People’s Libyan Arab Jamahiriya) Order, 2010

INCOME TAX ACT

(CAP. 123)

Double Taxation Relief (Taxes on Income) (The Great Socialist

People’s Libyan Arab Jamahiriya) Order, 2010

IN exercise of the powers conferred by article 76 of the Income

Tax Act, the Minister of Finance, the Economy and Investment has

made the following order:-

This title of this order is the Double Taxation Relief (Taxes Citation.

on Income) (The Great Socialist People’s Libyan Arab Jamahiriya)

CONVENTION BETWEEN

MALTA

AND

THE GREAT SOCIALIST PEOPLE'S LIBYAN ARAB JAMAHIRIYA

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME

DESIRING to promote and develop the economic relations and co-operation

between the two countries have decided to conclude a Convention for the

avoidance of double taxation and the prevention of fiscal evasion with respect to

taxes on income, and have agreed as follows

Article 1

Persons Covered

This Convention shall apply to persons who are residents of one or both of

the Contracting States.

Article 2

Taxes Covered

1. This Convention shall apply to taxes on income imposed on behalf of a

Contracting State or of its political subdivisions or local authorities, irrespective of

the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total

income, or on elements of income, including taxes on gains from the alienation of

movable or immovable property.

It is hereby declared

Arrangements to

have effect.

(a)

that the arrangements specified in the Convention

set out in the Schedule to this Order have been made with The

Great Socialist People’s Libyan Arab Jamahiriya with a view to

affording relief from double taxation in relation to the following

taxes imposed by the laws of The Great Socialist People’s

Libyan Arab Jamahiriya

- the income tax, law No (11) of 1372 P.D (2004)

regarding income tax and the defence tax, law No (44) of

(b)

that it is expedient that those arrangements should

have effect;

(c)

that the Convention has entered into force on the 20

May, 2010.

The existing taxes to which the Convention shall apply are in particular

(a)

in the Great Socialist People’s Libyan Arab Jamahiriya

the income tax, law No (11) of 1372 P.D (2004) regarding income tax

and the defence tax, law No (44) of 1970; (hereinafter referred to as "Libyan

tax"); and

(b)

in Malta, the income tax;

(hereinafter referred to as the "Maltese tax").

The Convention shall apply also to any identical or substantially similar

taxes which are imposed after the date of signature of the Convention in addition

to, or in place of, the existing taxes. The competent authorities of the Contracting

States shall notify each other of significant changes made to their tax laws.

Article 3

General Definitions

1. For the purposes of this Convention, unless the context otherwise

requires

(a)

The terms "a Contracting State" and "the other Contracting

State" mean Libya or Malta as the context requires;

(b)

The term "Libya", means the Great Socialist People’s Libyan

Arab Jamahiriya; used in a geographical sense, it means the territory of the

Great Socialist People’s Libyan Arab Jamahiriya, including the territorial sea

and any other area in the sea and in the air within which the Great Socialist

People’s Libyan Arab Jamahiriya, in accordance with international law,

exercises sovereign rights or its jurisdiction;

(c)

The term "Malta" means the Republic of Malta and when used

in a geographical sense means the island of Malta, the island of Gozo and the

other islands of the Maltese archipelago including the territorial waters

thereof as well as any area of the seabed, its subsoil and the super-adjacent

water column adjacent to the territorial waters, where the Republic of Malta

exercises sovereign rights, jurisdiction or control in accordance with

international law and its national law including its legislation relating to the

exploration of the continental shelf and exploitation of its natural resources

(d)

The term "person" includes an individual, a company and any

other body of persons;

(e)

The term "company" means any body corporate or any entity

that is treated as a body corporate for tax purposes;

(f)

The terms "enterprise of a Contracting State" and "enterprise of

the other Contracting State" mean respectively an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident of

the other Contracting State;

(g)

The term "international traffic" means any transport by a ship or

aircraft operated by an enterprise that has its place of effective management

in a Contracting State, except when the ship or aircraft is operated solely

between places in the other Contracting State;

(h)

The term "competent authority" means

(i)

In Libya, the Secretary of the General People’s Committee

for Finance or the General Director of the Taxation Authority or their

authorised representatives;

(ii) In Malta, the Minister responsible for finance or his

authorised representative.

(i)

The term "national" means

(i)

Any individual possessing the nationality of a Contracting

State;

(ii) Any legal person, partnership or association deriving its

status as such from the laws in force in a Contracting State.

2. As regards the application of the Convention at any time by a

Contracting State, any term not defined therein shall, unless the context otherwise

requires, have the meaning that it has at that time under the law of that State for the

purposes of the taxes to which the Convention applies, any meaning under the

applicable tax laws of that State prevailing over a meaning given to the term under

other laws of that State.

