Special Administrative Region of the People’s Republic of China)

L.N. 321 of 2012

INCOME TAX ACT

(CAP. 123)

Double Taxation Relief (Taxes on Income) (The Hong Kong

Special Administrative Region of the People’s Republic of China)

Order, 2012

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:-

The title of this order is the Double Taxation Relief (Taxes

on Income) (The Hong Kong Special Administrative Region of the

People’s Republic of China) Order, 2012.

(Article 2)

AGREEMENT BETWEEN THE GOVERNMENT OF MALTA AND THE

GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE

REGION OF THE PEOPLE’S REPUBLIC OF CHINA FOR THE AVOIDANCE

OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME

The Government of Malta and the Government of the Hong Kong Special

Administrative Region of the People’s Republic of China,

Desiring to conclude an Agreement for the avoidance of double taxation and

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

Have agreed as follows

Article 1

Persons Covered

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

Contracting Parties.

Article 2

Taxes Covered

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

Contracting Party, 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 and taxes on the total amounts of wages or

salaries paid by enterprises.

It is hereby declared

(a) that the arrangements specified in the Agreement set

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

Government of The Hong Kong Special Administrative Region

of the People’s Republic of China with a view to affording relief

from double taxation in relation to the following taxes imposed

by the laws of The Hong Kong Special Administrative Region

of the People’s Republic of China

(i)

profits tax;

(ii)

salaries tax; and

(iii) property tax

(b) that it is expedient that those arrangements should

have effect;

(c) that the Agreement has entered into force on the

18th July, 2012.

The existing taxes to which the Agreement shall apply are

(a)

in the case of the Hong Kong Special Administrative Region,

(i)

profits tax;

(ii)

salaries tax; and

(iii) property tax;

whether or not charged under personal assessment;

(b)

in the case of Malta,

the income tax.

The Agreement shall apply also to any identical or substantially similar

taxes that are imposed after the date of signature of the Agreement in addition to,

or in place of, the existing taxes, as well as any other taxes falling within

paragraphs 1 and 2 of this Article which a Contracting Party may impose in future.

The competent authorities of the Contracting Parties shall notify each other of any

significant changes that have been made in their taxation laws.

The existing taxes, together with the taxes imposed after the signature

of the Agreement, are hereinafter referred to as "Hong Kong Special

Administrative Region tax" or "Malta tax", as the context requires.

Article 3

General Definitions

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

requires

(a)

(i) the term "Hong Kong Special Administrative Region"

means any territory where the tax laws of the Hong Kong Special

Administrative Region of the People’s Republic of China apply;

(ii) 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 sea-bed, its sub-soil and the

superjacent water column adjacent to the territorial waters, wherein 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;

(b) the term "business" includes the performance of professional

services and of other activities of an independent character;

(c)

the term "company" means any body corporate or any entity that

is treated as a body corporate for tax purposes;

(d)

the term "competent authority" means

(i) in the case of the Hong Kong Special Administrative

Region, the Commissioner of Inland Revenue or his authorised

representative;

(ii)

in the case of Malta, the Minister responsible for finance or

his authorised representative;

(e) the terms "Contracting Party" and "Party" mean the Hong Kong

Special Administrative Region or Malta, as the context requires;

(f)

the term "enterprise" applies to the carrying on of any business;

(g) the terms "enterprise of a Contracting Party" and "enterprise of

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

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

the other Contracting Party;

(h) the term "international traffic" means any transport by a ship or

aircraft operated by an enterprise of a Contracting Party, except when the

ship or aircraft is operated solely between places in the other Contracting

Party;

(i)

the term "national", in relation to Malta, means

(i)

any individual possessing the nationality of Malta; and

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

status as such from the laws in force in Malta;

(j)

the term "person" includes an individual, a partnership, a

company and any other body of persons;

(k) the term "tax" means Hong Kong Special Administrative Region

tax or Malta tax, as the context requires.

2. In the Agreement, the terms "Hong Kong Special Administrative

Region tax" and "Malta tax" do not include any penalty or interest imposed under

the laws of either Contracting Party relating to the taxes to which the Agreement

applies by virtue of Article 2.

3. As regards the application of the Agreement at any time by a

Contracting Party, 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 Party for

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

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

other laws of that Party.

