DoutwTU'I\oa Rdlef(TuaOD Income) (tuaodincome)

L .N. 164 of 1\194

lNCOMETAXACT

(CA P. 123)

DoutwTU'I\oa Rdlef(TuaOD Income)

(hopk'. Rep.blkofChIDa) Order, 199<t

IN exercise of the powers conferred try section 80 of the Income

Tu ACI . the Minister of Finance has made the following Order: -

I. This Order may bedted as the DoublcTultioo Relief(Tues

on Income) (People', Republic of China) Order, 1994.

ill; l-arr.ngameDI; spetifik.ti fiI-Ftehim muri fl· lskc:da li

(a)

tinsab ma' dan l-ordni gew mapul. mal-Gvem lar-Repubblih

lal-Popl" tat-Cina sabies. jingl'lata helsien minn taxu doppja dwar

il-tau; I. teilin stabbiliti bi,-,igijiet tar-Repubblika tal-Pop!u tat·

Cina

it-tau, h>q l-iIIc.onI<! gllall-indiYidwi;

(i)

(ii) il-tan. fuq I-income ghat impriti li jkollhom

inve$li.mnl Inrrani 11 ghal impriti barnnin ;

<iii)

;(.Iuxa fuq l-inwm.-klltal;;

(b) illi hllw. $p<'djenli Ii dawk ]-ananpmenti jkoUbom

~ff~lI .

SKEOA

FTEH IM

BEJN Il.rGVERNTA' MALTA

U L-GVERN TAR·RE PUBBLIKA TAL-POPLUTACCINA

G MALL-MELS IEN MINN T AXXA DOPPJA U BIEXTlGI EV ITATA

EVAtJON I FlSKAU DWAR TAXXI FUQL-I NCOME

II-Gvcrn ta· Malta u I-G~~rn (ar-Rcp"bblika tal·Poplll ta~-Cina billi jixti~q ll

Jaghmlu F!~him gflal1 · n~15icn minn Taul Ooppja u bin tip ~vitata ~~at;ooi fisk"i

dwar tani fuq l-iIIcomf:" .... apitll, ft~hmu kif g~j

ARTIKLU 1

Oan il-F!~him ghandll japplika gflall·persun; li huma resi(\cnt; ta· wicbed mill -

bllti Kontraenti jew tat-tm:jn.

· '"

ARTIKLU2

To:ui Koperri

1. Oan il ·FlChim gllandu japplika gI'Ial-taD; fuq 1·u.come impost; fisem Slat

Kontraenti .iew 1-lwlori1ljiel lokali tagflha , irrispetlivament mill-mod kif dawn

jint;abru .

AGREEMENT

BElWEEN THE OOVERNMENT OF MALTA

AND 1lfE GOVERNMENT QFTIiE PEOPLE 'S REPUBLIC OF CHINA

FOR THE A VOIDANCE OF

OOUBLE TAXATION AND THE PREVENTION OF FISCAL

EVASION wm-I RESPECfTOTAXES ON INCOME

The Government of Malta and the Government of the People 's Republicof China,

de$iring to o;:ooelude an Agreement for the avoidance of double tuation and the

prevention offucal evasion with respect 10 laxes on illOOflle , have agreed IS follows

ARTI CLE 1

P~r'Sofl(ll !ko~

This Agr«ment shall apply 10 pel"SOftlI woo are residents of one or IIoth of the

Contractiog Slltes,

•

66'

ARllCl.E 2

1. This Agreement :!.ball apply 10 lUes on i~ impo5ed on behalf of a

Conlntcting Stale or of il5 ]cxallu thorili~, irrespective of the manner in which they ace

levied.

2. The re :!.ball be reprded as hUes on inc:ome . Utalles impo5Cd on t()(al income,

or on elements of income. including laxes on gaiM from the alie nalion of movable or

immonble property, as well as laxel on capital appreciation.

J. The eiliting tues 10 which the Agreement sballapply are

(a) in the People's Republic afOiio.

(i)

tbe individ ual income IU ;

(iil the income tu for e nte rprises with foreign investment arM! foreign

enterprises;

(iii) the local income I U;

(hereinafter I"C'fcrred to lIS ~Chincse tax ") ;

(b) io Malta

tbe income: lax ;

(hereinafter re ferred 10 as MMalla IU ") .

I1 is MUby dttlared:-

(a) Ihlllhe arrangements specified in the Agreement set out

in the 5<:hed\l1e to this O rder have bee n made with the Government

of the People 's Rcpublk of China with. view 10 affording relief

from double taxation in relation 10 the following taxes imposed by

the Jaws or the People's Republic of Cbina

the individual income lax ;

(i)

(ii ) the income lax for enterprises with foreign

investment and ford", en terprises;

(iii)

the local income tax ;

(b)

Ihat it;$ expedient that those arrangement$ should have

effect.

Ca) fir-Repubblih taJ ·PopIu tat-Cina

it-lau. fuq I-~ ghaU-individwi: u

(i)

(ii) il-lau; fuq I-income ghal imprii:i li jkollbom invesliment barnni u

glial impriti barranin;

iHUU fuq l-iIIcQtm'lakal; ;

(iii)

(hawnhekk itjed 'i l quddiem imsejha ~ il-laua tl e-Cin," );

(b)

fMalta

il-tau. fuq l-iIIcom<';

( hawnhekk i*d 'il quddiem ims.ejha ~ il-Iaxx.a ta ' Malta") .

This Agreement shall also apply 10 any identical or $Ubstantially similar lues

which arc imposed after the dale of signature of th~ Agreement in addition 10, or in

place of, the u i$llng laxes refened 10 in pa ragraph 3. TIle compelcnl authoritin of the

ConU.Cli ng States shall notify each other of any significant changes which have been

made in thei r respective taxation laws with in a reawnable period of time after such

changes.

ARTICLE 1

I.

