DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH MALAYSIA [ S.L.123.66 1
SUBSIDIARY LEGISLATION 123.66
DOUBLE TAXATION RELIEF ON TAXES ON 
INCOME WITH MALAYSIA ORDER
1st September, 2000
LEGAL NOTICE 281 of 2002.
Citation.
Taxes on Income with Malaysia 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
Malaysia with a view to affording relief from double
taxation in relation to the following taxes imposed by
the laws of Malaysia:
(i) the income tax;
(ii) the supplementary income tax, that is, the
development tax; and
(iii) the petroleum income tax;
( b ) that it is expedient that those arrangements should
have effect;
( c ) that the Agreement has entered into force on the 1 st
September, 2000.
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SCHEDULE
CONVENTION BETWEEN MALTA AND MALAYSIA 
FOR THE AVOIDANCE OF DOUBLE TAXATION
Malta and Malaysia, desiring to conclude an Agreement for the Avoidance
of Double Taxation, have agreed as follows:
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 imposed by a Contracting
State, irrespective of the manner in which they are levied.
(2) The taxes which are the subject of this Agreement are:
( a ) in Malaysia:
(i) the income tax;
(ii) the supplementary income tax, that is, the development tax; and
(iii) the petroleum income tax;
(hereinafter referred to as "Malaysian tax').
( b ) in Malta, 
the income tax;
(hereinafter referred to as "Malta tax").
(3) Notwithstanding the other provisions of this Article this Agreement shall not
apply to tax paid or payable in Malta at the rate provided for in subsection (13) of
section 56 of the Income Tax Act.
(4) The Agreement shall also apply to any identical or substantially similar
taxes on income which are imposed after the date of signature of this Agreement in
addition to, or in place of, the existing taxes. The competent authorities of the
Contracting State shall notify each other of important changes which have been
made in their respective taxation laws.
Article 3
General Definitions
(1) In this Agreement, unless the context otherwise requires:
( a ) the term "Malaysia" means the territories of the Federation of Malaysia,
the territorial waters of Malaysia and the sea-bed and subsoil of the
territorial waters, and includes any area extending beyond the limits of
the territorial waters of Malaysia, and the sea-bed and subsoil of any
such area, which has been or may hereafter be designated under the laws
of Malaysia and in accordance with international law as an area over
which Malaysia has sovereign rights for the purposes of exploring and
exploiting the natural resources, whether living or non-living;
( b ) the term "Malta", when used in a geographical sense, means the Island
of Malta, the Island of Gozo and the other islands of the Maltese
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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 sea-bed and sub-soil and their
natural resources may be exercised;
( c ) the terms "a Contracting State" and "the other Contracting State" mean
Malaysia or Malta as the context requires;
( d ) the term "person" includes an individual, a company and any other body
of persons which is treated as a person for tax purposes;
( e ) the term "company" means any body corporate or any entity which is
treated as a body corporate for tax purposes;
( f ) 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;
( g ) the term "tax" means Malaysian tax or Malta tax, as the context
requires;
( h ) the term "national" means:
(i) any individual possessing the citizenship of a Contracting State;
(ii) any legal person, partnership, association and any other entity
deriving its status as such from the laws in force in a Contracting
State;
( i ) 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;
( j ) the term "competent authority" means:
(i) in the case of Malaysia, the Minister of Finance or his authorised
representative; and
(ii) in the case of Malta, the Minister responsible for finance or his
authorised representative.
(2) In the application of this Agreement by a Contracting State, any term not
defined therein shall, unless the context otherwise requires, have the meaning which
it has under the laws of that State concerning the taxes to which this Agreement
applies.
Article 4
Resident
(1) For the purposes of this Agreement, the term "resident of a Contracting
State" means:
( a ) in the case of Malaysia, a person who is resident in Malaysia for the
purposes of Malaysian tax; and
( b ) in the case of Malta, a person who is resident in Malta for the purposes
of Malta tax.
(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 in accordance with the
following rules:
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( a ) he shall be deemed to be a resident solely 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 solely 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 solely 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 solely 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, then it shall be deemed to be a
resident solely of the State in which its place of effective management is situated.
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" shall include especially:
( a ) a place of management;
( b ) a branch;
( c ) an office;
( d ) a factory;
( e ) a workshop;
( f ) a mine, an oil or gas well (including an offshore drilling site), a quarry
or any other place of extraction of natural resources including timber or
other forest produce;
( g ) a farm or plantation;
( h ) a building site or construction, installation or assembly project which
exists for more than 12 months.