Article 4

Resident

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

Party" means;

(a)

in the case of the Hong Kong Special Administrative Region

(i) any individual who ordinarily resides in the Hong Kong

Special Administrative Region;

(ii) any individual who stays in the Hong Kong Special

Administrative Region for more than 180 days during a year of

assessment or for more than 300 days in two consecutive years of

assessment one of which is the relevant year of assessment;

(iii) a company incorporated in the Hong Kong Special

Administrative Region or, if incorporated outside the Hong Kong

Special Administrative Region, being centrally managed or controlled

in the Hong Kong Special Administrative Region;

(iv) any other person constituted under the laws of the Hong

Kong Special Administrative Region or, if constituted outside the Hong

Kong Special Administrative Region, being centrally managed or

controlled in the Hong Kong Special Administrative Region;

(b) in the case of Malta, any person who, under the laws of Malta, is

liable to tax therein by reason of his domicile, residence, place of

management or any other criterion of a similar nature. This term, however,

does not include any person who is liable to tax in Malta in respect only of

income from sources in Malta;

(c)

in the case of either Contracting Party, the Government of that

Party.

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

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

(a)

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

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

to him in both Parties, he shall be deemed to be a resident only of the Party

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

interests);

(b) if the Party 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

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

habitual abode;

(c)

if he has an habitual abode in both Parties or in neither of them,

he shall be deemed to be a resident only of the Party in which he has the right

of abode (in the case of the Hong Kong Special Administrative Region) or of

which he is a national (in the case of Malta);

(d) if he has the right of abode in the Hong Kong Special

Administrative Region and is also a national of Malta, or if he does not have

the right of abode in the Hong Kong Special Administrative Region nor is he

a national of Malta, the competent authorities of the Contracting Parties 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 Parties, then it shall be deemed to be a

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

Article 5

Permanent Establishment

1. For the purposes of this Agreement, 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; and

(f)

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

extraction of natural resources.

3. The term "permanent establishment" also encompasses

(a) 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 six months;

(b) the furnishing of services, including consultancy services, by an

enterprise directly or through employees or other personnel engaged by the

enterprise for such purpose, but only if activities of that nature continue (for

the same or a connected project) within a Contracting Party for a period or

periods aggregating more than 183 days within any twelve-month period.

4. 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, display or

delivery 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, display or delivery;

(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.

5. 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 on behalf of an enterprise and has, and habitually exercises, in a Contracting

Party an authority to conclude contracts in the name of the enterprise, that

enterprise shall be deemed to have a permanent establishment in that Party in

respect of any activities which that person undertakes for 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.

An enterprise shall not be deemed to have a permanent establishment in

a Contracting Party merely because it carries on business in that Party 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 Party

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

Party, or which carries on business in that other Party (whether through a

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

company a permanent establishment of the other.

Article 6

Income from Immovable Property

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

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

Contracting Party may be taxed in that other Party.

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

under the law of the Contracting Party 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, quarries, sources and other natural

resources; ships and aircraft shall not be regarded as immovable property.

3. Any property or right referred to in paragraph 2 shall be regarded as

situated where the land, standing timber, mineral deposits, quarries, sources or

natural resources, as the case may be, are situated or where the working may take

place.

4. The provisions of paragraph 1 shall apply to income derived from the

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

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

from immovable property of an enterprise.

Article 7

Business Profits

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

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

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 Party

but only so much of them as is attributable to that permanent establishment.

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

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

permanent establishment situated therein, there shall in each Contracting Party 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 determining the profits of a permanent establishment, there shall be

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

permanent establishment, including executive and general administrative expenses

so incurred, whether in the Party in which the permanent establishment is situated

or elsewhere.

4. Insofar as it has been customary in a Contracting Party 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, or where

such an apportionment could not be made on the basis of the information available

to that Contracting Party, the profits to be so attributed are to be determined on the

basis of such other method as may be prescribed by the laws of that Party, nothing

in paragraph 2 shall preclude that Contracting Party from determining the profits to

be taxed by such apportionment or other method; the method adopted shall,

however, be such that the result shall be in accordance with the principles

contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of

the mere purchase by that permanent establishment of goods or merchandise for

the enterprise.

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.

7. Where profits include items of income which are dealt with separately

in other Articles of this Agreement, then the provisions of those Articles shall not

be affected by the provisions of this Article.

Article 8

Shipping and Air Transport

1. Profits of an enterprise of a Contracting Party from the operation of

ships or aircraft in international traffic shall be taxable only in that Party.

2. 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 9

Associated Enterprises

1. Where

(a)

an enterprise of a Contracting Party participates directly or

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

Contracting Party, or

(b) the same persons participate directly or indirectly in the

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

enterprise of the other Contracting Party,

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.

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

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

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

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

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

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

Party 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 this Agreement and the competent authorities of the

Contracting Parties shall if necessary consult each other.

Article 10

Dividends

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

to a resident of the other Contracting Party shall be taxable only in that other Party.

This paragraph shall not affect the taxation of the company in respect of the profits

out of which the dividends are paid.

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

mining shares, founders’ 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

Party of which the company making the distribution is a resident.