For the putp05CS of thi$ Agreement, unleu the context OIilr;rwise requires

(a) tilr; teRn ~a.ina~ means the People', Repuhlicof Oaina; when used in a

geographical !iCnse, means all the territory of the People's Republic of Oaina,

including its territorial !iCa, in which the Chinese: laWl re lating to taxation apply ,

and any area beyond its territorial $el , within which the People', ltepublic of

China hll$ sovereign rightS of exploration fO!" and exploitation of re~ of the

seabed lutd ilS sub-soil and superadjacent water re50UtceS in accordance with

international law ;

(b) the tenn ~ Mllta", when used in a geographical sense , means the bland

of Malta, the Wand of Gow and the other Islands of the Maltese archipelago

including the territorial waten thereof, and any area outside tilr; territorial tea of

Malta which , in accordance with inlernationallaw, hll$ been or may hereafter be

..

designated, under the la .... of Malta concerning the Continental Shelf, as an area

within which the righ ts of Malta with respect 10 the 5Ubed .nd lubsoiland their

natural resources may be CKCrti1ed;

(c) the tenns ~a Contracting SlaIC~ and - tbe other ConulICling Slatc ~ mean

China or Malta as the oontcxt requites ;

(d) tile term -pcrsoo~ includcs an individual ,. company and .nyolhcrbody

ofpersoll$;

(cl the term -oompan y~ means any body corporate o r any enlily which is

treated as a bodya:lrpon1.IC for- tu purposes;

(f) the terms -enterprise of a Contracting Slate- and -en terprise oflhe Olher

Contracting SUte- mean , respcc:tivcly, an enterprise carried on by a resident of.

Conuacting Stale and an C11ICrprise carried on by a resident of the other

ContractingSlalC;

(J)

the term "nationals" means

(i) in respect of China, all individuals poiSCssing the nationality of

China and all juridical peI~ms created or organised under lhe laws of ChillI as

well as any o rganiutions without juridical personality treated for tU purposes

as juridical persons cuated or organised unde r the laWl! of China;

(il) in respect of Malla. any citizen of Malta and any lepl pel'5Oll ,

partnership or association deriving its SU!!., u such from the law in fom: in

Malta;

(h) the term Mintemational traffic~ means any transpon by a shipor aim-aft

operated by an enterprise which has ill place of head office (i.e . effective

management) in a Contracting State, except when the ship or aircnft is operated

IIOleJy between placcs in the other Contracting State;

the tenD "competent authority~ mean,

(i)

(i) in the case of China. the Sute Tu: Bureau or ill authorixed

representative; and

(ii) in the case of Malta, the Minister responsible for finance: or hi!

authorized representative.

2. As regards the application of this Agreement by a Contracting State, any term

not defined therein shall, unless the context otherwise requires , have the meaning

which it has under the laws of that ContraClingState cono:rningthe tues towhlch th is

Agreement applies.

ARTICLE 4

Raide,,/

I . For the purposcsof Ihis Agreement, the tenn "resident of a Contracting State"

meaJl$ any penon who , under tbe laws of that Contracting State. is liable to tU therein

•

<If>

by reason of his domicile, residence, place of head office (Le. effective managemen t) or

llIIy other criterion of a similar nature:.

2. Where by reQ(ln ofthc provisions of pll'1l.gTaph 1 an individual is a resident of

both Conuactin& Statcl, then his status shall be determined IS follows

<a) lie shall be deemed to be • resident 50Iely of the Contnlding S ... te in

which he ha, a pennanent home available 10 him : if he has. permanent home

availabLe 10 him in both Contracting States, he shall be deemed 10 be a residen t

solely of the Contracting State with which his penonal and economic relations ITe

close r (centre of villI interests);

(b) if tbe State in which be has his oentre of vital interests cannot be

determined , OI' if be has no permanent home available to him in either Contracting

Stale, be dlall be deemed 10 be a resident solely oflhe Contracting Slate in which

he has an habitual.bode

(~) if be has In h.bi lUal abode in both Con tr.ctin~ Stales or in 'neither of

them , he shall be deemed to be a resideD! solely of the Contracting Stale of which

be is. national

(d) if he is • national of both Contracting States or of neither of them , the

competent authorities of the Contracting States shalllCttJe the question by mutual

agreement.

J. Wbere by reason of the provisions of paragraph I a person othe r than an

individual is a resident of both Contracting States, then it shan be deemed to be a

resident solely of the Contracting State in ""bleh its place of head offICe (i.e. effective

management) is situated.

ARTICLES

I. For the PUrpose$ of this Agreement, the tenn Mpennlnel"ll eslablish ment

H

means a fixed place of husineu through which the busil"lcss of an enterprn.e i$ wholly or

partly carried on.

2. The term Mpennanel"ll establishme nt includes especially

H

(.)

a place of mal"lagemel"lt;

a branch;

(b)

(,)

an office;

(d)

a factory;

(,) 1 workshop;

(f) B mine. an oil or gas weH , 11"1 offshore drilling site, 1 qUill"!)' or any other

place of ex traction of MtU",] resourcn;

•

61\l

W a building $lIe, I c:onstruction, assembly Or inslallation p1 o}ecl or

supervisory activities in ronn«1Mm therewith, where sudl t.ite, project or activi ties

rontinue for a period of more than 8 motllbs;

(h) the furnishing of ~rvicel. induding OOII$ulllr>ey services, by an

enterprise of a Conlracting State through employeesorolher engaged personnel in

the othe r Contracting Stale , provided tbat such activities a :m llnue for the Silme

protect or a connected project for I period or periods aggregating more than 8

mo nths.

Notwithstanding the provisions of paragraphs 1 and 2, the term ~permmenl

1. es"blishmenl~ shall be deemed nollO include

(a) the use of facilities ll(llely for the purJ>OlSe o f stOl'll&e. disp\.ay or delivery

of JOOd:s or merdlandi5e bc:ion,inglo the enterprise;

(b) the mainlcllancc of a stocl; of goods or merchandise belonging 10 the

enterprise solely for the purpose of storage, display or delivery;

the maintenance of a ~Iock of goods or men:handise belonging 10 the

(c)

en terpri se solely for the purpose o f processing by another enterpri5e;

(d) tile maintenance of a filled place of business solely fo r tile purpose of

purchasinggOO<hor mcrchanlfue . or of ooUming information, forthe enterprise;

(e) the mainte nance of a fixed place o f bU$iness solely for the p Urpc::ok of

c:IInying on. for the enterprise. any mller activity of a ~pal1ItOl)' or I Wliliary

character;

(f) the maintenance of a fixed place of b usiness solely for any oombination of

activities mentioned in sub-paragraphs (al to (el, provided that the overallllCtivity

of lhe fixed place of bll.'lincss resulting from this oombination is of a preparatory or

auxiliary eharacte r.

