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SUBSIDIARY LEGISLATION 123.17
DOUBLE TAXATION RELIEF ON TAXES ON 
INCOME WITH CANADA ORDER
5th February, 1988
LEGAL NOTICE 12 of 1988.
Title.
on Income with Canada Order.
Arrangements to 
have effect.
2. It is hereby declared -
( a ) that the arrangements specified in the Agreement set
out in the Schedule to this Order have been made with
the Government of Canada with a view to affording
relief from double taxation in relation to the following
taxes imposed by the laws of Canada:
the income taxes imposed by the Government of
Canada (hereinafter referred to as "Canadian tax");
( b ) that it is expedient that those arrangements should
have effect.
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SCHEDULE
AGREEMENT
BETWEEN
THE REPUBLIC OF MALTA AND CANADA
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL
The Government of the Republic of Malta and the Government of Canada desiring
to conclude an Agreement for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income and on capital, have agreed as
follows:
I.Scope of the Agreement
ARTICLE 1
Personal Scope
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 and on capital imposed on
behalf of each Contracting State, irrespective of the manner in which they are levied.
(2) There shall be regarded as taxes on income and on capital all taxes imposed
on total income, on total capital, or on elements of income or of capital, including
taxes on gains from the alienation of movable or immovable property, taxes on the
total amounts of wages or salaries paid by enterprises, as well as taxes on capital
appreciation.
(3) The existing taxes to which the Agreement shall apply are, in particular: 
( a ) in the case of Canada:
the income taxes imposed by the Government of Canada, (hereinafter
referred to as "Canadian Tax");
( b ) in the case of Malta:
the income tax, including prepayments of tax whether made by
deduction at source or otherwise, (hereinafter referred to as "Malta
tax").
(4) The Agreement shall apply also to any identical or substantially similar
taxes and to taxes on capital which are imposed after the date of signature of the
Agreement in addition to, or in place of, the existing taxes. The Contracting States
shall notify each other of significant changes which have been made in their
respective taxation laws.
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II.Definitions
ARTICLE 3
General Definitions
(1) In this Agreement, unless the context otherwise requires:
( a ) (i) the term "Canada" used in a geographical sense, means the territory of
Canada, including any area beyond the territorial seas of Canada which, under the
laws of Canada, is an area within which Canada may exercise rights with respect to
the sea-bed and subsoil and their natural resources;
(ii) the term "Malta" means the Republic of Malta and when used in a
geographical sense, the term "Malta" means the Island of Malta, the Island of Gozo
and the other islands of the Maltese archipelago, including the territorial waters
thereof, and any area outside the territorial sea of Malta which, in accordance with
international law, has been or may hereafter be designated, under the law of Malta
concerning the Continental Shelf, as an area within which the rights of Malta with
respect to the seabed and subsoil and their natural resources may be exercised;
( b ) the terms "a Contracting State" and "the other Contracting State" mean, as
the context requires, Canada or Malta;
( c ) the term "person" includes an individual, an estate, a trust, a company, a
partnership and any other body of persons;
( d ) the term "company" means any body corporate or any entity which is treated
as a body corporate for tax purposes; in French, the term "societe" also means a
"corporation" within the meaning of Canadian law;
( e ) 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;
( f ) the term "competent authority" means:
(i) in the case of Canada, the Minister of National Revenue or his
authorized representative,
(ii) in the case of Malta, the Minister responsible for finance or his
authorised representative;
( g ) 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;
( h ) the term "national" means:
(i) in the case of Canada, any individual possessing the nationality of
Canada and any legal person, partnership and association deriving its
status as such from the laws in force in Canada;
(ii) in the case of Malta, any citizen of Malta as provided for in Chapter III
of the Constitution of Malta and in the Maltese Citizenship Act, and any
legal person, partnership and association deriving its status as such from
the law in force in Malta.
(2) As regards the application of the Agreement by a Contracting State any term
not defined therein shall, unless the context otherwise requires, have the meaning
which it has under the law of that State concerning the taxes to which the Agreement
applies.
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ARTICLE 4
Fiscal Domicile
(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.
