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SUBSIDIARY LEGISLATION 123.03
DOUBLE TAXATION RELIEF ON TAXES ON 
INCOME WITH THE LIBYAN ARAB REPUBLIC 
ORDER
1st January, 1973
LEGAL NOTICE 7 of 1973, as amended by Legal Notice 201 of 1996.
Title.
on Income with the Libyan Arab Republic Order.
2. It is hereby declared -
( a ) that the arrangements specified in the Convention set
out in the Schedule to this Order have been made with
the Government of the Arab Libyan Republic with a
view to afford relief from double taxation in relation to
the following taxes imposed by the laws of the Libyan
Arab Republic -
(i) Real Estate Revenue Tax;
(ii) Agricultural Revenue Tax;
(iii) Taxes on Commercial, Industrial and
Professional profits, which comprise:
( a ) Taxes on profits realised from Commercial,
Industrial and Professional activities;
( b ) Taxes on Companies;
(iv) Taxes on profits realised by practising Free
Professions;
(v) Taxes on wages, salaries and the like;
(vi) Taxes on Income realised abroad;
(vii) General Tax on Income;
(viii) Al-Jihad Tax (Defence Tax); and
( b ) that it is expedient that those arrangements should
have effect.
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Amended by: SCHEDULE
L.N. 201 of 1996.
CONVENTION 
BETWEEN MALTA AND THE GREAT SOCIALIST PEOPLES’ LIBYAN ARAB 
JAMAHIRIYA FOR THE AVOIDANCE OF DOUBLE TAXATION WITH 
RESPECT TO TAXES ON INCOME
Malta and the Great Socialist Peoples’ Libyan Arab Jamahiriya, desiring to enter
into a Convention with each other for the avoidance of double taxation with respect
to taxes on income, have agreed as follows:
CHAPTER I
Scope of Convention
ARTICLE 1
Taxes Covered
1. This Convention shall apply to taxes on income imposed on behalf of each
Contracting State 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.
3. The existing taxes to which this Convention shall apply are:
(A) With regards to the Libyan Arab Republic.
(i) Real Estate Revenue Tax;
(ii) Agricultural Revenue Tax;
(iii) Taxes on Commercial, Industrial and Professional profits, which
comprise:
( a ) Taxes on profits realised from Commercial, Industrial, and
Professional activities;
( b ) Taxes on Companies;
(iv) Taxes on profits realised by practising Free Professions; 
(v) Taxes on wages, salaries and the like;
(vi) Taxes on Income realised abroad; 
(vii) General Tax on Income;
(viii) Al-Jihad Tax (Defence Tax). 
(B) With regard to Malta.
The Income Tax.
4. The Convention shall also apply to any identical or substantially similar
taxes which are subsequently imposed in addition to, or in place of, the existing
taxes. At the end of each year, the competent authorities of the Contracting State
shall notify to each other any changes which have been made in their respective
taxation laws.
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CHAPTER II
Definitions
ARTICLE 2 
General Definitions
1. In this Convention, unless the context otherwise requires - 
( a ) the terms "a Contracting State" and "the other Contracting State" mean
Malta or Libya, as the context requires;
( b ) the term "person" comprises an individual, a company and any other body of
persons;
( c ) the term "company" means any body corporate or any entity which is treated
as a body corporate for tax purposes;
( d ) 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 by a resident of the other Contracting State;
( e ) the term "competent authority" with respect to the Libyan Arab Republic
means the Ministry of the Treasury, and with respect to Malta means the
Commissioner of Inland Revenue.
2. For the purposes of this Convention, the term "resident of a Contracting
State" means any person who, under the law of that State, is liable to taxation therein
by reason of his domicile, residence, place of management or any other criterion of a
similar nature.
3. As regards the application of the Convention by a Contracting State any
term not otherwise defined shall, unless the context otherwise requires, have the
meaning which it has under the laws of that Contracting State relating to the taxes
which are the subject of the Convention.