(3) 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;
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( 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.
(4) An enterprise of a Contracting State shall be deemed to have a permanent
establishment in the other Contracting State if:
( a ) it carries on supervisory activities in that other State for more than 12
months in connection with a construction, installation or assembly
project which is being undertaken in that other State; or
( b ) substantial equipment is in that other State being used or installed by,
for or under contract with, the enterprise.
(5) A person (other than a broker, general commission agent or any other agent
of an independent status to whom paragraph 6 applies) acting in a Contracting State
on behalf of an enterprise of the other Contracting State shall be deemed to be a
permanent establishment in the first-mentioned State, if:
( a ) he has, and habitually exercises in the first-mentioned 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; or
( b ) he maintains in the first-mentioned State a stock of goods or
merchandise belonging to the enterprise from which he regularly fills
orders on behalf of the enterprise; or
( c ) he manufactures or processes in the first-mentioned State for the
enterprise goods or merchandise belonging to the enterprise.
(6) 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 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 shall not be considered as agent of an
independent status if the transactions between the agent and the enterprise were not
made under arm’s length conditions.
(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.
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 be
defined in accordance with the laws 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, oil or gas wells (including an
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offshore drilling site), quarries and other places of extraction of natural resources
including timber or other forest produce. 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 on so much thereof 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 including executive and general administrative
expenses, which would be deductible if the permanent establishment were an
independent enterprise, insofar as they are reasonably allocable to the permanent
establishment, whether incurred in the State in which the permanent establishment is
situated or elsewhere.
(4) If the information available to the competent authority is inadequate to
determine the profits to be attributed to the permanent establishment of an
enterprise, nothing in this Article shall affect the application of any law of that State
relating to the determination of the tax liability of a person by the exercise of a
discretion or the making of an estimate by the competent authority, provided that the
law shall be applied, so far as the information available to the competent authority
permits, in accordance with the principle of 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
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ships or aircraft in international traffic shall be taxable only in that State.
(2) Paragraph 1 shall also apply to the share of the profits from the operation of
ships or aircraft derived by a resident of a Contracting State through participation in
a pool, a joint business or an international operating agency.
(3) Notwithstanding the other provisions of this Article, profits from the
operation of a ship in international traffic derived by a company which is a resident
of Malta having more than 25 per cent of its capital owned, directly or indirectly, by
persons not residents of Malta, may be taxed in Malaysia unless the company proves
that the profits derived from the operation of such ship are subject to Malta tax
without regard to any relief therefrom as provided for in section 86 of the Merchant
Shipping Act (Cap. 234) or in any identical or similar provision.
Article 9
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.
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) Dividends paid by a company which is a resident of Malaysia to a resident of
Malta who is the beneficial owner thereof shall be exempt from any tax in Malaysia
which is chargeable on dividends in addition to the tax chargeable in respect of the
income of the company. Nothing in this paragraph shall affect the provisions of the
Malaysian law under which the tax in respect of a dividend paid by a company which
is a resident of Malaysia from which Malaysian tax has been, or has deemed to be,
deducted may be adjusted by reference to the rate of tax appropriate to the Malaysian
year of assessment immediately following that in which the dividend was paid.
(3) ( a ) Dividends paid by a company which is a resident of Malta to a resident
of Malaysia who is the beneficial owner thereof may be subjected to
Malta tax on the gross amount of such dividends, but the tax so charged
shall not exceed that chargeable on the profits out of which the
dividends are paid.
( b ) Where such dividends are paid out of profits of a company which are
subject to tax at a reduced rate of tax under special provisions designed
to promote investments necessary for the economic development of
Malta, the rate of Malta tax on the dividends shall not exceed such
reduced rate.
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(4) 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.
(5) The provisions of paragraphs 1, 2 and 3 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, and the holding in
respect of which the dividends are paid is effectively connected with such permanent
establishment. In such case, the provisions of Article 7 shall apply.
(6) Where a company which is a resident of a Contracting State derives income
or profits from the other Contracting State, that other State may not impose any tax
on the dividends paid by the company to persons who are not residents of that other
State, or 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
income or profits arising in that 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 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, interest to which a resident
of Malta is beneficially entitled shall be exempt from Malaysian tax if the loan or
other indebtedness in respect of which the interest is paid is an approved loan as
defined in section 2(1) of the Income Tax Act, 1967 of Malaysia (as amended).