4. A person engaged in a Cont ractin, State in activitics whkh are

oomplementary or auxiliary 10 activities in oonnmion with either the exploratio n of tile

seabed and il$ subsoil or the exploitation of natural resources situated there is deemed

to exercise: sueh activities tbrough I pennanent establishment in that State.

S. Nmwilltanding the provisions of paragraphll and 2. where a peTJoOn - OIller

thlll a n agent of an independent uatus 10 wbom the provisions of paragrapb 6 apply -

is acting in a Contracting State on hehalf of an enlerprise of the other Con tracting S"te,

ha$ and habitually exercisn an authori ty to conclude oontracts in the name of the

enterprise , thal enterprise shall be d«med 10 ha ve a permanent establishment in the

first-mentioned Contracting State in respect of any activities which that person

undertakes fo r the enterprise. unleSii the activities o f such person are limited to tllosc

mentioned in paragraph 3 which, if exerciKd through a fixed place of business . wo uld

not mike tbis fixed place of buoiness a permanent establiShment under tbe provisions of

tbat paragraph .

An enterprisc:of a Contracting State shan n.ot be deemed to have a permanent

establishment in the nlner Contracting State me rely because it carries 011 business in

that QlM;r ContractinJ State through. broker. general commission agent or a ny othe r

agent of an independent status, provided that such persons are acting in the ordinary

course of their busi~ss. However , when the activities of such an agent are devoted

wholly or almost wholly on behalf nf that enterprise, he shall not be considered an agent

of an independent $tatus withln the meaning meaning of this paragraph if the

transactions between the agent and the enterprise were not made under arm'li length

conditions.

The faclthat a company which is a resident of a Contracting State controls or

is controlled by a company which is a resident of the other Contracting State, or which

cames on businCS$ in that other State (whether through a permanent C$tablishmem or

otherwise) , 5hall nOI of i!$elf constitute either company a permanen t establishment of

the other.

ARTICLE 6

/"am1t: frQm Immovablt PrQpt!rty

I. Income derived by a resident ofa ContJ"actingState from immovable property

silualed in the other Conlracting State may be tilled in that other Contracting State.

2. 11Ie term - immovable property" shall have the meaning which il hasunderlhe

law of the Conlracting State in which the property in question is situated. The term shall

in any cue incIi.>de property acec:ssory to immovable property , livestock and equipment

U$Cd in agriculture and forestry, rights 10 which the provisions of general law respecting

landed property apply, usufruc:t of immOVllble property and rights to variable or rued

payments IS consideration for the working of, or the right to work or 10 uplore for ,

mineral deposiu , 5OUn;:es and other natural re50tm:e$. Ships and aireaft mall not be

regarded as immovable property.

3. The provisions of paragraph 1 !JIall apply to income derived from the direct

use,ielling, or use in any other form of immovable property.

4. The provisions of paragraphs I and 3 shall abo apply to the inoomc from

immovable property of an enterprise and 10 income from immovable property used for

the perform ance of independent personal service5.

ARnCLE7

Business Pro[us

I. The profits of an enterprise of a Contracting SUIte shall be tillable only in that

Contracting State unless the enterprise carries on businCS$ in the other Contracting

State through a pennanent establishment situated therein . If the enterprise ca.rries on

business lIS aforesaid, the profits o[the enterprise may be taxed in the other Contracting

Sta te, but only so much of them as is allribntable to that permar>ent es .. blishmenl .

2. Sub}cct 10 the provisions of paragraph 3, where an enterpri5C ofa Contractin&

State carries on business in the other Contract in& State through I permanent

C$lablishment situated therein, there shall in each Contracting S .. te be allributed to

that permanent establishment the profits which it might be expected to make if it were

a diuinct and separate enterprise engaged in the same or simila r activilies under the

same or similar conditions and dealing wholly independent ly with the enterprise of

which it i, a permanent establishment or with ot her enterprises with which it deals .

6n

B

3. In delerminin, the profits of • permanent establishment, there shall be

allowed as deductions expenses wbieh are in<:tUTed for the purposes of the busilM:ss of

tile permanent establishment , mcluding executive arid gc: neral administrative Cltpc:tl5CS

so incurred , whether in the State in which the permanent C5ubJishmenl is situatro or

elsewhere.

4. Nothing in this Article shallaffeet Ine application of any law of a Coonaeting

Stale relat;o& 10 the determination of th<: profits 10 be al1ribuled to a permanent

establishment by the method of excrQ5e of d.is<.:retion or the making of an estimate in

casea where the information available 10 the competent authority of lhat Slale is

inadcqlLlltc to determine thole profits, provided that dUll law shall be applied, so far as

the information available 10 Ihe rompclenl authority permits, consistently with the

principles oflhU Article.

S. No profits shall be attributed to . permanent establishment by reawn of the

mere pIIrch.ue by thal permanent establishment of goods or merchandise for the

enterprise.

6, For the purposes of paragraphs I to 5. the profits to be attributed to the

permanent establishment 5hall be determined by the ",me method rur by yea r unless

there is good and wfficienl reason 10 the «>nlral')'.

7. Where profits inclu de items of income which I re dealt wi lh separately in other

Articles of this Agrument . then the provisions of those Articles shall not be affected by

the provisiolH of this Article.

ARTICLES

I . Profi" from the operation of ships or aircraft in international traffic sha ll be

tauble only in the Contracting State in whiCh the plaoc: of head office (Le. effective

management) of the enterprise is situated .

2. If the place o fhcad of rice (i.e. cff«live management) ofa shipping en terprise

is aboard adlip, then it shall be deemed to be situated in theContractingStatc in which

the home harbour of the ship is situated or if tbere is no such home harbour, in the

Contracting State of which the operator of the ship is a rClidenl .