Article 4

Tax Domicile

Without prejudice to any of the other provisions of this Convention, the tax

domicile for income is the Contracting State in which such income arises.

Article 5

Resident

1. For the purposes of this Convention, the term "resident of a Contracting

State" means any person who, under the laws of that State, is liable to tax therein

by reason of his domicile, residence, place of incorporation, place of management

or any other criterion of a similar nature, and also includes that State and any

political subdivision or local authority thereof. This term, however, does not

include any person who is liable to tax in that State in respect only of income from

sources in that State or capital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is a

resident of both Contracting States, then his status shall be determined as follows

(a)

He shall be deemed to be a resident only of the State in which he

has a permanent home available to him; if he has a permanent home available

to him in both States, he shall be deemed to be a resident only of the State

with which his personal and economic relations are closer (centre of vital

interests);

(b)

If the State in which he has his centre of vital interests cannot be

determined, or if he has not a permanent home available to him in either

State, he shall be deemed to be a resident only of the State in which he has an

habitual abode;

(c)

If he has an habitual abode in both States or in neither of them,

he shall be deemed to be a resident only of the State of which he is a national;

(d)

If he is a national of both States or of neither of them, the

competent authorities of the Contracting States shall settle the question by

mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an

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

resident only of the State in which its place of effective management is situated.

Article 6

Permanent Establishment

1. For the purposes of this Convention, the term "permanent

establishment" means a fixed place of business through which the business of an

enterprise is wholly or partly carried on.

2. The term "permanent establishment" includes especially

(a)

A place of management;

(b)

A branch;

(c)

An office;

(d)

A factory;

(e)

A workshop;

(f)

A mine, an oil or gas well, a quarry or any other place of

extraction of natural resources;

(g)

A building site, a construction, assembly or installation project

or supervisory activities in connection therewith, but only if such site, project

or activities last more than three months.

3. Notwithstanding the preceding provisions of this article, the term

"permanent establishment" shall be deemed not to include

(a)

The use of facilities solely for the purpose of storage or display

of goods or merchandise belonging to the enterprise;

(b)

The maintenance of a stock of goods or merchandise belonging

to the enterprise solely for the purpose of storage or display;

(c)

The maintenance of a stock of goods or merchandise belonging

to the enterprise solely for the purpose of processing by another enterprise;

(d)

The maintenance of a fixed place of business solely for the

purpose of purchasing goods or merchandise or of collecting information, for

the enterprise;

(e)

The maintenance of a fixed place of business solely for the

purpose of carrying on, for the enterprise, any other activity of a preparatory

or auxiliary character;

(f)

The maintenance of a fixed place of business solely for any

combination of activities mentioned in subparagraphs (a) to (e), provided that

the overall activity of the fixed place of business resulting from this

combination is of a preparatory or auxiliary character.

4. Notwithstanding the provisions of paragraphs 1 and 2, where a person -

other than an agent of an independent status to whom paragraph 6 applies - is

acting in a Contracting State on behalf of an enterprise of the other Contracting

State, that enterprise shall be deemed to have a permanent establishment in the

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

undertakes for the enterprise, if such a person

(a)

Has and habitually exercises in that State an authority to

conclude contracts in the name of the enterprise, unless the activities of such

person are limited to those mentioned in paragraph 4 which, if exercised

through a fixed place of business, would not make this fixed place of

business a permanent establishment under the provisions of that paragraph;

or

(b)

Has no such authority, but habitually maintains in the first-

mentioned State a stock of goods or merchandise from which he regularly

delivers goods or merchandise on behalf of the enterprise.

An enterprise of a Contracting State shall not be deemed to have a

permanent establishment in the other Contracting State merely because it carries

on business in that other State through a broker, general commission agent or any

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

ordinary course of their business.

The fact that 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 carries on business in that other State (whether through a

permanent establishment or otherwise), shall not of itself constitute either

company a permanent establishment of the other.

Article 7

Income from Immovable Property

1. Income derived by a resident of a Contracting State from immovable

property (including income from agriculture or forestry) situated in the other

Contracting State may be taxed in that other State.

2. The term "immovable property" shall have the meaning which it has

under the law of the Contracting State in which the property in question is situated.

The term shall in any case include property accessory to immovable property,

livestock and equipment used in agriculture and forestry, rights to which the

provisions of general law respecting landed property apply, usufruct of immovable

property and rights to variable or fixed payments as consideration for the working

of, or the right to work, mineral deposits, sources and other natural resources;

ships, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall also apply to income derived from

the direct use, letting or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income

from immovable property of an enterprise and to income from immovable property

used for the performance of independent personal services.