(4) Notwithstanding the provisions of paragraphs 2 and 3, the Government of a
Contracting State shall be exempt from tax in the other Contracting State in respect
of interest derived by the Government from that other State.
(5) For the purposes of paragraph 4, the term "Government':
( a ) in the case of Malaysia means the Government of Malaysia and shall
include:
(i) the government of the States;
(ii) the local authorities;
(iii) the statutory bodies;
(iv) the Bank Negara Malaysia;
(v) such institutions, the capital of which is wholly owned by the
Government of Malaysia or the governments of the States, or the
local authorities or the statutory bodies thereof, as may be agreed
upon from time to time between the competent authorities of the
Contracting States;
( b ) in the case of Malta means the Government of Malta and shall include:
(i) the Central Bank of Malta;
(ii) the Malta Development Corporation;
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(iii) the statutory bodies;
(iv) such institutions, the capital of which is wholly owned by the
Government of Malta, as may be agreed upon from time to time
between the competent authorities of the Contracting States.
(6) 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.
(7) The provisions of paragraphs 1, 2 and 3 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 and the debt-claim in respect of which the interest is
paid is effectively connected with such permanent establishment. In such a case, the
provisions of Article 7 shall apply.
(8) 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 statutory body thereof,
or 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 in connection with which the indebtedness on which the interest is
paid was incurred, and such interest is borne by such permanent establishment, then
such interest shall be deemed to arise in the State in which the permanent
establishment is situated.
(9) 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 paid, 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 a case, the excess part of the payment 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 15 per cent of
the gross amount of the royalties.
(3) The term "royalties' as used in this Article means payments of any kind to
the extent to which they are paid as consideration for:
( a ) the use of, or the right to use, any
(i) copyright, patent, design or model, plan, secret formula or
process, trade mark, or other like property or right;
(ii) industrial, commercial or scientific equipment; or
(iii) cinematograph film or tape for radio or television broadcasting;
( b ) the supply of scientific, technical, industrial or commercial knowledge
or information;
( c ) the supply of any assistance that is ancillary and subsidiary to, and is
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furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in subparagraph ( a )(i), any such
equipment as is mentioned in subparagraph ( a )(ii), or any such
knowledge or information as is mentioned in subparagraph ( b ).
(4) The provisions of paragraphs 1 and 2 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 and the right or property in respect of which the
royalties are paid is effectively connected with such permanent establishment. In
such a case, the provisions of Article 7 shall apply.
(5) 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 statutory body thereof,
or a resident of that State. Where, however, the person paying such royalties,
whether he is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment in connection with which the obligation to pay the royalties
was incurred, and such royalties are borne by such permanent establishment, then
such royalties shall be deemed to arise in the State in which the permanent
establishment is situated.
(6) 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 paid or credited, having regard to the use, right or information for which
they are paid or credited, 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 a
case, the excess part of the royalties paid or credited shall remain taxable according
to the laws of each Contracting State, due regard being had to the other provisions of
this Agreement.
Article 13
Technical fees
(1) Technical fees arising in a Contracting State which are derived by a resident
of the other Contracting State may be taxed in that other State.
(2) However, such technical fees 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 a
beneficial owner of the technical fees, the tax so charged shall not exceed 10 per cent
of the gross amount of the technical fees.
(3) The term "technical fees" as used in this Article means payments of any kind
to any person, other than to an employee of the person making the payments, in
consideration for any services of a technical, managerial or consultancy nature.
(4) The provisions of paragraph 1 and 2 of this Article shall not apply if the
beneficial owner of the technical fees, being a resident of a Contracting State, carries
on business in the other Contracting State in which the technical fees arise through a
permanent establishment situated therein, or performs in that other State independent
personal services, and the technical fees are effectively connected with such
permanent establishment or such services. In such case, the provisions of Article 7 or
Article 15, as the case may be, shall apply.
(5) Technical fees shall be deemed to arise in a Contracting State when the
payer is that State itself, a political subdivision, a local authority or a statutory body
thereof, or a resident of that State. Where, however, the person paying the technical
fees, whether he is a resident of a Contracting State or not, has in a Contracting State
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a permanent establishment in connection with which the obligation to pay the
technical fees was incurred, and such technical fees are borne by that permanent
establishment, then such technical fees shall be deemed to arise in the Contracting
State in which the permanent establishment is situated.
