New Malta-China tax agreement expected to boost investment(Times of Malta)

A new agreement between Malta and China for the avoidance of double taxation is expected to boost investment relations between the two countries and may also help Chinese investors to tap the EU market more effectively, the Finance Ministry said this evening.

The new agreement, which replaces another signed 17 years ago, provides that the withholding tax rate for dividends for a holding of at least 25% of the company paying the dividends has been established at 5% as opposed to 10% under the existing treaty.

Furthermore, the withholding tax rate for certain royalties has been reduced from 10% (under existing DTA) to 7%.

The Agreement will enter into force after it is ratified by both countries. The ministry said the agreement is in line with current internationally accepted standards and the negotiations took into account the OECD Model Tax Convention on Income and on Capital and recent tax treaties concluded by both countries.

The new agreement also establishes better channels for exchange of information to prevent fiscal evasion.

Maltese imports from China have grown from €62 million in 2004 to €117 million in 2009 whilst exports have increased from €15.5 million in 2004 to €27 million in 2009.