Article 8

Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only

in that State unless the enterprise carries on business in the other Contracting State

through a permanent establishment situated therein. If the enterprise carries on

business as aforesaid, the profits of the enterprise may be taxed in the other State

but only so much of them as is attributable to

(a)

that permanent establishment;

(b)

sales in that other State of goods or merchandise of the same or

similar kind as those sold through that permanent establishment; or

(c)

other business activities carried on in that other State of the

same or similar kind as those effected through that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a

Contracting State carries on business in the other Contracting State through a

permanent establishment situated therein, there shall in each Contracting State be

attributed to that permanent establishment the profits which it might be expected to

make if it were a distinct and separate enterprise engaged in the same or similar

activities under the same or similar conditions and dealing wholly independently

with the enterprise of which it is a permanent establishment.

3. In the determination of the profits of a permanent establishment, there

shall be allowed as deductions expenses which are incurred for the purposes of the

business of the permanent establishment including executive and general

administrative expenses so incurred, whether in the State in which the permanent

establishment is situated or elsewhere provided that these deductions shall not

exceed the deduction that would be allowed according to domestic law of the

Contracting State where a permanent establishment is situated.

4. In so far as it has been customary in a Contracting State to determine the

profits to be attributed to a permanent establishment on the basis of an

apportionment of the total profits of the enterprise to its various parts, nothing in

paragraph 2 shall preclude that Contracting State from determining the profits to

be taxed by such an apportionment as may be customary; the method of

apportionment adopted shall, however, be such that the result shall be in

accordance with the principles contained in this article.

5. If the information available to the competent authority of a Contracting

State is inadequate to determine the profits to be attributed to the permanent

establishment, nothing in this Article shall affect the application of any law or

regulations of that Contracting State relating to the determination of the tax

liability of that permanent establishment by making of an estimate of the profits to

be taxed of that permanent establishment by the competent authority of that

Contracting State, provided that such law or regulations shall be applied, taking

into account the information available to the competent authority, consistently with

the principles of this Article.

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

to the permanent establishment shall be determined by the same method year by

year unless there is good and sufficient reason to the contrary.

Where profits include items of income which are dealt with separately

in other articles of this Convention, then the provisions of those articles shall not

be affected by the provisions of this article.

Article 9

Shipping and Air Transport

1. Profits from the operation of ships or aircraft in international traffic

shall be taxable only in the Contracting State in which the place of effective

management of the enterprise is situated.

2. For the purpose of this Article, profits from the operation in international

traffic of ships or aircraft shall include in particular profits from

(a)

Leasing of ships or aircraft on charter fully equipped, manned

and supplied, used in international transport;

(b)

Occasional rental of ships or aircraft on a bare boat basis; and

(c)

The use or rental of containers (including trailers and ancillary

equipment used for transporting of containers),

Where such rental or use is supplementary or incidental to the operation of

ships or aircraft in international transport.

3. If the place of effective management of a shipping enterprise or

enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting

State in which the home harbour of the ship is situated, or, if there is no such home

harbour, in the Contracting State of which the operator of the ship is a resident.

4. The provisions of paragraph 1 shall also apply to profits from the

participation in a pool, a joint business or an international operating agency.

Article 10

Associated Enterprises

1. Where

(a)

an enterprise of a Contracting State participates directly or

indirectly in the management, control or capital of an enterprise of the other

Contracting State; or

(b)

the same persons participate directly or indirectly in the

management, control or capital of an enterprise of a Contracting State and an

enterprise of the other Contracting State, and in either case conditions are

made or imposed between the two enterprises in their commercial or

financial relations which differ from those which would be made between

independent enterprises, then any profits which would, but for those

conditions, have accrued to one of the enterprises, but, by reason of those

conditions, have not so accrued, may be included in the profits of that

enterprise and taxed accordingly. It is to be understood that the procedures

available in the respective laws of each Contracting State in this regard shall be

applied.

2. Where a Contracting State includes in the profits of an enterprise of that

State - and taxes accordingly - profits on which an enterprise of the other

Contracting State has been charged to tax in that other State and the profits so

included are profits which would have accrued to the enterprise of the first-

mentioned State if the conditions made between the two enterprises had been those

which would have been made between independent enterprises, then that other

State shall make an appropriate adjustment to the amount of the tax charged

therein on those profits. In determining such adjustment, due regard shall be had to

the other provisions of the Convention and the competent authorities of the

Contracting States shall, if necessary, consult each other.