3. The proYisi?f15 ofparasraph 1 s.hall also ap~ly 10 profl" from the participation

In a pool. a JOInt bUSIness or an mternalJonal operating agency.

ARTIC LE9

Assoc~d Emerprisu

1. Where

(a) an enterprise of. Contracting Stale panicipat~ dirC(:tly or indirectly in

the manageme nt, control or capital of an enterprise of the other ConlractingStlte,

"

(b) the same penom panicipate directly or indiredly in the management,

oontro] or capital of an enterprise of a Contracting Stale and an enterprise of the

other Contracting State,

and in either case conditions are made or imposed between the lwoenterprises in their

commerci al or financial relations which differ from those which WQ\Ild be m..:le

between independent enterprises. then any profits ",hich would , but for those

oooditions, have accrued 10 onc of the enterprises, but, by rca5OI1 of tbole eonditions,

have DOl so aa::rued, may be included in the profits of that enterprise and lUcd

ac:rordinalY·

2. Nothing in this Artide shall .ffect the application of any law of a Contracting

Slale relating 10 the determination of the profits 10 be attributed 10 an enterprise by the

method of exercise of discretion or the making of an estimate in cases where the

information avai lable 10 the competent autOOrity of that Slate is inadequate 10

determine those profib, provided that that Law shall be applied, so far as the

information available 10 the competent authority permits, consistently with the

priociple$of this Article.

3. Where a Contracting State includes in t~ profits of an en le rprise of that

Conlr;l(1ing State . and lues II(;OOrdingly. profits on which an enterprise of the other

Contracting State has been charged to tax in that other Contracting Stale, and the

profits to included ~re profits which would have accrued to the enterprise of the fint-

mentioned State if the conditions made between the two enterprises had bee n those

which would have been made between independent enterprises. then that m~r

Con tracting State &hall make an appropriate adjustment to the amount of the tu

charged therin 0<1 those profits. In determining such adjustment . due regard shaJ.I be

had 10 the other pr~ons of this Agreement and the competent authorities of the

Contracting States ...... 1. if necessary. conwlt cach othe r.

ARTICLE 10

Dividt1lds

I. Dividends paid by I company which is a resident of a Cont ... cting Shte to ,

resident of the mbe r Contracting State may be wed in that other Contracting State.

2. However. such dividends may ,150 be taxed in the Contractin, State of which

the company payin, the dividends is a resident and according to the laws of that

Contracting State, IxIt ;

<a) where the dividends are paid by a company which is a resident of China

to a resident of Malta wOO is the beneficial owner thereof, the Chine5/: tu so

charged shall not uceed 10 pe r cent of the gross amount of the dividends;

(b) where the dividends are paid by a company which is a resident ofMaltl

to a resident of China who is the benerlcial owner thereof, the Maltl tu on the

gross amount ofth<: dividends &hall noc CJ:ceed that chargeable on the profitlout of

which the dividends Ire paid.

This paragraph &hall not affect tile tUition of the company in respect ohhe profits

out of which the dividends arc paid.

3. The tenn Mdividends~ as used in this Anicle means inrome from shares, or

other righb , not being debt-claims, panicipating in profil5, as well 11$ income from other

rorporPte righ ts wh ich is subjcaed 10 the sa me taxalion lreallTK'nt as income from

shares by the laws of the Slate of which the oompany making lhe dKtribution is 1

resident .

4. The provisions of paragraphs I and 2 shall not apply if the bene6ci.al owner of

lhe dividends, being a resKkot of a Conll'lCting Stale, camcl on business in the other

Conlneti ng Stlte ofwhich the rompany payinlthc dividends is I resident, through I

permanent establishment situated therein , or performs in that other Contnlding State

independent penonal services from a filled base situated therein, and the bolding in

respecI of which the dividends arc paid is effectively OOIlnC(:ted with such permanent

C5U1blishment orfuted base . In such QUe the provisions of Anick 70r Anick 14, as the

cue mlY be , shalllpply.

S. Where a rompany whkh is I resident of I Contractin, State derives profits or

il\OOll'lC from thc Olher Contn,,;tin,State. that other ContnetingSlale may not impo5C

any tu 00 the dividends paid by Ihe rompan y, except inwfar 8S such dividends arc paid

to I resident of that other Con tracting Slale or inwfar as Ihe holding in respect of which

the dividends arc paid is effectively oonnected with a permanen t establishment or a

fixed base situated in Ihat olhe r Conlracting Slate, nor subjoect the company's

undililributed profi ts 10 a tax on the company 's undistribuled profits. even if the

dividends paid or the undiSlributed profitsronsist wholly or panlyofprofits or income

arising in slIch olher Contracting Slale.

ARTI CLE It

11tH"'"

1. Interest arising in a Coo lracting Slate and paid 10 a residenl of the olher

Contracting State may be taxed in tli.at OIher Contracting State.

2. However, lUCh inlerest may also be taxed in the Conlneting Slate in which it

arises and acrordi ng to the laws of Ihat Conlracting Stale, bUI if Ihe recipien t is the

beneficial owner of lhe interest, the tax $0 charged shall not exceed 10 per ce nt of Ihe

grOiSS amount of the in terest.

3. Notwithstanding Ihe provisions of paragraph 2, inle reSt arising in I

Conlracting Slale shall be exempt from IIll! in thal Stale if it is derived by the

Government of the other Contracting State, • local authority thereof or such institution

u may be agreed upon hy both Conlracting Stales, provided Ihal such instilUlion i$

wholly owned Or controlled by thal Governmenl Or local authority .

4. The tenn Minleresl " as lI~d in this Anicle muns income from de ht-cllims of

every kind , whether Or not $CCUred by mortgage ~nd .... hethe ror not carrying a righlto

participate in the debtor's profits, and in panicular. income from governmenl !leCllritics

and inoome from bonds or debentures , il\(luding premiums and prizes attaching tosuch

securities, bonds or debentures. Penally charges for late payment shall not be regarded

1$ inlerest for the purposc: of this Anicle .

S.