ARTICLE 3
The Tax Home
Without prejudice to the provisions of this Convention, the Tax Home of any
income shall be deemed to be the Contracting State in which the income arises.
ARTICLE 4
Permanent Establishment
1. For the purposes of this Convention, the term "permanent establishment"
means a fixed place of business in which the business of the enterprise is wholly or
partly carried on.
2. The term "permanent establishment" shall include especially:
( a )  A place of management; 
( b ) A branch;
( c ) An office; 
( d ) A factory; 
( e ) A workshop;
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( f ) A mine, quarry or other place of extraction of natural resources; 
( g ) A building or building site.
3. The term "permanent establishment" shall not be deemed to include -
( a ) the use of facilities solely for the purpose of storage and display 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 and display;
( c ) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
( d ) the maintenance of a fixed place of business solely for the purpose of
advertising, for the supply of information, for scientific research or for
similar activities which have a preparatory or auxiliary character, for
the enterprise.
4. A person acting in a Contracting State on behalf of an enterprise of the other
Contracting State - other than an agent of an independent status to whom paragraph 5
applies - shall be deemed to be a permanent establishment in the first-mentioned
State if he has, and habitually exercises in that State, an authority to conclude
contracts in the name of the enterprise, unless his activities are limited to the
purchase of goods or merchandise for the enterprise.
5. An enterprise of a Contracting State shall not be deemed to have a
permanent establishment in the other Contracting State merely because it carries on
business in that other State through a broker, general commission agent or any other
agent of an independent status, where such persons are acting independently in the
ordinary course of their business.
6. 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.
CHAPTER III
Taxation of Income
ARTICLE 5
Income from Immovable Property
1. Income from immovable property shall only be taxed in the Contracting
State in which such property is situated.
2.  The term "immovable property" shall be defined in accordance with the law
of the Contracting State in which the property in question is situated.
ARTICLE 6
Business Profits
1. The profits of an enterprise of a Contracting State shall be taxable in the
State where the enterprise is situated and also in the State where it has a permanent
establishment, in which latter case the tax so charged shall be limited to the profits
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attributable to the permanent establishment and shall not exceed 15 per cent of the
said profits.
2. 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 the determination of the profits of a permanent establishment, there shall
be allowed as deduction expenses which are incurred for the purpose of the
permanent establishment whether such expenses have been incurred in the State in
which the permanent establishment is situated or elsewhere.
4. 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.
5. 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.
6. Where profits include items of income which are dealt with separately in
other Articles of this Convention, then the provisions of those Articles shall not be
affected by the provisions of this Article.
ARTICLE 7
Shipping and Air Transport
Profits from the operation of ships or aircraft in international traffic shall be
taxable only in the Contracting State in which the place of effective management of
the enterprise is situated.
ARTICLE 8
Associated Enterprises
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. It is to be understood that the
procedures available in the respective laws of each Contracting State in this regard
shall be applied.
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ARTICLE 9 
Dividends
1.  Dividends paid by a company which is registered in one of the Contracting
States to a resident of the other Contracting State shall be taxed only in the first-
mentioned State. However, the tax so charged shall not exceed 15 per cent of the
gross amount of the dividends:
Provided that a company registered in one of the Contracting States shall be
entitled to require that the gains or profits, or part thereof, derived by it and which
are distributable by way of dividend to a resident of the other Contracting State
shall, notwithstanding that the dividend, or part therof, has not been distributed, be
taxed at a rate not exceeding 15 per cent.
2. The term "dividends" shall be defined in accordance with the law of the
Contracting State in which the company in question is registered.
ARTICLE 10
Interest
1. Interest arising in a Contracting State and paid to a resident of the other
Contracting State shall only be taxed in the Contracting State where it arises. 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.