3. The provisions of paragraph 2 shall not apply where judicial,

administrative or other legal proceedings have resulted in a final ruling that by

actions giving rise to an adjustment of profits under paragraph 1, one of the

enterprises concerned is liable to penalty with respect to fraud, gross negligence or

wilful default.

Article 11

Dividends

1. Dividends paid by a company which is a resident of a Contracting State

to a resident of the other Contracting State may be taxed in that other Contracting

State.

2. However, such dividends may also be taxed in the Contracting State of

which the company paying the dividends is a resident and according to the laws of

that Contracting State, but

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

Libya to a resident of Malta who is the beneficial owner thereof the tax so

charged shall not exceed

(i) if the beneficial owner of the dividends is a company

(other than a partnership) which holds directly at least 10 per cent of the

capital of the company paying the dividends, 5 per cent;

(ii)

in all other cases, 15 %.

(b)

where the dividends are paid by a company which is a resident

of Malta to a resident of Libya who is the beneficial owner thereof, the Malta

tax on the gross amount of the dividends shall not exceed that chargeable on

the profits out of which the dividends are paid.

The competent authorities of the Contracting States shall by mutual

agreement settle the mode of application of these limitations. This paragraph

shall not affect the taxation of the company in respect of the profits out of

which the dividends are paid.

3. The term "dividends" as used in this Article means income from shares,

or other rights, not being debt-claims, participating in profits, as well as income

from other corporate rights which is subjected to the same taxation treatment as

income from shares by the laws of the State of which the company making the

distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial

owner of the dividends, being a resident of a Contracting State, carries on business

in the other Contracting State of which the company paying the dividends is a

resident, through a permanent establishment situated therein, or performs in that

other Contracting State independent personal services from a fixed base situated

therein, and the holding in respect of which the dividends are paid is effectively

connected with such permanent establishment or fixed base. In such case the

provisions of Article 8 or Article 15, as the case may be, shall apply.

5. Where a company which is a resident of a Contracting State derives

profits or income from the other Contracting State, that other Contracting State

may not impose any tax on the dividends paid by the company, except insofar as

such dividends are paid to a resident of that other Contracting State or insofar as

the holding in respect of which the dividends are paid is effectively connected with

a permanent establishment or a fixed base situated in that other Contracting State,

nor subject the company’s undistributed profits to a tax on the company’s

undistributed profits, even if the dividends paid or the undistributed profits consist

wholly or partly of profits or income arising in such other Contracting State.

Article 12

Interest

1. Interest arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in

which it arises and according to the laws of that State, but if the beneficial owner

of the interest is a resident of the other Contracting State, the tax so charged shall

not exceed five per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest shall be

exempted from tax in the Contracting State in which it arises if the interest is paid

to and beneficially owned by the other Contracting State or a local authority

thereof, the Central Bank or any financial institution wholly owned by that other

Contracting State, political subdivision or local authority.

4. The term "interest" as used in this article means income from debt-

claims of every kind, whether or not secured by mortgage and whether or not

carrying a right to participate in the debtor's profits, and in particular, income from

government securities and income from bonds or debentures, including premiums

and prizes attaching to such securities, bonds or debentures. Penalty charges for

late payment shall not be regarded as interest for the purpose of this article.

5. The provisions of paragraph 1 shall not apply if the beneficial owner of

the interest, being a resident of a Contracting State, carries on business in the other

Contracting State in which the interest arises, through a permanent establishment

situated therein, or performs in that other State independent personal services from

a fixed base situated therein, and the debt-claim in respect of which the interest is

paid is effectively connected with such permanent establishment or fixed base. In

such cases the provisions of article 8 or article 15, as the case may be, shall apply.

6. 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, 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 Convention.

7. Interest shall be deemed to arise in a Contracting State when the payer is

a resident of that State. Where, however, the person paying the interest, whether

he is a resident of a Contracting State or not, has in a Contracting State a

permanent establishment or a fixed base in connection with which the

indebtedness on which the interest is paid was incurred, and such interest is borne

by such permanent establishment or fixed base, then such interest shall be deemed

to arise in the State in which the permanent establishment or fixed base is situated.

Article 13

Royalties

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

other Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in

which they arise and according to the laws of that State, but if the beneficial owner

of the royalties is a resident of the other Contracting State, the tax so charged shall

not exceed 5 per cent of the gross amount of the royalties. The competent

authorities of the Contracting States shall by mutual agreement settle the mode of

application of this limitation.