The provisions of paragraphs I and 2 §hall not apply iflhe beneficial owner of

the interest, being 1 resident of . Contracting Stale, carries on busineM in Ihe other

Contractinl State in which the interest arises, through a permane nt establi shment

situated therein , or performs in that other Contracting State independent perwnal

services from a fIXed base situated therein, and the debt-daim in respect of which the

interest if, paid ;, effectively connected with such pennanent establishment or fixed

base. In such case the provisions of Article 7 or Artide 14, as the case may be , shall

apply.

6. Inte rest shall be dee med to arise in a Contracting State when the payer i$ that

Government of the Contracting State, a local autllority the reof or a resident of that

Contractinl State. Where, however, the person paying th e interest, whether he if, a

resident of a Contracting State or not , hllS in a Contracting Slate. permanent

establishment or fIXed base in connection with which the indebtedne5S on which the

interest is paid was incurred, and such interest is bome by such permanent

establishment or fixed base, then such interest !>hall be dee med to arise in the

Contracting Stale in which the permanent establishment or filled base is sit uated.

7. 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 debl-Claim for wh ich il is paid, ueceds the amount

which would have been agreed upon by the payer and the beneficial owner in the

absence of such relationship, Ihe provisions of Ih is Anicle &ltallapply only to the IllSt·

mentioned amount . In such case, the excess part of the payments shall remain ta.uble

according 10 the laws of each Qintnlding State , due regard being had to the other

provisions of this Agreement.

ARTICLE 12

Royallia

I. Royalties arising in a Contracting State and paid to I resident of the other

Contracting State may be taxed in that other Contracting State.

2. However, such royalties may also be taud in the Contracting State in whic:h

they arue, and aceording to the laWiofthe ContractingState. but if the recip;ent is the

beneficial owner of the royalties, the tax so charged shall !lot exceed 10 per cent ohhe

gross amount of the royalties.

3. The lenn "royalties- u used in this A nide means payme nts of any kind

received as a coosideration for the use of , or the right to use. anycopyrighl of literary,

artistic: or scientific wurk indudi ng cinematograph filrm; I nd fillllll or tapes for radio or

television broadcasting, any patent, know·bow, trade marll: , design or model , plan,

seuel fonnula or process, or for the IlK of, or the righl lo use , induslrial, rommc:rcial or

scientifIC equipment. or for information conce rning industrial , rommercial or scientific

experience.

4. The provisions of paraJl1lp/ls I and 2 shall not apply if the benefICial owner of

the royaJcies, being a resident of a Contracting Scate, tames on business in the other

Contncting Slate in whid! the royalties arise, through a pel"l1WlCnt establishment

sitUlled Iherein , or performs in thac otber Conlracting Slate independe nl perwnal

services from I fuu:,d base lituated therein , and the righl or property in respeet of which

lhe royalties are paid is effectively connected with such pennanenl establishment or

fixed base. In such case lhe provisions of Article 7 or Article 14, as the ease may be, shall

I pply.

5. Royalties shall be deemed 10 arise in a Conlracti llJ Slale when the payer "the

Government of that Contraaing Slate, a local authority thereof or a resident of tllat

Contracting State. Where, ho_vcr, the per1Ol1 paying th e royallie., whether he

"I

resident of a Contracting State or not , has in a Contracting Stlte I pennanent

estahlishment or a fixed base in connection wit h which the liabi lity to pay the royalties

was incurred , and such royalties are home by such pe nnanent e>;lablishmcnt or filled

base, then such royalties Shall be deemed to arise in the Contracting State in which the

pemlanent establWlment or filled bilK is$ituated.

6. Where by reason of a "f'Ccial relationship bet_en the payer and tbe benflcial

owner or between both of them and some other penon, the amount of the royalties,

IlavinS reprd to the use , rigbt or information for whidlthey an paid , uoteds the

amount which would haye been.geed upon by the payer and the benefieial owner in

the absence of such relationship, the provisions of this Article ahall apply only to the

last-mentioned amount . In such CI!lC, the ucess pan of the payments , hal l remain

ta"ble IC(X)rding to the laws of each Contracting State, due regard being had to the

othe r provisions of this Agreement.

ARTICLE 13

Al~fUjlio" of Property

1. Income or gains from the alienation of immovable prope rty, as defined in

Article 6, may be taxed in the Contncting State in which such property is si tuated.

2. Income or gains tram the alienation of shares of the capital stock of a company

the property of whi(h oonsists directly or indire<.:tly principally of immovable property

situated in a Contracting State may be taxed in that ContractingState .

l . Income or gains from the alienation of movable property formin, part of the

bwiness property of a permanent establishment which an enterprise of a Contracting

State has in the othe r Contractins State or of movable property pert.ining to a fUled

base ayailable to a resident of a Contr.cting State in the other Con tracting State for the

purpose of performing independent pe!"$Onal services. including such income or gains

from the .Iienation of such a permanent establi~hment (.Ione or together with the

whole enterprise) or ofsuch fixed base, may be taxed in the ot her Con tracting State.

4. Income or gains from the alienation of ships and aircraft operated in

international traffic or moYable property pertaining to the operation of such means of

transportation shaD be taxable only in the Contracting State in which the place of head

office (i.e . effective management) of the enterprise is situated.

S. Income Or gaiTU from the 8lienation of shlrC$ other than those mentioned in

pargrapb 2 representing. participation of at 1cast 2S per cen t in a company which is a

resident of a Contracting St8fe may be taxed in that Contracting State.

6. Inc:ome or gaiTU from the alienation of any propeny other than that referred to

in pan .... pbs I 105, shaLl be taubleon ly in theContractingStlteofwhich the.lienator

isa resident.

B

ARTICLE 14

IndCJHnlUI1l PtrroNli ~rvius

1. Income derived by a resident of a Contracting Slate in respect of professional

services or other activities of an independent character shall be taxable only in that

Contraaing State exoept in o ne of the: following circumstan<.:es, when such income may

alsQ be taxed in the other Contracting State

Ca) ilbe has a fixed base regularly a~ailable to him in t1K: other Contracting

State for the purpose of performing his activities; in that case, only $0 m~h oflhe

income as is attributable 10 that fixed base may be taxed in thalother Conuaaing

State: or

(b) if his stay in the other Contracting State is for a period Or periods

amounting to or e~cecding in the aggregate 183 days in the calendar year

concerned: in Ihal case, only so much of the income as is derived from his activities

performed in that other Contracting State may be taxed in that other Contracting

State; or

(e) if the remuneration for his IiCrvkes in the other Contracting State is

derived from residents of that State and exceeds the equiYalent of U .S.S 10,000

during the calendar year, notwithstanding that his stay in that State is for & period

or periods amounting in the aggregate to less tlian 183 days durill8 that year.

