DOUBLE TAXATION RELIEF ON SHIPS AND AIRCRAFT
WITH THE UNITED STATES OF AMERICA ġ S.L.123.44 1
SUBSIDIARY LEGISLATION 123.44
DOUBLE TAXATION RELIEF ON SHIPS AND 
AIRCRAFT WITH THE UNITED STATES OF 
AMERICA ORDER
11th March, 1997
LEGAL NOTICE 230 of 1997. 
Title.
and Aircraft with the United States of America Order.
Taxes covered and 
commencement.
2. It is hereby declared that -
( a ) the Agreement specified in the Exchange of  Notes
Verbales  reproduced in the Schedule to this Order has
been made with the United States of America with a
view to affording relief from double taxation in
relation to the taxation of income derived from the
international operation of ships and aircraft; and
( b ) the Agreement has entered into force on the 11th
March, 1997 and is effective in respect of income
derived on or after the 1st January, 1997.
2 ġ S.L.123.44
DOUBLE TAXATION RELIEF ON SHIPS AND AIRCRAFT
WITH THE UNITED STATES OF AMERICA
SCHEDULE 
(1056)
The Embassy of Malta presents its compliments to the Department of State of the
United States of America and has the honour to propose, that the two governments
conclude an agreement to exempt from income tax, on a reciprocal basis, income
derived by residents of the other country from the international operation of ships
and aircraft. The following proposed terms of agreement have been drafted on the
basis of similar agreements the United States has with other governments:
The Government of Malta agrees to exempt from tax gross income derived from
the international operations of ships or aircraft by individuals who are residents of
the United States (other than citizens of Malta) and corporations which are
incorporated in the United States.
In case of a U.S. corporation, the exemption shall apply only if the corporation
meets one of the following conditions:
(1) the corporation’s stock is primarily and regularly traded on an
established securities market in the U.S., another country which grants a
reciprocal exemption to Maltese corporations or Malta, or
(2) more than fifty (50) per cent of the value of the corporation’s stock is
owned directly or indirectly by individuals who are residents of the
United States or of another foreign country which grants an equivalent
exemption to Maltese corporations or by a corporation organized in a
country which grants an equivalent exemption to Maltese corporations
and whose stock is primarily and regularly traded on an established
securities market in that country, another country which grants an
equivalent exemption to Maltese corporations, or Malta.
The Government of the United States of America, in accordance with articles
872( b ) and 883(A) of the Internal Revenue Code, agrees to exempt from tax gross
income derived from the international operation of ships or aircraft by individuals
who are residents of Malta (other than United States citizens) and corporations
which are incorporated in Malta.
In case of a Maltese corporation, the exemption shall apply only if the corporation
meets one of the following conditions:
(1) the corporation’s stock is primarily and regularly traded on an
established securities market in Malta. another country which grants a
reciprocal exemption to U.S. corporations or the United States, or
(2) more than fifty (50) percent of the value of the corporation’s stock is
owned directly or indirectly by individuals who are residents of Malta
or of another foreign country which grants an equivalent exemption to
U.S. corporations or by a corporations organized in a country which
grants an equivalent exempion to U.S. corporations and whose stock is
primarily and regularly traded on an established securities market in
that country, another country which grants an equivalent exemption to
U.S. corporations, or the United States.
For the purposes of exemption from the U.S. tax, the Government of Malta will be
treated as an individual resident of Malta, and sub-paragraph (2) shall be considered
to be satisfied if the corporation is a "controlled foreign corporation" under the
Internal Revenue Code, so however, that U.S. shareholders of such corporations
shall be treated as residents of Malta.
DOUBLE TAXATION RELIEF ON SHIPS AND AIRCRAFT
WITH THE UNITED STATES OF AMERICA ġ S.L.123.44 3
In this agreement -
( a ) the terms "contracting state" and "other contracting state" mean Malta or the
United States of America, the governments of which have concluded this agreement.
( b ) gross income includes all income derived from the international operation of
ships or aircraft, including:
(1) income from the rental on full (time or voyage) basis of ships or aircraft
used in international transport;
(2) income from the rental on a bareboat basis of ships or aircraft used in
international transport;
(3) income from the rental of containers and related equipment used in
international transport that is incidental to income from the
international operation of ships and aircraft; and
(4) gains from the sale or other alienation of ships or aircraft used in
international transport derived by a person primarily engaged in the
international operation of ships or aircraft.
In the application of this agreement by a contracting state, any term not defined in
this agreement shall, unless the context otherwise requires, have the meaning which
it has under the laws of that state relating to the taxes to which the agreement
applies.
The Government of Malta proposes that, if the foregoing is acceptable to the
Government of the United States, this note and the Department’s note in reply shall
constitute an agreement. The agreement shall enter into force on the date of the
Department’s note in reply and shall have effect in respect of income derived on or
after 1 January, 1997.
This agreement shall continue in force until the Government of either contracting
state gives written notice of termination of the agreement to the other Contracting
State through the diplomatic channel.
The Embassy of Malta takes this opportunity to renew to the Department of State
of the United States of America the assurance of its highest consideration.
26 December, 1996
Embassy of Malta
Washington. D.C.
4 ġ S.L.123.44
DOUBLE TAXATION RELIEF ON SHIPS AND AIRCRAFT
WITH THE UNITED STATES OF AMERICA
The Department of State refers the Embassy of Malta to the Embassy’s note 1065
of December 26, 1996, regarding the reciprocal exemption from income tax of
income derived from the international operation of ships and aircraft.
The Department of State confirms that the proposals contained in the Embassy’s
note are acceptable to the Government of the United States of America. Therefore,
this note and the Embassy’s note of December 26, 1996, constitute an agreement
which shall enter into force on the date of this note in reply and shall be effective in
respect of income derived on or after January 1, 1997. This agreement shall continue
in force until the Government of either contracting state gives written notice of
termination of the agreement to the other contracting state through the diplomatic
channel.
Department of State,
Washington,
March 11, 1997.
