place of business a permanent establishment under the
provisions of that paragraph; or
(b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or
merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or
(c) habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself.
6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in
regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums
in the territory of that other State or insures risks situated therein through a person other than an agent of an independent
status to whom paragraph 7 applies.
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7. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission agent or any other agent of an independent status, provided
that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are
devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status
within the meaning of this paragraph.
8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a
resident of the other Contracting State or which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property situated in the other Contracting State
may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the
property in question is situated. The term shall in any case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property
apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the
right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as
immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of
immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to
income from immovable property used for the performance of independent personal services.
Article 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on
business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is
attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to
that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise
engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are
incurred for the purposes of the permanent establishment, including executive and general administrative expenses so
incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the
provisions of and subject to the limitations of the tax laws of that State. However, no such deduction shall be allowed in
respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent
establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific
services performed or for management, or, except in the case of banking enterprises, by way of interest on moneys lent to
the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent
establishment, for amounts charged (otherwise than toward reimbursement of actual expenses), by the permanent
establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar
payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific
services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to
the head office of the enterprise or any of its other offices.
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4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in
paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as
may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance
with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be
determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the
provisions of those Articles shall not be affected by the provisions of this Article.
Article 8
SHIPPING AND AIR TRANSPORT
1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall
be taxable only in that State.
2. Profits derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance, or
rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods
or merchandise in international traffic shall be taxable only in that Contracting State unless the containers are used solely
within the other Contracting State.
3. For the purposes of this Article interest on investments directly connected with the operation of ships or aircraft in
international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to
the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest.
4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an
international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1. Where
a)
an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of
an enterprise of the other Contracting State, or
b)
the same persons participate directly or indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations
which differ from those which would be made between independent enterprises, then any profits which would, but for
those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be
included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of the State - and taxes accordingly - profits on which
an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are
profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two
enterprises had been those which would have been made between independent enterprises, then that other State shall make
an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due
regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall
if necessary consult each other.
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Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may
be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a
resident and according to the laws of that State, but:
(a) if the dividends are paid by a company that is a resident of India to a resident of Malta who is the beneficial owner
thereof, the tax charged by India shall not exceed 10 per cent of the gross amount of the dividends;
(b) if the dividends are paid by a company that is a resident of Malta to a resident of India who is the beneficial owner
thereof, the tax charged by Malta on the gross amount of the dividends shall not exceed that Malta tax chargeable on
the profits out of which the dividends are paid.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends
are paid.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt-
claims, participating in profits, as well as income from other corporate rights which is subjected to the same
taxation treatment as income from shares by the laws of the State of which the company making the
distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a
resident, through a permanent establishment situated therein, or performs in that other State independent personal services
from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with
such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be,
shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid
to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected
with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits
to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or
partly of profits or income arising in such other State.
Article 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other
State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that
State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not
exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that
State, provided that it is derived and beneficially owned by:
a) the Government, a political subdivision or a local authority of the other Contracting State; or
b) (i) in the case of India, the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank;
and
(ii) in the case of Malta, Central Bank of Malta; or
c) any other institution as may be agreed upon from time to time between the competent authorities of the
Contracting States through exchange of letters.
4. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by
mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from
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THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
government securities and income from bonds or debentures, including premiums and prizes attaching to such securities,
bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent personal services from a fixed base situated
therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the
person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and
such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the
State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and
some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount
which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this
Agreement.
Article 12
ROYALTIES AND FEES FOR TECHNICAL SERVICES
1. Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.
2. However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise,
and according to the laws of that State, but if the beneficial owner of the royalties or fees for technical services is a
resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the royalties
or fees for technical services.
3.
(a) The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of,
or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes
used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for
the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial,
commercial or scientific experience.
(b) The term “fees for technical services” as used in this Article means payments of any kind, other than those
mentioned in Articles 14 and 15 of this Agreement as consideration for managerial or technical or consultancy services,
including the provision of services of technical or other personnel.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical
services being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or
fees for technical services arise, through a permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties
or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such
case the provisions of Article 7 or Article 14, as the case may be, shall apply.
5.
(a) Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that
State itself, a political subdivision, a local authority, or a resident of that State. Where, however, the person paying the
royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical
services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed
base, then such royalties or fees for technical services shall be deemed to arise in the Contracting State in which the
permanent establishment or fixed base is situated.