(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 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 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 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 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 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, the competent authorities of the
Contracting States shall endeavour to settle the question by mutual agreement having
regard in particular to its place of effective management, the place where it is
incorporated or otherwise constituted and any other relevant factors. In the absence
of such agreement, such person shall be deemed not to be a resident of either
Contracting State for the purposes of Articles 6 to 22 inclusive and Article 24.
ARTICLE 5
Permanent Establishments
(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; 
( b ) a branch;
( c ) an office; 
( d ) a factory;
( e ) a workshop; and
( f ) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources.
(3) A building site or construction or installation project, or an installation or
drilling rig or ship used for the exploration or development of natural resources, or
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supervisory activities connected therewith, constitutes a permanent establishment
but only if such site, project or activity continues for a period or periods aggregating
more than 183 days in any twelve month period, including the period of any
supervisory activity connected therewith.
(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 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 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 for 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 sub-paragraphs ( 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 (6) applies - is
acting on behalf of an enterprise and has, and habitually exercises in a Contracting
State an authority to conclude contracts in the name of the enterprise, that enterprise
shall be deemed to have a permanent establishment in that State in respect of any
activities which that person undertakes for 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.
(6) 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.
(7) 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.
III.Taxation of Income
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) For the purposes of this Agreement, the term "immovable property" shall
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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, rights to which the provisions of general law
respecting immovable 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 and to profits or
income from the alienation of such 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 or
has carried 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
attributable 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 the determination of the profits of a permanent establishment, there shall
be allowed those deductible expenses which are incurred for the purposes of the
permanent establishment including executive and general administrative expenses,
whether incurred in the State in which the permanent establishment is situated or
elsewhere.
(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 purpose 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) The provisions of this Article shall not affect the provisions of the law of a
Contracting State regarding the taxation of profits from the business of insurance
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carried on in that State.
(8) 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) For the purposes of this Article, profits from the operation in international
traffic of ships or aircraft include profits derived from the rental on a full or bareboat
basis of ships or aircraft if operated in international traffic by the lessee or if such
rental profits are incidental to other profits described in paragraph (1).
(3) Profits of an enterprise of a Contracting State from the use, maintenance or
rental of containers (including trailers, barges and related equipment for the
transport of containers) used for the transport in international traffic of goods or
merchandise shall be taxable only in that State.
(4) Notwithstanding the provisions of paragraphs (1), (2) and (3) and Article 7,
profits derived from the operation of ships or aircraft used principally to transport
passengers or goods exclusively between places in a Contracting State may be taxed
in that State.
(5) The provisions of paragraphs (1), (3) and (4) shall also apply to profits
referred to in those paragraphs derived by an enterprise of a Contracting State from
its 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 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 that
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 tax charged therein on those profits. In
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determining such adjustment, due regard shall be had to the other provisions of this
Agreement.
(3) A Contracting State shall not change the profits of an enterprise in the
circumstances referred to in paragraph (1) after the expiry of the time limits
provided in its national laws and, in any case, after five years from the end of the
year in which the profits which would be subject to such change would have accrued
to an enterprise of that State.
(4) The provisions of paragraphs (2) and (3) shall not apply in the case of fraud,
wilful default or neglect.
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 ) where the dividends are paid by a company which is a resident of
Canada to a resident of Malta who is the beneficial owner of the
dividends the tax so charged shall not exceed 15 per cent of the gross
amount of the dividends;
( b ) where the dividends are paid by a company which is a resident of Malta
to a resident of Canada who is the beneficial owner thereof -
(i) Malta tax on the gross amount of the dividends shall not exceed
that chargeable on the profits out of which the dividends are paid;
(ii) where such dividends are paid out of profits of a company in
receipt of tax benefits under the provisions of the Aids to
Industries Ordinance, the rate of Malta tax on the dividends shall
be that applicable under the Fifth Schedule of the said Ordinance.
The provisions of this paragraph shall not affect the taxation of the company on
the profits out of which the dividends are paid.
(3) The term "dividends" as used in this Article means income from shares,
"jouissance" shares or "jouissance" rights, mining shares, founders shares or other
rights, not being debt-claims, participating in profits, as well as income 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 paragraph (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 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
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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 undistributed profits, even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising in such other State.
