Tax Agreement Signed between Hong Kong and Malta

19.07.2012

The agreement between Hong Kong and Malta for the avoidance of double  taxation and the prevention of fiscal evasion with respect to taxes on income has entered into force July 18. The agreement was signed in November last year. It came into force on after completion of ratification procedures on both sides.

In accordance with an agreement between the jurisdictions set the new tax rules and tax incentives for various types of passive income.

Absent the agreement, income earned by a Maltese national residing in HK would be subject to both Hong Kong and Maltese income tax, while Maltese enterprises operating through a branch in Hong Kong would also be taxed with both jurisdictions’ corporate tax.

Under the agreement, taxes paid by companies on their profits in Hong Kong can be credited against their tax payable in Malta.

Also, the DTA provides that Hong Kong airlines operating flights to Malta will be taxed at HK’s corporate tax rate, which is lower than that of Malta.

Under the agreement, profits from international transport, received by the residents of Hong Kong, which originated in Malta and which is subject to current taxation there will not be taxed in Malta.

The most recent tax exchange information standards issued by the Organization for Economic Co-operation and Development (OECD) were also included in the DTA.

Expert’s opinion

One more Hong Kong tax treaty, and this time with Malta has become the 23rd DTA for Hong Kong. It should be noted that the agreement was a first for Hong Kong agreement on avoidance of double taxation with the State of South Europe.
Clearly, Hong Kong, directs all funds for the development of business environment and to increase the attractiveness for investors from around the world.
New tax rules will increase the potential of investors, which will undoubtedly influence on the improvement of economic relations between the two countries.
We all know that Hong Kong is a major financial investment center in Asia. Thus, Malta can not only benefit from this agreement, but also become intermediate party through which Hong Kong will interact with its neighbors in southern Europe and northern Africa.

On the basis: http://www.ird.gov.hk/

Natalie Dambieva ( the paralegal of Moscow office of Honest & Bright )