An agreement for the avoidance of double taxation and the prevention of fiscal evasion between Malta and Georgia entered into force on 30th December 2009. The double taxation agreement was signed on 23rd October 2009 and ratified by Malta by virtue of Legal Notice 65 of 2010.
Apart from aiming to eliminate the double taxation of income or gains arising in one state and received by residents of the other state, the agreement also delivers tax transparency and provides for the exchange of information. To this extent, the agreement is based on the OECD Model Convention. A difference arises in the absence of withholding taxes on outbound dividends, interest payments and royalties. Georgia is thus restricted from levying any withholding tax on dividend, interest and royalty distributions to residents of Malta. this pursuant to Georgia’s newly adopted tax policy that abolishes domestic withholding tax on dividends and interest payments to non-residents as of 2012.
In the oppposite scenario, Malta, on the basis of domestic leglisation, does not operate a witholding tax system in this respect. Accordingly, these sources of income are only taxable in the residence state of the recipient. Any double taxation is eliminated by means of the credit method.
This agreement aims to benefit entrepreneurs from both countries as business between the two jurisdictions will be able to take place with more ease. Deputy Prime Minister and Minister of Foreign Affairs Dr Tonio Borg has said that the time has come to concretely build upon a positive bilateral relationship and that these agreements are a first step towards further enhancing relations between the two countries. The signing of the Double Taxation Agreement should serve a springboard for future agreements to facilitate business and creating new employment opportunities.