(6) Where, by reason of a special relationship between the payer and the
recipient or between both of them and some other person, the amount of the
technical fees paid exceeds, for whatever reason, 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 law of each Contracting State due regard being had to the other provisions of
this Agreement.
Article 14
Alienation of property
(1) Income or gains from the alienation of immovable property, as defined in
paragraph 2 of Article 6, may be taxed in the Contracting State in which such
property is situated.
(2) Income or gains from the alienation of 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 of movable property available to a
resident of a Contracting State in the other Contracting State for the purpose of
performing professional services, including such income or gains from the alienation
of such a permanent establishment (alone or together with the whole enterprise) may
be taxed in that other State. However, income or gains from the alienation of ships or
aircraft operated by an enterprise of a Contracting State in international traffic and
movable property pertaining to the operation of such ships or aircraft shall be
taxable only in the State of which the enterprise is a resident.
(3) Income or gains from the alienation of shares of a company, the property of
which consists principally of immovable property situated in a Contracting State,
may be taxed in that State. Income or gains from the alienation of an interest in a
partnership or a trust, the property of which consists principally of immovable
property situated in a Contracting State, may be taxed in that State.
(4) Income or gains from the alienation of any property or assets, other than
those mentioned in paragraphs 1, 2 and 3 of this Article, shall be taxable only in the
Contracting State of which the alienator is a resident.
Article 15
Independent personal services
(1) Subject to the provisions of Article 13, 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. However, if such income is
derived from the other Contracting State it may be taxed in that other State if:
( a ) his stay in that other State is for a period or periods amounting to or
exceeding in the aggregate 183 days during any calendar year; or
( b ) the remuneration for his services in that other State is either derived
from residents of that State or borne by a permanent establishment
which the person paying the remuneration has in that State and in either
case it exceeds the equivalent in the currency of that State of five
thousand U.S. dollars (US $5,000) during the calendar year.
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(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 16
Dependent personal services
(1) Subject to the provisions of Articles 17, 19, 20, 21 and 22, 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:
( a ) 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
( b ) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other State; and
( c ) the remuneration is not borne by a permanent establishment which the
employer has in the other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in
respect of an employment exercised on board a ship or aircraft operated in
international traffic by an enterprise of a Contracting State may be taxed in that
State.
Article 17
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, or other comparable body
however described, of a company which is a resident of the other Contracting State
may be taxed in that other State.
Article 18
Artistes and athletes
(1) Notwithstanding the provisions of Articles 15 and 16, 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, 15
and 16, be taxed in the Contracting State in which the activities of the entertainer or
athlete are exercised.
(3) The provisions of paragraphs 1 and 2 shall not apply to remuneration or
profits derived from activities exercised in a Contracting State if the visit to that
State is directly or indirectly supported wholly or substantially from the public funds
of the other Contracting State, a political subdivision, a local authority or a statutory
body thereof.
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Article 19
Pensions and annuities
(1) Subject to the provisions of paragraph 2 of Article 20, any pensions and
other similar remuneration for past employment or any annuity arising in a
Contracting State and paid to a resident of the other Contracting State shall be
taxable only in that other State.
(2) Pensions and other payments made under the social security legislation of a
Contracting State shall be taxable only in that State.
(3) The term "annuity" includes a stated sum payable periodically at stated
times, during life or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration in
money or money's worth.
Article 20
Government service
(1) ( a ) Remuneration, other than a pension, paid by a Contracting State or a
political subdivision or a local authority or a statutory body thereof to
any individual in respect of services rendered to that State or political
subdivision or a local authority or statutory body thereof 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
performing the services.
(2) Any pension paid by, or out of funds created by, a Contracting State or a
political subdivision or a local authority or a statutory body thereof to any individual
in respect of services rendered to that State or political subdivision or local authority
or a statutory body thereof shall be taxable only in that State.
(3) The provisions of Articles 16, 17 and 19 shall apply to remuneration and
pensions in respect of services rendered in connection with any trade or business
carried on by a Contracting State or a political subdivision or a local authority or a
statutory body thereof.
Article 21
Students and trainees
An individual who is a resident of a Contracting State immediately before making
a visit to the other Contracting State and is temporarily present in the other State
solely:
( a ) as a student at a recognised university, college, school or other similar
recognised educational institution in that other State;
( b ) as a business or technical apprentice; or
( c ) as a recipient of a grant, allowance or award for the primary purpose of
study, research or training from the government of either State or from a
scientific, educational, religious or charitable organisation or under a
technical assistance programme entered into by the Government of
either State,
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DOUBLE TAXATION RELIEF ON TAXES ON INCOME
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shall be exempt from tax in that other State on:
( a ) all remittances from abroad for the purposes of his maintenance,
education, study, research or training;
( b ) the amount of such grant, allowance or award; and
( c ) any remuneration not exceeding the equivalent in the currency of that
other State of two thousand U.S. dollars (US $2,000) in respect of
services in that other State provided the services are performed in
connection with his study, research or training or are necessary for the
purposes of his maintenance.