(6) Nothing in this Agreement shall be construed as preventing a Contracting
State from imposing on the earnings of a company attributable to a permanent
establishment in that State, tax in addition to the tax which would be chargeable on
the earnings of a company which is a national of that State, provided that any such
additional tax so imposed shall not exceed 15 per cent of the amount of such
earnings which have not been subjected to such additional tax in previous taxation
years. For the purpose of this provision, the term "earnings" means the profits
attributable to a permanent establishment in a Contracting State in a year and
previous years after deducting therefrom all taxes, other than the additional tax
referred to herein, imposed on such profits by that 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 recipient is the beneficial
owner of the interest the tax so charged shall not exceed 15 per cent of the gross
amount of the interest.
(3) Notwithstanding the provisions of paragraph (2) -
( a ) interest arising in a Contracting State and paid to the Government or the
Central Bank of the other Contracting State shall be exempt from tax in
the first-mentioned State;
( b ) interest arising in Malta and paid to the Export Development
Corporation shall be exempt from Malta tax;
( c ) interest arising in Canada and paid to the Malta Development
Corporation shall be exempt from Canadian tax.
(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 government
securities and income from bonds or debentures, including premiums and prizes
attaching to such securities, bonds or debentures, as well as income which is
subjected to the same taxation treatment as income from money lent by the laws of
the State in which the income arises. However, the term "interest" does not include
income dealt with in Article 10.
(5) The provisions of paragraph (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
that State itself, a political subdivision, a local authority or a resident of that State.
Where, however, the person paying the interest, whether he is a resident of a
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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
(1) Royalties 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 may also be taxed in the Contracting State in which
they arise, and according to the laws of that State, but if the recipient is the
beneficial owner of the royalties the tax so charged shall not exceed 10 per cent of
the gross amount of the royalties.
(3) Notwithstanding the provisions of paragraph (2), copyright royalties and
other like payments in respect of the production or reproduction of any literary,
educational, dramatic, musical or artistic work (but not including royalties in respect
of motion picture films and works on film or videotape for use in connection with
television) arising in a Contracting State and paid to a resident of the other
Contracting State who is subject to tax thereon shall be taxable only in that other
State.
(4) 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, 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, and includes payments of
any kind in respect of motion picture films and works on film or videotape for use in
connection with television.
(5) The provisions of paragraph (2) and (3) shall not apply if the beneficial
owner of the royalties, being a resident of a Contracting State, carries on business in
the other Contracting State in which the royalties 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 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.
(6) Royalties 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, 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 obligation to pay the royalties was incurred,
and such royalties are borne by such permanent establishment or fixed base, then
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such royalties 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
royalties, having regard to the use, right or information for which they are 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 13
Capital Gains
(1) Gains derived by a resident of a Contracting State from the alienation of
immovable property situated in the other Contracting State may be taxed in that
other State.
(2) Gains from the alienation of immovable property forming part of the
business property of a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State or of movable property pertaining to a fixed
base available to a resident of a Contracting State in the other Contracting State for
the purpose of performing independent personal services, including such gains from
the alienation of such a permanent establishment (alone or with the whole enterprise)
or of such a fixed base, may be taxed in that other State.
(3) Gains from the alienation of ships or aircraft operated in international traffic
and movable property pertaining to the operation of such ships or aircraft, shall be
taxable only in the Contracting State in which such property is taxable according to
paragraph (3) of Article 22.
(4) Gains from the alienation of -
( a ) shares of the capital stock of a company the property of which consists
principally of immovable property situated in a Contracting State, and
( b ) an interest in a partnership, trust or estate, the property of which
consists principally of immovable property situated in a Contracting
State, 
may be taxed in that State. For the purposes of this paragraph, the term "immovable
property" includes the shares of a company referred to in sub-paragraph ( a ) or an
interest in a partnership, trust or estate referred to in sub-paragraph ( b ) but shall not
include property, other than rental property, in which the business of the company,
partnership, trust or estate is carried on.
(5) Gains from the alienation of any property, other than that referred to in
paragraphs (1), (2), (3) and (4) shall be taxable only in the Contracting State of
which the alienator is a resident.
(6) The provisions of paragraph (5) shall not affect the right of either of the
Contracting States to levy, according to its law, a tax on gains from the alienation of
any property derived by an individual who is a resident of the other Contracting
State and has been a resident of the first-mentioned State at any time during the six
years immediately preceding the alienation of the property.