2. The provisions of paragraph 1 shall not apply if the recipient of the interest,
being a resident of a Contracting State, has in the other Contracting State in which
the interest arises a permanent establishment with which the debt-claim from which
the interest arises is effectively connected. In such a case, the provisions of Article 6
shall apply.
3. Interest shall be deemed to arise in a Contracting State when the payer is
that State itself, a political sub-division, a local authority or resident of that State.
ARTICLE 11
Royalties
1. Royalties arising in a Contracting State and paid to a resident of the other
Contracting State shall be taxed only in the Contracting State where they arise. If the
recipient is the beneficial owner of the royalties, the tax so charged shall not exceed
15 per cent of the gross amount of the royalties.
2. The term "royalties" as used in this Article means payments of any kind as a
consideration for the use of, or the right to use, any copyright of literary artistic or
scientific work, 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.
3. The term "royalties" as used in this Article shall exclude rentals and other
income in respect of cinematographic films. Such rentals and income shall, far the
purpose of this Convention, be considered the profits from business.
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ARTICLE 12
Independent Personal Services
1. Income derived by a resident of a Contracting State in respect of
professional services or other independent activities of a similar character shall be
taxable only in that State unless he has a fixed base regularly available to him in the
other Contracting State for the purpose of performing his activities. If he has such a
fixed base, the income may be taxed in the other Contracting State but only so much
of it as is attributable to that fixed base.
2. The term "professional services" means independent activities according to
the laws and regulations in force in each Contracting State.
ARTICLE 13
Dependent Personal Services
Salaries, wages and similar emoluments arising in one of the Contracting States
shall only be taxable in the State where the services giving rise to that income are
performed, but if such income is realised from work carried out on a ship or aircraft
operating in the field of international transport, it shall only be taxable in the State
where the place of effective management of the enterprise is situated.
ARTICLE 14 
Directors’ Fees 
Directors’ fees and similar payments derived by a resident of a Contracting State
in his capacity as a member of the board of directors of a company which is a
resident of the other Contracting State may be taxed in that other State.
ARTICLE 15
Artists and Athletes
Notwithstanding the provisions of Articles 12 and 13, income derived by public
entertainers, such as theatre, motion picture, radio or television artists, and
musicians, and by athletes, from their personal activities as such may be taxed in the
Contracting State in which these activities are exercised.
ARTICLE 16
Pensions
Pensions and other similar income paid to a resident of a Contracting State in
consideration of past employment shall be taxable only in that State.
ARTICLE 17
Government Functions
1. Remuneration paid by the Government of one of the Contracting States to
any individual for services rendered to that Government in the discharge of
governmental functions shall be exempt from tax in the other State if the individual
is not resident in that other State or is resident in that other State solely for the
purpose of rendering those services, so provided, however, that such an individual
has the nationality of that Contracting State.
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2. The provisions of this Article shall not apply to payments in respect of
services rendered in connection with any trade or business carried on by either of the
Governments for the purposes of profit.
3. In this Article, "Government" shall be deemed to include public
corporations and any other similar parastatal bodies.
ARTICLE 18
Students
1. Payments which a student or business apprentice who is or was formerly a
resident of a Contracting State and who is present in the other Contracting 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 other State provided that
such payments are made to him from sources outside that other State.
2. The provisions of this Article shall also apply to the income which the
student or business apprentice may derive from an employment in the other
Contracting State: provided that such employment is related to his study or training
and/or that the income deriving therefrom is required by the student or trainee to
meet his living expenses.
ARTICLE 19
Professors, Teachers and Researchers
A professor, teacher or research worker from one of the Contracting States who
receives remuneration for teaching or carrying out research work during a period of
temporary residence not exceeding three months at a University, college or some
other institute of higher education or scientific research in the other Contracting
State shall be exempt from tax in that other State in respect of that remuneration:
provided that the said period of three months may be extended by similar periods.