Article 22
Teachers and researchers
(1) An individual who is a resident of a Contracting State immediately before
making a visit to the other Contracting State, and who, at the invitation of any
university, college, school or other similar educational institution, visits that other
State for a period not exceeding two years solely for the purpose of teaching or
research or both at such educational institution shall be exempt from tax in that other
State on any remuneration for such teaching or research or both.
(2) This Article shall not apply to income from research if such research is
undertaken primarily for the private benefit of a specific person or persons.
Article 23
Income not expressly mentioned
Items of income of a resident of a Contracting State which are not expressly
mentioned in the foregoing Articles of this Agreement shall be taxable only in that
Contracting State except that if such income is derived from sources in the other
Contracting State, it may also be taxed in that other State.
Article 24
Elimination of double taxation
(1) Subject to the laws of Malaysia regarding the allowance as a credit against
Malaysian tax of tax payable in any country other than Malaysia, Malta tax payable
under the laws of Malta and in accordance with this Agreement by a resident of
Malaysia in respect of income derived from Malta shall be allowed as a credit
against Malaysian tax payable in respect of that income. The credit shall not,
however, exceed that part of the Malaysian tax, as computed before the credit is
given, which is appropriate to such item of income.
(2) For the purposes of paragraph 1, the term "Malta tax payable" shall be
deemed to include the amount of Malta tax which would, under the laws of Malta
and in accordance with this Agreement, have been payable on any income derived
from sources in Malta had the income not been taxed at a reduced rate or exempted
from Malta tax in accordance with:
( a ) the Aids to Industries Ordinance, 1959 and Industrial Development Act,
1988 in 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 respects so as not to affect their general character; or
( b ) any other provisions which may subsequently be introduced in Malta in
modification of or in addition to, the existing special incentive laws so
far as they are agreed by the competent authorities of the Contracting
States to be of a substantially similar character.
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(3) Subject to the laws of Malta regarding the allowance as a credit against
Malta tax of tax payable in any country other than Malta, Malaysian tax payable
under the laws of Malaysia and in accordance with this Agreement by a resident of
Malta in respect of income derived from Malaysia shall be allowed as a credit
against the Malta tax payable in respect of that income. The credit shall not,
however, exceed that part of the Malta tax, as computed before the credit is given,
which is appropriate to such item of income.
(4) For the purposes of paragraph 3, the term "Malaysian tax payable" shall be
deemed to include Malaysian tax which would, under the laws of Malaysia and in
accordance with this Agreement, have been payable on any income derived from
sources in Malaysia had the income not been taxed at a reduced rate or exempted
from Malaysian tax in accordance with:
( a ) the Income Tax Act, 1967 and the Promotion of Investment Act, 1986 in
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
respects so as not to affect their general character; or
( b ) any other provisions which may subsequently be introduced in Malaysia
in modification of, or in addition to, the investment incentives laws so
far as they are agreed by the competent authorities of the Contracting
States to be of a substantially similar character; and
( c ) interest to which paragraph 3 of Article 11 applies had that interest not
been exempted from Malaysian tax in accordance with that paragraph.
(5) For the purposes of paragraph 3, where royalties derived by a resident of
Malta are, as film rentals, subject to cinematograph film-hire duty in Malaysia, that
duty shall be deemed to be Malaysian tax.
Article 25
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) 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 that first-
mentioned State are or may be subjected.
(4) Nothing in this Article shall be construed as obliging:
( a ) a Contracting State to grant to individuals who are resident of the other
Contracting State any personal allowances, reliefs and reductions for
tax purposes on account of civil status, family responsibilities or any
other personal circumstances which it grants to its own residents;
( b ) Malaysia to grant to nationals of Malta not resident in Malaysia those
personal allowances, reliefs and reductions for tax purposes which are
by law available on the date of signature of this Agreement only to
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DOUBLE TAXATION RELIEF ON TAXES ON INCOME
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nationals of Malaysia who are not resident in Malaysia.