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ARTICLE 14
Independent Personal Services
(1) Income derived by an individual who is a resident of a Contracting State
from the performance of professional services or other activities of an independent
character shall be taxable only in that State unless such services are performed in the
other Contracting State and -
( a ) the individual is present in that other State for a period or periods
aggregating more than 90 days in the taxable year concerned, or
( b ) the individual has or had a fixed base regularly available to him in that
other State for the purpose of performing his activities, but only so
much of the income as is attributable to that fixed base may be taxed in
such other State, or
( c ) the remuneration for his services in the other Contracting State is
derived from residents of that State and exceeds ten thousand Canadian
dollars or the equivalent in Malta currency during the taxable year.
(2) The term "professional services" includes especially independent scientific
literary, artistic, educational or teaching activities as well as the independent
activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
(1) Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is exercised in
the other Contracting State. If the employment is so exercised, such remuneration as
is derived therefrom may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if the recipient is
present in the other State for a period or periods not exceeding in the aggregate 183
days in the calendar year concerned, and either -
( a ) the remuneration earned in the other Contracting State in the calendar
year concerned does not exceed five thousand Canadian dollars ($
5,000) or its equivalent in Malta currency; or
( b ) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other State, and such remuneration is not borne by a
permanent establishment or a fixed base which the employer has in the
other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised aboard a ship or aircraft operated in
international traffic by an enterprise of a Contracting State, shall be taxable only in
that State.
ARTICLE 16
Directors’ Fees
Directors’ fees and other similar payments derived by a resident of a Contracting
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WITH CANADA g S.L.123.17 13
State in his capacity as a member of the board of directors or a similar organ of a
company which is a resident of the other Contracting State, may be taxed in that
other State.
ARTICLE 17
Artistes and Athletes
(1) Notwithstanding the provisions of Articles 7, 14 and 15, income derived by
a resident of a Contracting State as an entertainer, such as a theatre, motion picture,
radio or television artiste, or a musician, or as an athlete, from his personal activities
as such exercised in the other Contracting State, may be taxed in that other State.
(2) Where income in respect of personal activities exercised by an entertainer or
an athlete in his capacity as such accrues not to the entertainer or athlete himself but
to another person, that income may, notwithstanding the provisions of Articles 7, 14
and 15, be taxed in the Contracting State in which the activities of the entertainer or
athlete are exercised.
(3) The provisions of paragraph (2) shall not apply if it is established that
neither the entertainer or the athlete nor persons related thereto, participate directly
or indirectly in the profits of the person referred to in that paragraph.
ARTICLE 18
Pensions and Annuities
(1) Pensions and annuities arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
(2) Pensions arising in a Contracting State and paid to a resident of the other
Contracting State may also be taxed in the State in which they arise, and according
to the law of that State. However, in the case of periodic pension payments, the tax
so charged shall not exceed the lesser of -
( a ) 15 per cent of the gross amount of the payment, and
( b ) the rate determined by reference to the amount of tax that the recipient
of the payment would otherwise be required to pay for the year on the
total amount of the periodic pension payments received by him in the
year, if he were resident in the Contracting State in which the payment
arises and if such total amount were his only income in that year.
(3) Annuities arising in a Contracting State and paid to a resident of the other
Contracting State may also be taxed in the State in which they arise, and according
to the law of that State; but the tax so charged shall not exceed 15 per cent of the
portion thereof that is subject to tax in that State. However, this limitation does not
apply to lump-sum payments arising on the surrender, cancellation, redemption, sale
or other alienation of an annuity, or to payments of any kind under an income-
averaging annuity contract.
(4) Notwithstanding anything in this Agreement -
( a ) war veterans pensions or allowances or war disability benefits received
from a Contracting State shall not be taxable in the other Contracting
State so long as they are not subject to tax in the first-mentioned State;
( b ) alimony and other similar payments arising in a Contracting State and
paid to a resident of the other Contracting State who is subject to tax
therein in respect thereof, shall be taxable only in that other State.