2. The tenn ~ professional services~ includes especially indepclldent

scientific, literary, artistic. educational Or teaching activities as well as the independent

activities of physicians, lawyers, engineers , architects. dentists and lIC((Iuntants.

ARTICLE I S

~~ndtnl Personal Suvicu

I. Subject to the provisions of Anicles 16, 18, 19, 20 an~ 21, saIa~es, wages and

other similar remuneration derived by a resident of a Contractmg State In respect of an

employment shall be taxable only in that Contracting State unless the employment is

exercised in the other Contracting State. If the employment is so exercised, such

remuneration as is derived therefrom may be taxed in that other Contracting State.

2. NOIwitlistanding the provisions of paragraph I , remuneration derived by a

resident of a Contracting State in respect of an employme nt exercised in the other

Contracting State shall be laxable only in the first-me ntioned Slate if

(a) the recipient is present in the OIher Contracting State for a period or

periods not exceeding in the aggregate 183 days in the calendar year concerned;

Md

(b) the remuneration is paid by , or on behalf of, an employer who is nOI a

resident of the other Contracting State; and

(c) the remuneration is not borne by a pennanent establishment or a fixed

hase which the employer has in the other Contracting State .

B

".

l . Notwithstanding the provWons of paragraphs 1 and 2 of Ihis Article ,

remuneration derived in respca of an employment exercised aboard a ship or ai=alt

openled by an enterprise of. Contracting Sr..le in intenuotionaJ traffic:, may be taxed in

the Contracting State in whieh the pI_ of head office (Le. effective man. gement) of

the enterprise is situated.

ARTI CLE 16

Dir«tI)rs' Fees

Directors' fees and olher si milar pIIyntenlS derived by a resident of . Contracting

State in his capacity as a member mIne board of diredors, or othercompan.bIe body

howtYi:r described, of a company .. hich is I ruident of the other Conuactiog Stale,

may be taxed in that other Contracting Slue.

ARna..E J7

Notwithstanding the provision ~ of Anlcles 14 and 15, inoome derived by •

1. resident of a Contracting Slate as an entertainer, such as 8thealre , motion piclure,

radio or television artisle, or a musician , or as an athlete, from his personal activitie1; 11$

such exercised in the other Contracting Stale, may be taxed in th. t other Contncting

SUIte.

2. Where inc:om<:: in respect of penonal-.:tiYitics uertised by u entelUiner or

an athlete in his ClIpacily as such aa:f\IQ noIlO the entenaine r or athlete himself but to

&DOtber penon . that il'lCXXJle may, notwithuandin, the provi5ioru; of Artide$ 7, 14 Ind

I S, be tncd in !be Contl'KtillJ Slatc in whidI the activities of the cnteruilK'r or I thlete

au cltCrciJed.

3. NOIwidlStlnding the provisions of paragraphs I and 2. inoome derived by

cntcrtaineR or I thletes who au residents of I Contractina Slate from 1hc activities

ClICrc:iscd in thc other Contl1lcting State undcr a plan of cultural ClIchange between the

Govel"1l/DCnt$ of both Contracting States shall be exempt from tall in that OIher

Contracting Statc.

ARTICLE 18

I. Sub;ca to the provisions 01 paragraph 2 of Artick: 19. pensions and other

similar remune ration paid 10 I resident oil Contl'Kting State in o;:onsjderation of put

cmployment sh.al1 be taubk: oo ly in that Contl1lCling StltC.

2. NotwitMlanding the provisions ofparagmph I. pensions and other payments

made under !be socill sccurity lepslation of a Contracting Statc shin be taxable only in

thlt Conuacting Stlte.

ARTICLE 19

I. (.) Remuneration , other than pension, paKI by the Government of I

Conlrktln& State or. local authority thereof to an iDdividual in respect of llervices

~ndeted 10 the Government of Ihlt Connaaing State or .Iotal authority thereof mall

be t .... bIe only in that Conlractin.g State.

(b) Ho_vn, 5UCh rcmuBeTation shall be taxable only in the olher

Contract;n& Sute if the services are rendered in that other Contracting State .nd the

individual is. resident orlhal other Contracting Stale who

(i)

is a national of thlt other Contracting SU.lt; or

(ii) did 1101 become I resident of that other Con~ing State solely for

lhc purpose of rendering the 1lervK:e$.

2. (.) Any pensioo paid by, or out of flllKh 10 wbk.h contributions arc made by,

the Government of. Contradin, Stale or aloaoi authority thereof 10 an individllal in

n:spea of services rendered 10 the Government of that ContnlCting Stalt or I local

authority thereof shall be taxable only in Ihat Contracting State.

(b) However, such pension shall be taxable only in the other Contracting

SUle if the individual is a resident of, and a national of, that other Contracting State.

J. The provisions of Articles IS, 16, 11 . nd 18 shall apply 10 rem\lnenllion and

pensions in reSpe<:t of services rendered in connection with .ny lrusineu arried on by

the Ooyem.m:nt of a Contracting State or alocalluthorily thereof.

ARTICLE 20

1. Remuneration whiclJ I profeuor or teacher who isor was im.m:diately before

visiting a Contracting Slate I resident of Ihe other Contracting Stale and who is prellCnt

in tbe finH nentioned Slate for the purpose of carrying out advanced study or research

o r for teaching at a university, college, school or other educational instit\ltion receives

fo r such work shall not be laxed in that State. for a period of two yean from the date of

his fint arrival in the fInt mentioned Con tracting Slate, insofar as such rem\lneratiol\

derives from such advanced study , research or leaching.

2. This Anide shall not apply 10 income from research if such research is

unden.ken primarily for the private benefit of I specific person or penons.