3. The term "royalties" as used in this article means payments of any kind

received as a consideration for the use of, or the right to use, any copyright of

literary, artistic or scientific work including cinematograph films, or films or tapes

used for radio or television broadcasting, any patent, trade mark, design or model,

plan, secret formula or process, or for the use of, or the right to use, industrial,

commercial or scientific equipment or for information concerning industrial,

commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial

owner of the royalties, being a resident of a Contracting State, carries on business

in the other Contracting State in which the royalties arise, through a permanent

establishment situated therein, or performs in that other State independent personal

services from a fixed base situated therein, and the right or property in respect of

which the royalties are paid is effectively connected with such permanent

establishment or fixed base. In such case the provisions of Article 8 or Article 15,

as the case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer

is a resident of that State. Where, however, the person paying the royalties,

whether he is a resident of a Contracting State or not, has in a Contracting State a

permanent establishment or a fixed base in connection with which the liability to

pay the royalties was incurred, and such royalties are borne by such permanent

establishment or fixed base, then such royalties shall be deemed to arise in the

State in which the permanent establishment or fixed base is situated.

6. 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 royalties, having regard to the use, right or information for which they are 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 Convention.

Article 14

Capital Gains

1. Gains derived by a resident of a Contracting State from the alienation of

immovable property referred to in article 7 and situated in the other Contracting

State may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the

business property of a permanent establishment which an enterprise of a

Contracting State has in the other Contracting State or of movable property

pertaining to a fixed base available to a resident of a Contracting State in the other

Contracting State for the purpose of performing independent personal services,

including such gains from the alienation of such a permanent establishment (alone

or with the whole enterprise) or of such fixed base, may be taxed in that other

State.

3. Gains from the alienation of ships or aircraft operated in international

traffic or movable property pertaining to the operation of such ships or aircraft

shall be taxable only in the Contracting State in which the place of effective

management of the enterprise is situated.

4. Gains from the alienation of shares of the capital stock of a company, or

of an interest in a partnership, trust or estate, the property of which consists

directly or indirectly principally of immovable property situated in a Contracting

State may be taxed in that State. In particular

(a)

Nothing contained in this paragraph shall apply to a company,

partnership, trust or estate, other than a company, partnership, trust or estate

engaged in the business of management of immovable properties, the

property of which consists directly or indirectly principally of immovable

property used by such company, partnership, trust or estate in its business

activities.

(b)

For the purposes of this paragraph, "principally" in relation to

ownership of immovable property means the value of such immovable

property exceeding fifty percent of the aggregate value of all assets owned by

the company, partnership, trust or estate.

5. Gains from the alienation of shares other than those mentioned in

paragraph 4 which form part of a substantial participation in a company which is a

resident of a Contracting State may be taxed in that State. Shares shall be deemed

to form part of a substantial participation in a company when the transferor, alone

or together with related persons, holds directly or indirectly shares in that company

which entitle him in the aggregate to 25 per cent or more of the profits of that

company.

6. Gains from the alienation of any property other than that referred to in

paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which

the alienator is a resident.

Article 15

Independent Personal Services

1. Income derived by a resident of a Contracting State in respect of

professional services or other activities of an independent character shall be

taxable only in that State except in the following circumstances, when such income

may also be taxed in the other Contracting State

(a)

If he has a fixed base regularly available to him in the other

Contracting State for the purpose of performing his activities; in that case,

only so much of the income as is attributable to that fixed base may be taxed

in that other Contracting State; or

(b)

If his stay in the other Contracting State is for a period or

periods amounting to or exceeding in the aggregate 183 days in any twelve-

month period commencing or ending in the fiscal year concerned; in that

case, only so much of the income as is derived from his activities performed

in that other State may be taxed in that other State.

2. The term "professional services" includes especially independent

scientific, literary, artistic, educational or teaching activities as well as the

independent activities of physicians, lawyers, engineers, architects, dentists and

accountants.

Article 16

Dependent Personal Services

1. Subject to the provisions of articles 17, 19 and 20, salaries, wages and

other similar remuneration derived by a resident of a Contracting State in respect

of an employment shall be taxable only in that State unless the employment is

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

remuneration as is derived there from may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by

a resident of a Contracting State in respect of an employment exercised in the other

Contracting State shall be taxable only in the first-mentioned State if

(a)

The recipient is present in the other State for a period or periods

not exceeding in the aggregate 183 days in any twelve-month period

commencing or ending in the fiscal year concerned; and

(b)

The remuneration is paid by, or on behalf of, an employer who is

not a resident of the other State; and

(c)

The remuneration is not borne by a permanent establishment or

a fixed base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this article, remuneration

derived in respect of an employment exercised aboard a ship or aircraft operated in

international traffic, or aboard a boat engaged in inland waterways transport, may

be taxed in the Contracting State in which the place of effective management of the

enterprise is situated.