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

the dividends, being a resident of a Contracting Party, carries on business in the

other Contracting Party of which the company paying the dividends is a resident

through a permanent establishment situated therein and the holding in respect of

which the dividends are paid is effectively connected with such permanent

establishment. In such case the provisions of Article 7 shall apply.

4. Where a company which is a resident of a Contracting Party derives

profits or income from the other Contracting Party, that other Party 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 Party or insofar as the holding in

respect of which the dividends are paid is effectively connected with a permanent

establishment situated in that other Party, 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 Party.

Article 11

Interest

1. Interest arising in a Contracting Party and beneficially owned by a

resident of the other Contracting Party shall be taxable only in that other Party.

2. 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.

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

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

Contracting Party in which the interest arises through a permanent establishment

situated therein and the debt-claim in respect of which the interest is paid is

effectively connected with such permanent establishment. In such case the

provisions of Article 7 shall apply.

4. 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 exceeds, for whatever reasons, 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 Party, due regard being had to the other

provisions of this Agreement.

Article 12

Royalties

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

other Contracting Party may be taxed in that other Party.

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

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

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

not exceed 3 per cent of the gross amount of the royalties.

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 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 Party, carries on business

in the other Contracting Party in which the royalties arise through a permanent

establishment situated therein and the right or property in respect of which the

royalties are paid is effectively connected with such permanent establishment. In

such case the provisions of Article 7 shall apply.

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

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

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

permanent establishment in connection with which the liability to pay the royalties

was incurred, and such royalties are borne by such permanent establishment, then

such royalties shall be deemed to arise in the Party in which the permanent

establishment 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 exceeds, for whatever reasons, 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 Party, due regard being had to the other

provisions of this Agreement.

Article 13

Capital Gains

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

immovable property referred to in Article 6 and situated in the other Contracting

Party may be taxed in that other Party.

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

business property of a permanent establishment which an enterprise of a

Contracting Party has in the other Contracting Party, including such gains from the

alienation of such a permanent establishment (alone or with the whole enterprise),

may be taxed in that other Party.

3. Gains derived by an enterprise of a Contracting Party 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 that

Party.

4. Gains derived by a resident of a Contracting Party from the alienation of

shares of a company deriving more than 50 per cent of their value directly or

indirectly from immovable property situated in the other Contracting Party may be

taxed in that other Party. However, this paragraph does not apply to gains derived

from the alienation of shares quoted on a recognised stock exchange.

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

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

alienator is a resident.

Article 14

Income from Employment

1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and

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

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

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

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

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

a resident of a Contracting Party in respect of an employment exercised in the

other Contracting Party shall be taxable only in the first-mentioned Party if

(a)

the recipient is present in the other Party for a period or periods

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

commencing or ending in the taxable period concerned, and

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

not a resident of the other Party, and

(c)

the remuneration is not borne by a permanent establishment

which the employer has in the other Party.

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 by an enterprise of a Contracting Party may be taxed in that

Party.

Article 15

Directors’ Fees

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

Contracting Party in his capacity as a member of the board of directors of a

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

other Party.

Article 16

Artistes and Sportsmen

1. Notwithstanding the provisions of Articles 7 and 14, income derived by

a resident of a Contracting Party as an entertainer, such as a theatre, motion

picture, radio or television artiste, or a musician, or as a sportsman, from his

personal activities as such exercised in the other Contracting Party, may be taxed

in that other Party.

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

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

sportsman himself but to another person, that income may, notwithstanding the

provisions of Articles 7 and 14, be taxed in the Contracting Party in which the

activities of the entertainer or sportsman are exercised.

Article 17

Pensions

1. Subject to the provisions of paragraph 2 of Article 18, pensions and

other similar remuneration (including a lump sum payment) paid to a resident of a

Contracting Party in consideration of past employment or self-employment shall

be taxable only in that Party.

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

similar remuneration (including a lump sum payment) made under a pension or

retirement scheme which is

(a) a public scheme which is part of the social security system of a

Contracting Party; or

(b) a scheme in which individuals may participate to secure

retirement benefits and which is recognised for tax purposes in a Contracting

Party,

shall be taxable only in that Contracting Party.

Article 18

Government Service

1. (a) Salaries, wages and other similar remuneration, other than a

pension, paid by the Government of a Contracting Party to an individual in respect

of services rendered to that Party shall be taxable only in that Party.

(b) However, such salaries, wages and other similar remuneration

shall be taxable only in the other Contracting Party if the services are rendered in

that Party and the individual is a resident of that Party who

(i)

in the case of the Hong Kong Special Administrative Region, has

the right of abode therein and in the case of Malta, is a national thereof; or

(ii) did not become a resident of that Party solely for the purpose of

rendering the services.