ARTICLE 21

Studeflf;f Imd TTQincu

A student , business apprentice or trainee who is or was immediately be!'ore Y1$1tlllg

a Contracting State a resident of the other Contracting State and who is present in the

tint.me nlioned State solely for the purpose of his ed\lQ\lion or training ihall be eJlempl

from tax in that lint·mentioned State on the following paymcntsor income rea:ivedor

derived by him for the p\lrpo5C of his maintenance , education or train;",

8..,

(11) payments derived from sources ouuide Ihat Contracting State for the

purpose of his mainlenanoc, education, study. rcscan:b or training;

(b) grants, sdIot.rships or awards supplied by !he Government, or •

scientific, educational, cultural or other tu-acmpl orpniution; and

(c) any remuneration notuQCCdin,an amount equivalellt to U.S.S 3,OOOin

respect of services in the first mentioned Contracting State provided the services

are performed in c:onnc:ction with his study, re$eUCh or lnlining or are neo::uary

for the purpose. of his maintenance.

ARTIa.E 22

1. Items of income of a resident of I Contracting Stale, wherever arising, nor

dealt with in the foregoing Anicles of this Agreement shaD be IUlble only in that

Contracting State.

2. The provisionl of paragraph IlhaU not apply to income, olher than income

from immovable propen)' as defined in paragraph 2 of Anicle 6, if the recipient of such

inrome , being I milleDI of a Contracting State, carries on business in the other

ContrBcting Slate through. permanent establishment situated therein , or performs in

that other Contracting Stlte independent pel'$Oll.al services from I fU:ed base situated

therein. and the right or propeR)' in respe<:l of which the income is paid il effectively

oonneded with such pennanent establishment or filled base. In 5UdI cue the provisions

of Anicle 7 or Anide 14, as the case mlybe , shall apply .

ARTI CLE 2)

Elim;fUJtUlI1 of Doubk Taxa/;Ot!

In Chin. , double tuition sh.1I be eliminated as follow:!!

I.

(.) Where. resident of Chin. derive$ income from M. 'ta, the amount of tu

Ofl Ihal income payable in Malta in acror~ 1I'ith the provisions of this

Agreementlhall be credited .gaill$llhe Chinese tax imflC*'d on that resident. The

amount of the credit , however,lball not exceed the amount of the ChineK lax on

the income computed in aooordance with the taxation iaws and regulations of

Chin •.

(b) Where the income derived from Malta is a dividend paid by a company

whi<.:h is. resident of Maitllo, o;:ompany which is I resident of China and which

ownanot less than lOpercent ofthesharea oftheoompanypayinlltbe dividend, the

credit shall take into ac>XIIInt tbe tax paid to M"ta by tbe company paying the

dividend in respecI of iu income.

In Malta , double tautiOllIbaU be eliminated as follows

2,

Subject to the provisions of the law of Malta regarding tbe .llowance of I credit

.gainst Malla tax in respect of foreign tax, where, in aa:ordance with the provisions of

this Aln:ement , then: is irl(:luded in • Malta assessment inoome from sources within

China, the Chinese tu Oflluch income shall be allowed al. credit against the relative

Malta lax pay.ble thereon .

3. For the pUrpc:!$e1 of allowance as I credit, the ILt payable in Chin. or M.lta, U

the OOIIICJI requires, shall be deemed 10 include Ihe tu which is otherwise payable in I

Contntctinl State but has been Rduced or waived by that Contracting Slate \u\der its

legal provWons foe tu ineentivet. In the casc of dividends, interesl and royalties, any

such tu .. hid! has been uempled 01' reduced shaJl be deemed 10 bave been paid.l 10

per gent of the gross amount of IIICh diridends, mItral and royalties.

ARllCLE 24

NOII-DiKrimintll;on

I . Nationals of. ConIIllCt;ngSlate shall not be tl.lb}ected in the other O:mtractilli

Stale 10 any tuition or .ny requirement (:OIlnec1~ therewith , wh,K:h is ~hcr or more

burdcntOme than the laution and conncx:ted reqUirements 10 wllich tulllonm of that

other Contracting Slate in the u me ci~IIUf'~ are or ~.ay be 5U~cd. TIle

provisi()T15 of this paragraph shall, OOIWltmtandml the proVllllOlU of ArtICle 1, .150

apply to persons who arc not rcsidentsof onc or both of the Contract;n, Stales.

2. 1be tnation on • pennanenl cSl.blilhmcnt which an enterprise of •

Contract;n& SUle has in the other CooU'aClingSlllc WlJ DOt be IeIlS favourably levied

in that other Contrac:ting State than the tu.tion levied on enterprises of that other

Contracting State canyinl on the same activities.

3. Except where the provisions of paral raph I of Article 9. par'gnlph 7 of Article

11, o r paragraph 60f Article 12 apply, imerest, royalties and otllerdisoorsements paid

by .n enterpriseo!. Contraeting State to . resident of the other Contracting State shall,

for the purpose of determining !be talUIble profits of such enterprise , be deductible

IInder the same oxmditiom as if they h:ild bec:n paid 10 . resident of the first-mentioned

State.

.

4. Enterprises of I Contl'llCling Stale. the capital of which is wholly or panly

owned or controlled, directly or indirectly, by one or more residents of !be other

Contracting State, shall not be subjected in the fint-mentioned Stlte to any tu.tion or

any requireme nt connected therewi th which is other Or more burden!lOJlle than the

tuition and conll«led requirement to whiclJ other similar enterprises of the first-

mentioned State are or may be subjected.

5. Nothing in this Article shall be construed as obliging I Contracting State to

&rInt to individuals who are residents of the other Contracting State any perlOnll

allowances, reliefs and reductions for tu purposes on account of civil status, family

responsibilities or any other persona. circumstances which it granU to iuown residenU.

6. The pfOvisions of thi!. Article shall , notwithstanding the provisions of Article

2, apply 10 taxes of every kind and description .

