S.I. No. 495/1998 - Double Taxation Relief (Taxes on Income) (Malaysia) Order, 1998

1. Each of the Contracting States shall notify to the other the completion of the procedure required by its law for the bringing into force of this Agreement.

2. The Agreement shall enter into force on the date of receipt of the later of these notifications and shall thereupon have effect

(a) in Malaysia

(i) in respect of taxes withheld at source, to income derived on or after the first day of January in the calendar year following the year in which this Agreement enters into force;

(ii) in respect of other taxes on income, to taxes chargeable for any year of assessment beginning on or after the first day of January of the second calendar year following the year in which this Agreement enters into force.

(b) in Ireland

(i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after the sixth day of April in the calendar year next following the calendar year in which this Agreement enters into force;

(ii) in respect of corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following the year in which this Agreement enters into force.

Article 30

TERMINATION

This Agreement shall remain in effect indefinitely, but either Contracting State may terminate the Agreement, through diplomatic channels, by giving to the other Contracting State written notice of termination on or before the thirtieth day of June in any calendar year after the period of five years from the date on which this Agreement enters into force. In such an event the Agreement shall cease to have effect

(a) in Malaysia

(i) in respect of taxes withheld at source, to income derived on or after the first day of January in the calendar year following the year in which the notice is given;

(ii) in respect of other taxes on income, to taxes chargeable for any year of assessment beginning on or after the first day of January in the second calendar year following the year in which the notice is given.

(b) in Ireland

(i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after the sixth day of April in the calendar year next following the year in which the notice is given;

(ii) in respect of corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following the year in which the notice is given.

IN WITNESS whereof the undersigned, duly authorised thereto, by their respective Governments, have signed this Agreement.

DONE in duplicate at Kuala Lumpur this 28th day of November, 1998, in the Malay and the English languages, the two texts being equally authentic. In the event of there being a dispute in the interpretation and the application of this Agreement, the English text shall prevail.

BRENDAN LYONS

DATO' DR ARIS BIN OTHMAN

For the Government of Ireland

For the Government of Malaysia

GIVEN under the Official Seal of the Government, this 21st day of December, 1998.

BERTIE AHERN,

Taoiseach.

EXPLANATORY NOTE

This Order gives the force of law to the Agreement with Malaysia which is set out in the Schedule. The effect of the Agreement is summarised below.

This Agreement with Malaysia, which was signed in Kuala Lumpur on 28 November, 1998, is comprehensive in scope and is based on the OECD Model Convention.

It provides for the allocation of taxing rights between Ireland and Malaysia and for the granting of relief from double taxation with regard to items of income and capital gains which, under the laws of Ireland and the laws of Malaysia, may be taxed in both countries.

In many cases, the Agreement awards a taxation right over items of income and gains to the country of residence of the recipient only, for example, items such as business profits and gains on movable property, provided neither arises through a permanent establishment or fixed base in the country of source and profits from the operation of ships or aircraft engaged in international traffic. In other cases, such as remuneration in respect of services rendered to the Government of either country, the Agreement awards the taxation right to the state of source only.

Where both countries continue to have taxing rights, for example in the case of dividends, interest and royalty income, business profits arising through a permanent establishment which a person resident in one country has in the other country, or in the case of capital gains arising from the disposal of immovable property or shares linked with immovable property, the Agreement provides that the country of residence of the recipient of the income or gain will give credit against its tax on the income or gains for the tax paid in the other country on the same income or gains.

Reduced rates of withholding tax are provided for in the case of dividend (10%), interest (10%) and royalty (8%) payments. However, under current domestic law, neither Ireland nor Malaysia at present impose withholding taxes on dividends paid to non-residents.

The Agreement also provides for the safeguarding of nationals and enterprises of one country against discriminatory taxation in the other country, for consultation between the competent authorities of the two countries for the purpose of resolving any doubts or difficulties arising as to the interpretation or application of the Agreement and for the exchange of information between those authorities as is necessary for carrying out the provisions of the Agreement or of the domestic law of either country in relation to the taxes covered by the Agreement.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purposes of reaching an agreement in the sense of the preceding paragraphs.

Article 27

EXCHANGE OF INFORMATION

5. Nothing in this Article shall be construed as obliging

(a) a Contracting State to grant to individuals who are resident of the other Contracting State any personal allowances, reliefs and reductions for tax purposes on account of civil status or family responsibilities which it grants to its own residents;

(b) Malaysia to grant to nationals of Ireland not resident in Malaysia those personal allowances, reliefs and reductions for tax purposes which are by law available on the date of signature of this Agreement only to nationals of Malaysia who are not resident in Malaysia.

Article 26

MUTUAL AGREEMENT PROCEDURE

6. The period of relief provided for in paragraph 5 may be extended by agreement between the Contracting States.

7. For the purposes of paragraph 2 profits, income or gains owned by a resident of Ireland which may be taxed in Malaysia in accordance with this Agreement shall be deemed to be derived from sources in Malaysia.

Article 24

LIMITATION OF RELIEF

Where, under any provision of this Agreement, income or gains is or are wholly or partly relieved from tax in a Contracting State and, under the laws in force in the other Contracting State, an individual, in respect of the said income or gains, is subject to tax by reference to the amount thereof which is remitted to or received in that other State, and not by reference to the full amount thereof, then the relief to be allowed under this Agreement in the first-mentioned State shall apply only to so much of the income or gains as is remitted to or received in that other State.

Article 25

NON-DISCRIMINATION

8. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 12

ROYALTIES

S.I. No. 495 of 1998.

DOUBLE TAXATION RELIEF (TAXES ON INCOME) (MALAYSIA) ORDER, 1998

WHEREAS it is enacted by

sections 826

(1) and

828

of the

Taxes Consolidation Act, 1997

(No. 39 of 1997), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, corporation tax or capital gains tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment other than

section 168

of the

Taxes Consolidation Act, 1997

, have the force of law

AND WHEREAS it is further enacted by

section 826

(6) of the

Taxes Consolidation Act, 1997

, that where such an order is proposed to be made, a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of the following Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

sections 826

(1) and

828

of the

Taxes Consolidation Act, 1997

(No. 39 of 1997), hereby order as follows