14 g S.L.123.17
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ARTICLE 19
Government Service
(1) ( a ) Remuneration, other than a pension, paid by a Contracting State or a
political subdivision or a local authority thereof to an individual in respect of
services rendered to that State or subdivision or authority shall be taxable only in
that State.
( b ) However, such remuneration shall be taxable only in the other Contracting
State if the services are rendered in that State and the individual is a resident of that
State who -
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
rendering the services.
(2) The provisions of Articles 15, 16 and 17 shall apply to remuneration in
respect of services rendered in connection with a business carried on by a
Contracting State or a political subdivision or a local authority thereof.
(3) Where remuneration is paid under a development assistance programme of a
Contracting State, out of funds exclusively supplied by that State to a specialist or
volunteer seconded to the other Contracting State with the consent of that other
State, such remuneration shall be deemed to have been paid by the first-mentioned
State and shall be taxable only in that State.
ARTICLE 20
Students
Payments which a student, apprentice or business trainee who is, or was
immediately before visiting a Contracting State, a resident of the other Contracting
State and who is present in the first-mentioned State solely for the purpose of his
education or training receives for the purpose of his maintenance, education or
training shall not be taxed in that State, provided that such payments arise from
sources outside that State.
ARTICLE 21
Other Income
(1) Subject to the provisions of paragraph (2), items of income of a resident of a
Contracting State, wherever arising, not dealt with in the foregoing Articles of this
Agreement shall be taxable only in that State.
(2) However, if such income is derived by a resident of a Contracting State from
sources in the other Contracting State, such income may also be taxed in the State in
which it arises, and according to the law of that State. However, in the case of
income from an estate or trust, the tax so charged shall, provided that the income is
taxable in the Contracting State in which the recipient resides, not exceed 15 per cent
of the gross amount of the income.
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WITH CANADA g S.L.123.17 15
IV. Taxation of Capital
ARTICLE 22
Capital
(1) Capital represented by immovable property owned by a resident of a
Contracting State and situated in the other Contracting State, may be taxed in that
other State.
(2) Capital represented by movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or by movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, may be taxed in that other
State.
(3) Capital represented by ships and aircraft operated by an enterprise of a
Contracting State in international traffic and by movable property pertaining to the
operation of such ships and aircraft, shall be taxable only in that State.
(4) All other elements of capital of a resident of a Contracting State shall be
taxable only in that State.
V.Methods for Prevention of Double Taxation
ARTICLE 23
Elimination of Double Taxation
(1) In the case of Canada, double taxation shall be avoided as follows:
( a ) Subject to the existing provisions of the law of Canada regarding the
deduction from tax payable in Canada of tax paid in a territory outside
Canada and to any subsequent modification of those provisions - which
shall not affect the general principle hereof - and unless a greater
deduction or relief is provided under the laws of Canada, tax payable in
Malta on profits, income or gains arising in Malta shall be deducted
from any Canadian tax payable in respect of such profits, income or
gains.
( b ) Subject to the existing provisions of the law of Canada regarding the
determination of the exempt surplus of a foreign affiliate and to any
subsequent modification of those provisions - which shall not affect the
general principle hereof - for the purpose of computing Canadian tax, a
company resident in Canada shall be allowed to deduct in computing its
taxable income any dividend received by it out of the exempt surplus of
a foreign affiliate resident in Malta.
(2) For the purposes of paragraph (1) ( a ), tax payable in Malta by a resident of
Canada in respect of dividends, interest or royalties received by it from a company
which is a resident of Malta, shall be deemed to include any amount which would
have been payable as Malta tax for any year but for an exemption from, or reduction
of, tax granted for that year or any part thereof under -
( a ) the provisions of article 5 of the Aids to Industries Ordinance, so far as
they were in force on, and have not been modified since, the date of
signature of this Agreement, or have been modified only in minor
respect so as not to affect their general character;
16 g S.L.123.17
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
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( b ) any other special provisions of the law of Malta designed to promote
investments necessary for the economic development of Malta which
may subsequently be made, granting an exemption or reduction of tax
which is agreed by the competent authorities of the Contracting States
to be of a substantially similar character, if it has not been modified
thereafter or has been modified only in minor respects so as not to affect
its general character,
provided that any deduction from Canadian tax granted in accordance with the
provisions of this paragraph shall not exceed 15 per cent of the gross amount of the
dividends, interest or royalties.