CHAPTER IV
Elimination of Double Taxation
ARTICLE 20
Tax Credits
1. When a resident of a Contracting State derives income which has also
suffered tax in the other Contracting State, the first mentioned State shall allow a
deduction from its tax on the income of that person equal to the tax paid in the other
Contracting State: provided that the deduction shall not exceed that part of the tax as
computed before the deduction is given, which is applicable to the income taxed in
the other Contracting State.
2. Nothing in this Article contained shall prevent the granting of such further
relief as may be appropriate under the provisions of the law of either Contracting
State in respect of any amount by which the tax in one of the States exceeds the
credit allowed on its account in the other State in accordance with the provisions of
this Article.
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CHAPTER V
Special Provisions
ARTICLE 21
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 term "national" means:
( a ) all individuals possessing the nationality of a Contracting State;
( b ) all legal persons, partnerships and associations deriving their status as
such from the law in force in a Contracting State.
3. The taxation of 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. This provision shall not be construed as obliging a
Contracting State to grant to residents of the other Contracting State a personal
allowance, 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 Contracting State to
any taxation or any requirements connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of that first-mentioned State are or may be subjected.
ARTICLE 22
Mutual Agreement Procedure
1. Where a resident of a Contracting State considers that the actions of one or
both of the Contracting States result or will result for him in taxation not in
accordance with this Convention, he may, notwithstanding the remedies provided by
the national laws of those States, present his case to the competent authorities of the
Contracting State of which he is a resident.
2. The competent authority 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
Convention.
3. The competent authorities of the Contracting States shall endeavour to
resolve by mutual agreement any difficulties or doubt arising as to the interpretation
or application of this Convention. They may also consult together for the elimination
of double taxation in cases not provided for in the Convention.
4. The competent authorities of the Contracting States may communicate with
each other directly for the purpose of reaching an agreement in the sense of the
preceding paragraphs. When it seems advisable in order to reach agreement to have
an oral exchange of opinions such exchange may take place through a Commission
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consisting of representatives of the competent authorities of the Contracting States.
ARTICLE 23
Exchange at Information
1. The competent authorities of the Contracting States shall exchange such
information as is necessary for the carrying out of this Convention and of the
domestic laws of the Contracting States concerning taxes covered by this
Convention in so far as the taxation thereunder is in accordance with this
Convention. Any information so exchanged shall be treated as secret and shall not be
disclosed to any persons or authorities other than those concerned with the
assessment or collection of the taxes which are the subject of the Convention.
2.  In no case shall the provisions of paragraph 1 be construed so as to impose
on one of the Contracting States the obligation -
( 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 particulars which are 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.
ARTICLE 24 
Diplomatic and Consular Officials
Nothing in this Convention shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the provisions
of special agreements.
CHAPTER VI
Final Provisions
ARTICLE 25
Entry into Force
The Convention shall enter into force upon the exchange of instruments of
ratification and its provisions shall have effect as from the 1st January, 1973.
ARTICLE 26
Termination
This Convention shall remain in force until denounced by one of the Contracting
States. Either Contracting State may denounce the Convention through diplomatic
channels by giving notice of termination at least six months before the end of any
calendar year after the year 1975. In such event, the Convention shall cease to have
effect in respect of all categories of income that are derived after the end of the
calendar year during which notice of the denouncing of the Convention is given by
one Contracting State to the other.
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In witness of the agreement reached as above, the signatories have today signed
this Convention in virtue of the authority delegated to them for this purpose by their
respective Governments.
This Convention is being signed in duplicate, but to one effect, in the Arabic and
English Language, both languages being equally authoritative.
This, the 27th of Shaban 1392 Hijria. 
corresponding to 5th of October 1972 A.D.
For the Government of the
Libyan Arab Republic.
ABDUL ATI ELOBEIDI
Minister of Labour
(signature)
For the Government of Malta
DR JOSEPH CASSAR 
Minister of Labour, Employment 
and Welfare 
(signature)