Article 17

Directors' Fees

Directors' fees and other similar payments derived by a resident of a

Contracting State in his capacity as a member of the Board of Directors of a

company which is a resident of the other Contracting State may be taxed in that

other State.

Article 18

Artistes and Sportspersons

1. Notwithstanding the provisions of articles 15 and 16, income derived by

a resident of a Contracting State as an entertainer, such as a theatre, motion picture,

radio or television artiste, or a musician, or as a sportsperson, from his personal

activities as such exercised in the other Contracting State, may be taxed in that

other State.

2. Where income in respect of personal activities exercised by an

entertainer or a sportsperson in his capacity as such accrues not to the entertainer

or sportsperson himself but to another person, that income may, notwithstanding

the provisions of articles 8, 15 and 16, be taxed in the Contracting State in which

the activities of the entertainer or sportsperson are exercised.

Article 19

Pensions and Social Security Payments

1. Subject to the provisions of paragraph 2 of article 20, pensions and

other similar remuneration paid to a resident of a Contracting State in

consideration of past employment shall be taxable only in that State.

2. Notwithstanding the provisions of paragraph 1, pensions paid and other

payments made under a public scheme which is part of the social security system

of a Contracting State or a political subdivision or a local authority thereof shall be

taxable only in that State.

Article 20

Government Service

1. (a)

Salaries, wages and other similar remuneration, other than a

pension, paid by a Contracting State or a political subdivision or a local authority

thereof to an individual in respect of services rendered to that State or subdivision

or authority shall be taxable only in that State.

(b)

However, such salaries, wages and other similar remuneration

shall be taxable only in the other Contracting State if the services are

rendered in that other State and the individual is a resident of that State who

(i)

Is a national of that State; or

(ii) Did not become a resident of that State solely for the

purpose of rendering the services.

2. (a)

Any pension paid by, or out of funds created by, a Contracting

State or a political subdivision or a local authority thereof to an individual in

respect of services rendered to that State or subdivision or authority shall be

taxable only in that State.

(b)

However, such pension shall be taxable only in the other

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

other State.

3. The provisions of articles 16,17, 18 and 19 shall apply to salaries, wages

and other similar remuneration, and to pensions, in respect of services rendered in

connection with a business carried on by a Contracting State or a political

subdivision or a local authority thereof.

Article 21

Students

A student or trainee who is or was immediately before visiting a Contracting

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

mentioned State solely for the purpose of his education or training shall not be

subject to tax in the first-mentioned State on

(a)

payments he receives for the purpose of his maintenance,

education or training, provided that such payments arise from sources outside

that State; and

(b)

income he earns from an employment within that State,

provided such employment is relevant to his education or training and the

income there from is necessary for the purpose of his maintenance.

Article 22

Professors, Teachers and Researchers

1. Any remuneration paid to professors, teachers or researchers who are

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

for the purpose of teaching or carrying on scientific research at a university or

other officially recognised higher educational institution, shall be exempt from tax

in that other State for a period of two years from the date of arrival of these persons

in that other State.

2. The provisions of paragraph 1 of this article shall not apply to

remuneration from research if such research is undertaken not in the public interest

but primarily for the private benefit of a specific person or persons.

Article 23

Other Income

1. Items of income of a resident of a Contracting State, wherever arising,

not dealt with in the foregoing articles of this Convention shall be taxable only in

that State.

2. The provisions of paragraph 1 shall not apply to income, other than

income from immovable property as defined in paragraph 2 of article 7, if the

recipient of such income, being a resident of a Contracting State, carries on

business in the other Contracting State through a permanent establishment situated

therein, or performs in that other State independent personal services from a fixed

base situated therein, and the right or property in respect of which the income is

paid is effectively connected with such permanent establishment or fixed base. In

such case the provisions of article 8or article 15, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income

of a resident of a Contracting State not dealt with in the foregoing articles of this

Convention and arising in the other Contracting State may also be taxed in that

other State.

Article 24

Elimination of Double Taxation

1. Where a resident of Libya derives income which, in accordance with the

provisions of this Convention, may be taxed in Malta, Libya shall, subject to the

provisions of paragraphs 2 and 3, exempt such income from tax.

2. Where a resident of Libya derives items of income which, in accordance

with the provisions of articles 11, 12 and 13 may be taxed in Malta, Libya shall

allow as a deduction from the tax on the income of that resident an amount equal to

the tax paid in that other State. Such deduction shall not, however, exceed that part

of the tax, as computed before the deduction is given, which is attributable to such

items of income derived from that other State.