(5) In this Article, the term "taxation" means taxes to which this Agreement
applies.
Article 26
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 Agreement, he may, notwithstanding the remedies provided by
the taxation laws of those States, present his case to the competent authority of the
State of which he is a resident or, if his case comes under paragraph 1 of Article 25,
to that of the State of which he is a national. The case must be presented within three
years from the first notification of the action resulting in taxation not in accordance
with the provisions of this Agreement.
(2) The competent authority shall endeavour, if the objection appears to be
justified and 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 which is not in accordance with this
Agreement. Any agreement reached shall be implemented notwithstanding any time
limits in the domestic law of the Contracting States.
(3) 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 this Agreement. They may also consult together for
the elimination of double taxation in cases not provided for in this Agreement.
(4) The competent authorities of the Contracting State may communicate with
each other directly for the purpose of reaching an agreement in the sense of the
preceding paragraphs.
Article 27
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 for the
prevention or detection of evasion or avoidance of taxes covered by this Agreement.
Any information so exchanged shall be treated as secret and shall be disclosed only
to any persons or authorities (including a Court or reviewing authority) concerned
with the assessment, collection, enforcement or prosecution in respect of, or the
determination of appeals in relation to the taxes which are the subject of this
Agreement. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions.
(2) In no case shall the provisions of paragraph 1 be construed so as to impose
on a Contracting State the obligation:
( a ) to carry out administrative measures at variance with the laws or the
administrative practice of that or of the other 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 State;
( c ) to supply information which would disclose any trade, business,
industrial, commercial or professional secret, trade process or
information the disclosure of which would be contrary to public policy.
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Article 28
Diplomatic and consular officials
Nothing in this Agreement shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the provisions
of special agreements.
Article 29
Entry into force
(1) The Governments of the Contracting States shall notify each other that the
constitutional requirements for the entry into force of this Agreement have been
complied with.
(2) The Agreement shall enter into force thirty days after the date of the latter of
the notifications referred to in paragraph 1 of this Article and its provisions shall
have effect in respect of taxes for any year of assessment beginning on or after
January 1st in the second calendar year following the year in which this Agreement
enters into force.
Article 30
Termination
This Agreement shall remain in effect indefinitely, but either Contracting
State may terminate the Agreement, through diplomatic channels, by giving to the
other Contracting State written notice of termination on or before June 30th in any
calendar year beginning after the expiration of a period of five years from the date of
its entry into force. In such an event the Agreement shall cease to have effect in
respect of taxes for the year of assessment beginning on January 1st in the second
calendar year next following the year in which the notice is given and for subsequent
years of assessment.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, by their
respective Governments, have signed this Agreement.
DONE in duplicate at Kingston, Jamaica this 3rd day of October 1995, each
in Bahasa Malaysia and the English language, both texts being equally authentic.
For the Government of Malaysia For the Government of Malta
Wong see Wah John Dalli
Deputy Minister of Finance Minister of Finance
PROTOCOL
(1) At the time of signing the Agreement between the Government of Malaysia
and the Government of Malta for the avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income, both Governments
have agreed that the following provisions shall form an integral part of the
Agreement:
(2) In connection with Article 7 "Business Profits":
Nothing in this Agreement shall affect the operation of any law of a
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Contracting State relating to the taxation of income or profits from any insurance
business provided that if the relevant law in force in either Contracting State at the
date of signature of this Agreement is amended (otherwise than in minor respects so
as not to affect its general character) the States shall consult with each other with a
view to agreeing to any amendment of this paragraph that may be appropriate.
(3) In connection with Article 10 "Dividends":
Under the Malta law in force, income tax paid by a company, as is referable
to that part of its profits which is distributed by way of dividends, is assimilated with
the personal income tax of the shareholder in receipt of such a dividend. In the
shareholder's hands the dividend is charged to tax gross and the relevant amount of
tax, so assimilated, is set off against the shareholder's tax liability on his income
from all sources liable to tax.
(4) In connection with paragraph 4 of Article 13 "Technical Fees' it is
understood that where paragraph 1 (a) or (b) of Article 15 is applicable, the
provisions of Article 15 shall apply.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, by their
respective Governments, have signed the Protocol.
DONE in duplicate at Kingston, Jamaica this 3rd day of October 1995, each
in English and Bahasa Malaysia language, both texts being equally authentic.
For the Government of Malaysia For the Government of Malta
Wong see Wah John Dalli
Deputy Minister of Finance Minister of Finance