ARTICLElS

MUlWli AgTfc1m11l Prrx:tdun

I. Where I person considers that the actions of one or bot~ of the ~t~acting

States result or will result for him in tUition oot in IKQQrdance With the PTOVt$lOOll of

B 1M2

this Agreement, be may, irrespective of the remedies prOYidcd by the domestic Lawof

thole Slates, pfC5Cnl his ~ to the competent authority of the Contracting Slate of

which he is a resident or. if his case comes under paragraph 1 of Artide 24, to that orlhe

Contracting State of which he is a national . The case mUSI be presented within three

ycan (rom the first notifICation of the action resulting in taIllion not in accordance with

the provisions of the Agreement.

2 . The competent authority sha1I mdcavour, if the objet::tion appun 10 it 10 be

jUSlifJed and if il is not ilKlf able 10 arrive a' • satisfactory lOIution, 10 resolve the ease

by mutual agreement with the competent authority of the other Contracting Stale, with

I. view to the avoid.nee of talCalion which is not in acoordaru;c with this Agre<:menl . Any

agn:c ment reached lhall be implemented not withstanding any time limits in the

domestic law of the Contracting Stales.

) . The competent authorities of the ContTal.:ting Stales 5hall endeavour to

resolve by mUlualayeement any difficulties or doubts arising as 10 the interpretation or

appIieIlion of the Ageement . 'They may abo eoR$Ul t together for the elimination of

doubLe I21ation in eases not provided for in this Agreement .

4. The competent authorities of the Contracting Slates ma y communicate with

each o ther dir«\ly for the purpo$C of reaching an agreement in the sense of paragnplu

2 and 3. When it seem advisable for reaching agreement, representatives of the

competent authorities of the Contracting States may meet together for In oral exchange

of opinions.

ARTI CLE 26

&change of InfOTltUUion

I. 'The competent authori ties of the COflll'kling Sutes shall exchange sudI

infonnation as is neoc$$.Iry for canying out the provisions of this Agreement or of the

domestic: JaWl of the Contractm, Slates concernin. tues covered by the Agreement,

iTllOfar as the taxation thereunder is nol COrtlnry to this Agreement. in pankular for

the prevention of evasion of luch tues. The exchange of information i, not restricted by

Anide I . Any information rcaived by a Contracting State shall be treated as secret in

the pme manner as information obtained under the domestic laws of that Contracting

State and shall be disclosed only to persons o r authorities (including couns and

administrative bodies) involved in the lS5CSSment ne colle<:tion of, the enfon:ement or

pr( m'lItion in respea of, o r the determination of appeals in relation to. the lUes

covered by the Agreement . Such persons Of authorities shall use the infonnltion only

for IUCh putp05C$. 'They may diJdosc the infonnation in ""bli<:coun proceedings or in

jlldicial decisions.

2. In no case shall the provisions of paragraph I be construed 50 as to impose on

a ContraCling State the obligation

(a) 10 carT} out administrative meuures al variance with the laWl and

administrative pnctic:e of that or of the other Contrac1i ng Stale;

(b) to wpply inlonnalion which is not obtainable lInder the laws or in the

normal COUI"$C of me administration of that or of the othe r Contracting State;

(c) 10 supply information which WQuld disclose any trade, business,

industrial, commercial or professional secret or trade process, or information, the

disclosurl: of which would be contrary to public policy (ordn public).

ARTICLE 27

Diplomlltic Ag~llIs and OmsuJiu Offlurs

Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or

oonsular officers under the general rules of international law or under the provisions of

3pCcial agreements.

ARTICLE 28

Entry il1/O Fora

This Agreement shall enler inlo force on the thirtieth day after the date on which

diplomatic notes indicating the completion of intemal legaJ procedures necessary in

each Contracting Slate for the entry into force of lhis Agreement have ~n exchanged.

This Agreement shall have effect in respect of income derived during any year

beginning on or after the firsl day of January of the calendar year neXI following Ihal in

which Ihis Agreement enlers into force.

ARTICLE 29

Termination

This Agreement shall remain in force until terminated by a ContraCling State.

Either of tiu: Contracling Stales may, on or before the thirtieth day of June in any

calendar yc:ar beginning after tile expiration of a period of five yc:ars from the dale of its

enlry into force, give written notice of termination 10 the olher Contracti ng State

through the diplomatic channels. In such event this Agreement shall cease to have

effea in respea of income derived during any yc:ar beginning on or after the first day of

J~uary of the calendar year next following that in which the notice of lermination is

given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by

their respective Governments, have signed this Agreement.

DONE at Beijingon the serond day of February, 1993 in duplicate in the English

and Chinese languages, both texts being equally authentic.

FORTHEGOVERNMENTOFTHE

FORTHEGOVERNMENTOF

PEOPLE'SREPUBLlCOFCHINA

MALTA

L1UZHONGLI

JOHNDALLI

MINISTER OF FINANCE

MINISTER OF FINANCE

B

...

PROTOCOL

AI the moment of signature of the ~menl between the Government of the

PeopIe'l Republic of China and the Government of Malta for the Avoidanceof Doubk

Taxalion and the Pre~ntion of Fiscal Evasion wi th respect 10 Taxes on Ino:;Kne, both

parties have agreed upon the following provisions which will form an inlegl'1ll pat! oftbe

Agreement

1. With reference to Article 7, c.ct. ContractingSlatc shall tu the profit from the

business of insurance in ac:oordanc:e wilh the provisions of il5 own law.

2. With reference 10 Article 8, this AJreemcnt mall no! ,ffect the application of

the pn)Yisioo$ of Artide 18 in rupea of taxation of the Agreement on Maritime

Transport signed in Bc:ijilll between the Government ofMalh and the Governmentaf

the People's RepublicofOina 00 September 10, 1991.

IN WJlNESS whereof the undersigned, bcintt d uly a uthorised Iben:\O by their

respective Governments . hive signed this Pml:oooL

DONE at Bcijing on the serond day of February, 1993 in duplicate in the English

and Chinese languages, both lex" being equally authentic.

FORTHEGOVERNMENTOF

FOR TIl EGOVERNMENTOFTIlE

MALTA

PEOPLE'S REPUB LIC OF CH INA

JOHHDALLI

LlUZHONGLI

MINISTEROFRNANCE

MINISTER OF FINANCE

I""" ...

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