3. Where in accordance with any provision of this Convention income

derived by a resident of Libya is exempt from tax in Libya, Libya may

nevertheless, in calculating the amount of tax on the remaining income of such

resident, take into account the exempted income.

4. Where a resident of Malta derives income which, in accordance with the

provisions of this Convention, may be taxed in Libya, Malta shall allow as a

deduction from the tax on the income of that resident an amount equal to the

income tax paid in Libya. Such deduction shall not, however, exceed that part of

the income tax, as computed before the deduction is given, which is attributable to

the income which may be taxed in Libya.

5. Where, in accordance with any provision of this Convention, income

derived by a resident of Malta is exempt from tax in Malta, Malta may

nevertheless, in calculating the amount of tax on the remaining income of such

resident, take into account the exempted income.

Article 25

Non-Discrimination

1. Nationals of a Contracting State shall not be subjected in the other

Contracting State to any taxation or any requirement connected therewith which is

other or more burdensome than the taxation and connected requirements to which

nationals of that other State in the same circumstances, in particular with respect to

residence, is or may be subjected. This provision shall, notwithstanding the

provisions of article 1, also apply to persons who are not residents of one or both of

the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a

Contracting State has in the other Contracting State shall not be less favourably

levied in that other State than the taxation levied on enterprises of that other State

carrying on the same activities. This provision shall not be construed as obliging a

Contracting State to grant to residents of the other Contracting State any personal

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

or family responsibilities which it grants to its own residents.

3. Except where the provisions of paragraph 1 of article 10, paragraph 6 of

article 12 or paragraph 6 of article 13 apply, interest, royalties and other

disbursements paid by an enterprise of a Contracting State to a resident of the other

Contracting State shall, for the purpose of determining the taxable profits of such

enterprise, be deductible under the same conditions as if they had been paid to a

resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or

partly owned or controlled, directly or indirectly, by one or more residents of the

other Contracting State, shall not be subjected in the first-mentioned State to any

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which other similar

enterprises of the first-mentioned State are or may be subjected.

Article 26

Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the

Contracting States result or will result for him in taxation not in accordance with

the provisions of this Convention, he may, irrespective of the remedies provided by

the domestic law of those States, present his case to the competent authority of the

Contracting State of which he is a resident or, if his case comes under paragraph 1

of article 25, to that of the Contracting State of which he is a national. The case

must be presented within three years from the first notification of the action

resulting in taxation not in accordance with the provisions of the Convention.

2. The competent authority shall endeavour, if the objection appears to it

to be justified and if it is not itself able to arrive at a satisfactory solution, to

resolve the case by mutual agreement with the competent authority of the other

Contracting State, with a view to the avoidance of taxation which is not in

accordance with this Convention. Any agreement reached shall be implemented

notwithstanding any time limits in the domestic law of the Contracting States.

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 the Convention.

They may also consult together for the elimination of double taxation in

cases not provided for in the Convention.

4. The competent authorities of the Contracting States may communicate

with each other directly, including through a joint commission consisting of

themselves or their representatives, for the purpose of reaching an agreement in the

sense of the preceding paragraphs. The competent authorities, through

consultations, shall develop appropriate bilateral procedures, conditions, methods

and techniques for the implementation of the mutual agreement procedure

provided for in this article.

Article 27

Exchange of Information

1. The competent authorities of the Contracting States shall exchange such

information as is necessary for carrying out the provisions of this Convention or of

the domestic laws of the Contracting States concerning taxes covered by the

Convention, in so far as the taxation there under is not contrary to the Convention,

in particular for the prevention of fraud or evasion of such taxes. Any information

received by a Contracting State shall be treated as secret in the same manner as

information obtained under the domestic laws of that State. However, if the

information is originally regarded as secret in the transmitting State it shall be

disclosed only to persons or authorities (including courts and administrative

bodies) concerned with the assessment or collection of, the enforcement or

prosecution in respect of, or the determination of appeals in relation to, the taxes

which are the subject of the Convention. Such persons or authorities shall use the

information only for such purposes but may disclose the information in public

court proceedings or in judicial decisions. The competent authorities shall, through

consultation, develop appropriate conditions, methods and techniques concerning

the matters in respect of which such exchanges of information shall be made,

including, where appropriate, exchanges of information regarding tax avoidance.

2. In no case shall the provisions of paragraph 1 be construed so as to

impose on a Contracting State the obligation

(a)

To carry out administrative measures at variance with the laws

and administrative practice of that or of the other Contracting State;

(b)

To supply information which is not obtainable under the laws or

in the normal course of the administration of that or of the other Contracting

State;

(c)

To supply information which would disclose any trade, business,

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

the disclosure of which would be contrary to public policy (ordre public).

