Malta Strengthens Double Taxation Avoidance Network Through Agreement with China

Following months of discussions on a bilateral level a new Double Taxation Agreement between Malta and China has been concluded and is expected to be signed later on this year. The purpose of the Agreement is the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

The Agreement will enter into force after ratification by both countries. The provisions of this double taxation agreement are in line with current internationally accepted standards and, in fact, the negotiations took into account the OECD Model Tax Convention on Income and on Capital and recent tax treaties concluded by both countries.

The Minister of Finance, the Economy and Investment Tonio Fenech, welcomed this new agreement, which will replace the existing DTA between Malta and China signed on 2 February 1993. Tonio Fenech commented that “this agreement will provide investors from both countries with more attractive conditions for investment in Malta or China. Such conditions may also help Chinese investors to tap in a more efficient way into the European market. China is a country which is still growing strongly and offers significant investment potential”.

While this double taxation helps to create a more attractive investment climate for genuine business transactions, at the same time it introduces certain provisions to prevent tax avoidance through treaty abuse. The new DTA also updates the Exchange of Information article in accordance with current internationally agreed standards and therefore establishes better channels for exchange of information in a mutual effort to prevent fiscal evasion.

The Minister added that “the signing of this DTA will be another important milestone in the relations between Malta and China and will contribute to deepen and strengthen the already very good relations between the two countries. It also strengthens our growing network of over fifty tax treaties which improves the value proposition of our country to potential investors, which is a key objective in our effort to attract new and better jobs to our shores”.

A Maltese business delegation, lead by Malta Enterprise, visited Beijing and Shanghai earlier this year. Dr. Tonio Ellul, the partner of EMD, was one of the members to the business delegation and visited China as well.