(3) In the case of Malta, double taxation shall be avoided as follows:
Subject to the provisions of the law of Malta regarding the allowance of a credit
against Malta tax in respect of foreign tax, where, in accordance with the provisions
of this Agreement, there is included in a Malta assessment income from sources
within Canada, or elements of capital situated in Canada, the Canadian tax on such
income or elements of capital, as the case may be, shall be allowed as a credit
against the relative Malta tax payable thereon.
(4) For the purposes of this Article, profits, income or gains of a resident of a
Contracting State which are taxed in the other Contracting State in accordance with
this Agreement shall be deemed to arise from sources in that other State.
VI.Special Provisions
ARTICLE 24
Non-discrimination
(1) The nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected therewith which is
other or more burdensome than the taxation and connected requirements to which
nationals of that other State in the same circumstances are or may be subjected.
(2) The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably
levied in that other State than the taxation levied on enterprises of that other State
carrying on the same activities.
(3) Nothing in this Article shall be construed as obliging a Contracting State to
grant to residents of the other Contracting State any personal allowances, reliefs and
reductions for taxation purposes on account of civil status or family responsibilities
which it grants to its own residents.
(4) Enterprises of a Contracting State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the first-mentioned State to any taxation
or any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of the first-
mentioned State, the capital of which is wholly or partly owned or controlled,
directly or indirectly, by one or more residents of a third State, are or may be
subjected.
(5) In this Article, the term "taxation" means taxes which are the subject of this
Agreement.
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WITH CANADA g S.L.123.17 17
ARTICLE 25
Mutual Agreement Procedure
(1) Where a person considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with the provisions
of this Agreement, he may, irrespective of the remedies provided by the domestic
law of those States, address to the competent authority of the Contracting State of
which he is a resident an application in writing stating the grounds for claiming the
revision of such taxation. To be admissible, the said application must be submitted
within two years from the first notification of the action which gives rise to taxation
not in accordance with the Agreement.
(2) The competent authority referred to in paragraph (1) shall endeavour, if the
objection appears to it to be justified and if it is not itself able to arrive at an
appropriate solution, to resolve the case by mutual agreement with the competent
authority of the other Contracting State, with a view to the avoidance of taxation not
in accordance with the Agreement.
(3) A Contracting State shall not, after the expiry of the time limits provided in
its national laws and, in any case, after five years from the end of the taxable period
in which the income concerned has accrued, increase the tax base of a resident of
either of the Contracting States by including therein items of income which have
also been charged to tax in the other Contracting State. This paragraph shall not
apply in the case of fraud, wilful default or neglect.
(4) The competent authorities of the Contracting States shall endeavour to
resolve by mutual agreement any difficulties or doubts arising as to the
interpretation or application of the Agreement. In particular, the competent
authorities of the Contracting States may consult together to endeavour to agree:
( a ) to the same attribution of profits to a resident of a Contracting State and
its permanent establishment situated in the other Contracting State;
( b ) to the same allocation of income between a resident of a Contracting
State and any associated person provided for in Article 9.
(5) The competent authorities of the Contracting States may consult together for
the elimination of double taxation in cases not provided for in the Agreement. They
may also communicate with each other directly for the purpose of applying the
Agreement.
ARTICLE 26
Exchange of Information
(1) The competent authorities of the Contracting States shall exchange such
information as is necessary for carrying out the provisions of this Agreement or of
the domestic laws of the Contracting States concerning taxes covered by the
Agreement insofar as the taxation thereunder is not contrary to the Agreement. Any
information received by a Contracting State shall be treated as secret in the same
manner as information obtained under the domestic laws of that State and shall be
disclosed only to persons or authorities (including courts and administrative bodies)
involved in the assessment or collection of, the enforcement in respect of, or the
determination of appeals in relation to, the taxes covered by the Agreement. Such
persons or authorities shall use the information only for such purposes.
(2) In no case shall the provisions of paragraph (1) be construed so as to impose
on a Contracting State the obligation -
18 g S.L.123.17
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH CANADA
( a ) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State;
( b ) to supply information which is not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
( c ) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public policy
(ordre public).