Article 28

Members of Diplomatic Missions and Consular Posts

Nothing in this Convention shall affect the fiscal privileges of members of

diplomatic missions or consular posts under the general rules of international law

or under the provisions of special agreements.

Article 29

Entry Into Force

This Convention shall enter into force 30 days after the date of receipt of the

latter notification through diplomatic channels by which one Contracting State

notifies the other that its internal legal requirements for the entry into force of this

Convention have been fulfilled. This Convention shall have effect in respect of

income derived during the taxable years beginning on or after the 1st day of

January next following that in which this Convention enters into force.

Article 30

Termination

1. This Convention shall remain in force until one of the Contracting

States gives written notice of its intention to terminate the Convention to the other

Contracting State through diplomatic channels, on or before the thirtieth day of

June in any calendar year after the expiration of a period of five years from the

date of its entry into force. In such event this Convention shall cease to have effect

in respect of income derived during the taxable years beginning on or after the first

day of January of the year next following that in which the notice of termination

has been given.

2. The convention between Malta and the Great Jamahiriya for the

Avoidance of double taxation with respect to taxes on Income signed on the 5th of

October 1972 and the protocol thereto signed on the 28th April 1995 shall be

terminated on the date on which this Convention comes into force. In such a case

the above mentioned convention signed on the 5th of October 1972 and the above

mentioned Protocol thereto shall cease to have effect with respect to income

derived during the taxable years beginning on or after the first day of January of the

year next following that on which this Convention enters into force.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have

signed this Convention.

Done in Tripoli on the 28 th this day of December of the year two thousand

and eight in duplicate, in the English and Arabic languages, both texts being

equally authentic.

Mr. Ramadan Barq

H.E. Dr. Joseph Cassar

Ambassador

Director European Affairs

FOR MALTA

FOR THE GREAT SOCIALIST

PEOPLE’S LIBYAN ARAB

JAMAHIRIYA

PROTOCOL

Malta and the Great Socialist People's Libyan Arab Jamahiriya have agreed,

at the signing in Tripoli on the 28 th Day of December of the year two thousand and

eight of the Convention between the two States for the avoidance of double

taxation and the prevention of fiscal evasion with respect to taxes on income, upon

the following provisions, which shall form an integral part of the said Convention

1. With respect to Article 8 (Business Profits), the tax that may be charged

in a Contracting State on the profits of a Joint Business, to the extent that those

profits are derived by, or distributable directly or indirectly to, an Eligible Person

who is a resident of the other Contracting State, shall not exceed fifteen per cent

(15%).

2. With respect to Article 11 (Dividends) –

(a)

a company which is a resident of a Contracting State and which

is a Joint Business shall be entitled to require that the gains or profits derived

by it and which are distributable, directly or indirectly, by way of a dividend

to an Eligible Person who is a resident of the other Contracting State shall,

notwithstanding that the dividend or part thereof has not been distributed, be

taxed at a rate not exceeding fifteen per cent (15 %);

(b)

when gains or profits of a company have been subject to tax at a

rate not exceeding fifteen per cent (15 %) in accordance with paragraph (a),

no further tax shall be charged in that or in the other Contracting State on any

dividend paid, directly or indirectly, out of the said gains or profits.

3. In this Protocol –

(a)

"Eligible Person" means

(i)

an individual resident in a Contracting State; or

(ii) a Contracting State or a political sub-division or authority

thereof; or

(iii) a company or other body of persons which is fully owned,

directly or indirectly, by persons who are Eligible Persons in terms of

sub-paragraphs (i) and (ii);

(b)

a "Joint Business" means an enterprise –

(i) carried on jointly by two or more persons, whether

constituted as a company or not, who include at least one Eligible

Person who is a resident of a Contracting State and at least one Eligible

Person who is a resident of the other Contracting State; and

B B 3816

(ii) whose activities do not consist solely or mainly of

purchasing goods (including imports) for resale (including exports); and

(iii) whose profits are derived wholly or mainly from activities

carried on in a Contracting State or in both Contracting States.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have

signed this Protocol.

DONE in Tripoli, on the 28 th this day of December of the year two thousand

and eight in duplicate, in the English and Arabic languages, both texts being

equally authentic.

H.E. Dr. Joseph Cassar

Mr. Ramadan Barq

Ambassador

Director European Affairs

FOR MALTA

FOR THE GREAT SOCIALIST

PEOPLE’S LIBYAN ARAB

JAMAHIRIYA

€2.24