The new Double Taxation Agreement between China and Malta, signed on the 23rd October 2010, has been ratified. The Agreement is effective as of 25th August 2011 with respect to income derived during the taxable years beginning on or after 1st January 2012.
The Agreement envisages a 5% withholding tax rate on dividends if paid to a company (other than a partnership) which holds directly at least 25% of the capital of the company distributing the dividends. In any other cases, the Agreement provides for a 10% rate. Tax on interest and royalties may not exceed 10% while tax on royalties derived for the use of industrial, commercial, or scientific equipment shall not exceed 10% on an amount corresponding to 70% of the gross amount of such royalties.
This Double Tax Agreement is yet another step in the flourishing relations between China and Malta. Bilateral trade is on the rise. In the first 9 months of 2010 bilateral trade volume exceeded the total trade volume of year 2009. This shows a rise at a much faster rate than the average increase of trade between China and the other 27 EU member states. This year Vice Commerce Minister Zhong Shan headed an economic and trade delegation to Malta, during which visit the two states exchanged notes on the provision of a grant of RMB 5 million by the Chinese government to Malta.
