Double Taxation Agreement between Malta and the United Arab Emirates

Malta has signed a Double Taxation Agreement with the United Arab Emirates. Learn how you can benefit from the treaty.

Malta’s successive governments have sought to enter into double taxation agreements with other countries. This is to encourage international trade and the growth of financial services while curbing tax evasion.

These bilateral agreements resolve issues involving double taxation of passive and active income. They prevent double taxation and fiscal evasion and encourage cooperation between Malta and other international tax regimes through the understanding and enforcement of the law.

Malta and the United Arab Emirates signed a double taxation agreement in 2006, which came into effect in Malta through Legal Notice LN 99 in 2009. The Maltese Foreign Minister Michael Frendo and Minister of State for Finance and Industry of the United Arab Emirates Mohammed Khirbash in Abu Dhabi signed the agreement at the same time.

Malta – UAE Taxation Agreement: Who Benefits?

The double taxation agreement between the two countries refers specifically to the residents of Malta and the UAE.

The agreement covers any person registered for taxation purposes or any company registered or managed in the country for Malta. It also covers any individual holding residence in any of the seven emirates and any company managed or registered in the UAE.

In simpler terms, the double taxation agreement stipulates that once an income is levied in Malta, it will be not taxed once again in the UAE and vice versa. However, individuals or companies with businesses and gains in both countries should consider the taxes according to the individual rules and regulations.

Business implications of the Double Taxation Treaty

The double taxation agreement, also referred to as a convention or treaty, covers any company, including branch offices, factories, workshops, construction sites and any establishment used by a company to provide services for at least 12 months. The agreement does not cover companies using facilities for storage, display or delivery purposes.

The double taxation agreement directs the taxing rights related to dividends, interest and royalties to state the residency of the person receiving income. The relevant provisions of the convention do not impose any withholding tax on these types of income, which is compatible with Malta and the UAE’s taxation systems.

Article 11 in the Ancillary Protocol of the agreement specifically allows UAE tax residents to apply for tax refunds in Malta. According to the agreement, individuals or companies owning property in Malta or the UAE may also be taxed in the other contracting state.

On the one hand, the Malta-UAE double taxation treaty stipulates that the companies in question are taxed in the country in which the company is registered. On the other hand, permanent establishments will be taxed in the country they make profits in.