ARTICLE 27
Diplomatic Agents and Consular Officers
(1) Nothing in this Agreement shall affect the fiscal privileges of diplomatic
agents or consular officers under the general rules of international law or under the
provisions of special agreements.
(2) Notwithstanding Article 4, an individual who is a member of a diplomatic
mission, consular post or permanent mission of a Contracting State which is situated
in the other Contracting State or in a third State shall be deemed for the purposes of
the Agreement to be a resident of the sending State if he is liable in the sending State
to the same obligations in relation to tax on his total income as are residents of that
sending State.
(3) The Agreement shall not apply to International Organizations, to organs or
officials thereof and to persons who are members of a diplomatic mission, consular
post or permanent mission of a third State, being present in a Contracting State and
who are not liable in either Contracting State to the same obligations in relation to
tax on their total income as are residents thereof.
ARTICLE 28
Miscellaneous Provisions
(1) The provisions of this Agreement shall not be construed to restrict in any
manner any exclusion, exemption, deduction, credit, or other allowance now or
hereafter accorded by the laws of a Contracting State in the determination of the tax
imposed by that State.
(2) Nothing in the Agreement shall be construed as preventing -
( a ) Canada from imposing a tax on amounts included in the income of a
resident of Canada according to article 91 of the Canadian Income Tax
Act;
( b ) Malta from applying the provisions of Article 12(2) of the Income Tax
Act.
(3) Where the Agreement provides that income arising in a Contracting State
shall be relieved from tax in that State, either in full or in part, and, under the law in
force in the other Contracting State, such income is subject to tax by reference to the
amount thereof which is remitted to or received in that other State and not by
reference to the full amount thereof, then the relief to be allowed in the first-
mentioned State shall apply only to so much of income as is remitted to or received
in the other State.
(4) This Agreement shall not apply to any company, trust or partnership that is a
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WITH CANADA g S.L.123.17 19
resident of a Contracting State and is beneficially owned or controlled directly or
indirectly by one or more persons who are not residents of that State, if the amount
of the tax imposed on the income or capital of the company, trust or partnership by
that State is substantially lower than the amount that would be imposed by that State
if all of the shares of the capital stock of the company or all of the interests in the
trust or partnership, as the case may be, were beneficially owned by one or more
residents of that State.
VII.Final Provisions
ARTICLE 29
Entry into Force
(1) This Agreement shall be ratified and the instruments of ratification shall be
exchanged at Valletta, Malta.
(2) The Agreement shall enter into force 30 days after the exchange of
instruments of ratification and its provisions shall have effect:
( a ) in Canada:
(i) in respect of tax withheld at the source on amounts paid or
credited to non-residents on or after the first day of January in the
calendar year in which the exchange of instruments of ratification
takes place; and
(ii) in respect of other Canadian tax for taxation years beginning on or
after the first day of January in the calendar year in which the
exchange of instruments of ratification takes place;
( b ) in Malta, in respect of taxes which are levied for any year of assessment
beginning on the first day of January in the calendar year immediately
following that in which the exchange of instruments of ratification takes
place.
ARTICLE 30
Termination
This Agreement shall continue in effect indefinitely but either Contracting State
may, on or before June 30 in any calendar year after the year of the exchange of
instruments of ratification, give to the other Contracting State a notice of termination
in writing through diplomatic channels; in such event, the Agreement shall cease to
have effect:
( a ) in Canada:
(i) in respect of tax withheld at the source on amounts paid or
credited to non-residents on or after the first day of January in the
calendar year immediately following that in which the notice is
given; and
(ii) in respect of other Canadian tax for taxation years beginning on or
after the first day of January in the calendar year immediately
following that in which the notice is given;
( b ) in Malta, in respect of taxes which are levied for the year of assessment
beginning on the first day of January in the second year following that
in which the notice is given.
20 g S.L.123.17
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IN WITNESS WHEREOF the undersigned, duly authorised to that effect, have
signed this Agreement.
DONE in duplicate at Valletta, this 25th day of July, 1986, in the English and
French languages, each version being equally authentic.
(sgd.) Robert J. Stivala
FOR THE GOVERNMENT OF
THE REPUBLIC OF MALTA
(sgd.) Claude T. Charland
FOR THE GOVERNMENT OF
CANADA
