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Double taxation Agreement between Malta and the United Arab Emirates

Successive Maltese governments have sought to enter into double taxation agreements with other countries to encourage international trade and the growth of financial services, while at the same time 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 agreement was signed by (at the time) Maltese Foreign Minister Michael Frendo and Minister of State for Finance and Industry of the United Arab Emirates Mohammed Khirbash in Abu Dhabi.

Malta - UAE Taxation Agreement: Who Benefits?

The double taxation agreement between the two countries refers specifically to the residents of Malta and the UAE. In the case of Malta, this is extended to any person registered in Malta for taxation purposes or any company registered or managed in Malta. 

In the case of the UAE, any individual holding residence in any of the seven emirates as well as any company that is managed or registered in the UAE is covered by the double taxation agreement. 

In simpler terms, in the double taxation agreement, the two countries 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 in accordance with the rules and regulations in the UAE and in Malta. 

Business implications of the Double taxation Treaty

The double taxation agreement, which is also referred to as a convention or treaty, covers any type of company including branch offices, factories, workshops, construction sites and any establishment used by a company to provide services for at least 12 months.

Companies using facilities for storage, display or delivery purposes are not covered by the agreement.

The double taxation agreement directs the taxing rights related to dividends, interest and royalties to state the state of 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. 

Individuals or companies owning property in Malta or in the UAE may also be taxed in the other contracting state, according to the double taxation agreement. 

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

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