2. (a)

Any pension (including a lump sum payment) paid by, or paid out

of funds created or contributed by, the Government of a Contracting Party to an

individual in respect of services rendered to that Party shall be taxable only in that

Party.

(b) However, if the individual who rendered the services is a resident

of the other Contracting Party and the case falls within subparagraph (b) of

paragraph 1 of this Article, any corresponding pension (whether a payment in lump

sum or by instalments) shall be taxable only in that other Contracting Party.

3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries,

wages, pensions (including a lump sum payment), and other similar remuneration

in respect of services rendered in connection with a business carried on by the

Government of a Contracting Party.

Article 19

Students

Payments which a student who is or was immediately before visiting a

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

the first-mentioned Party solely for the purpose of his education receives for the

purpose of his maintenance or education shall not be taxed in that Party, provided

that such payments arise from sources outside that Party.

Article 20

Other Income

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

not dealt with in the foregoing Articles of this Agreement shall be taxable only in

that Party.

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

income from immovable property as defined in paragraph 2 of Article 6, if the

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

business in the other Contracting Party through a permanent establishment situated

therein and the right or property in respect of which the income is paid is

effectively connected with such permanent establishment. In such case the

provisions of Article 7 shall apply.

3. Alimony or other maintenance payment paid by a resident of a

Contracting Party to a resident of the other Contracting Party shall, to the extent it

is not allowable as a deduction to the payer in the first-mentioned Party, be taxable

only in that Party.

Article 21

Elimination of Double Taxation

1. In the case of the Hong Kong Special Administrative Region, double

taxation shall be eliminated as follows

Subject to the provisions of the laws of the Hong Kong Special

Administrative Region relating to the allowance of a credit against Hong Kong

Special Administrative Region tax of tax paid in a jurisdiction outside the Hong

Kong Special Administrative Region (which shall not affect the general principle

of this Article), Malta tax paid under the laws of Malta and in accordance with this

Agreement, whether directly or by deduction, in respect of income derived by a

person who is a resident of the Hong Kong Special Administrative Region from

sources in Malta, shall be allowed as a credit against Hong Kong Special

Administrative Region tax payable in respect of that income, provided that the

credit so allowed does not exceed the amount of Hong Kong Special

Administrative Region tax computed in respect of that income in accordance with

the tax laws of the Hong Kong Special Administrative Region.

2. In the case of Malta, double taxation shall be eliminated as follows

Subject to the provisions of the laws of Malta regarding the allowance of a

credit against Malta tax in respect of foreign tax, where, in accordance with the

provisions of the Agreement, there is included in a Malta assessment income from

sources within the Hong Kong Special Administrative Region, Hong Kong Special

Administrative Region tax on such income shall be allowed as a credit against the

relative Malta tax payable thereon.

Article 22

Non-Discrimination

1. Persons who, in the case of the Hong Kong Special Administrative

Region, have the right of abode or are incorporated or otherwise constituted

therein, and, in the case of Malta, are Maltese nationals, shall not be subjected in

the other Contracting Party to any taxation or any requirement connected

therewith, which is other or more burdensome than the taxation and connected

requirements to which persons who have the right of abode or are incorporated or

otherwise constituted in that other Party (where that other Party is the Hong Kong

Special Administrative Region) or nationals of that other Party (where that other

Party is Malta) in the same circumstances, in particular with respect to residence,

are 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 Parties.

2. Stateless persons who are residents of a Contracting Party shall not be

subjected in either Contracting Party to any taxation or any requirement connected

therewith, which is other or more burdensome than the taxation and connected

requirements to which persons who have the right of abode in the Party (where the

Party is the Hong Kong Special Administrative Region) or nationals of the Party

(where the Party is Malta) in the same circumstances, in particular with respect to

residence, are or may be subjected.

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

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

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

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

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

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

or family responsibilities which it grants to its own residents.

4. Except where the provisions of paragraph l of Article 9, paragraph 4 of

Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other

disbursements paid by an enterprise of a Contracting Party to a resident of the

other Contracting Party 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 Party.

5. Enterprises of a Contracting Party, the capital of which is wholly or

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

other Contracting Party, shall not be subjected in the first-mentioned Party 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 Party are or may be subjected.

6. The provisions of this Article shall, notwithstanding the provisions of

Article 2, apply to taxes of every kind and description.

Article 23

Mutual Agreement Procedure

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

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

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

the domestic laws of those Parties, present his case to the competent authority of

the Contracting Party of which he is a resident or, if his case comes under

paragraph 1 of Article 22, to that of the Contracting Party in which he has the right

of abode or is incorporated or otherwise constituted (in the case of the Hong Kong

Special Administrative Region) or of which he is a national (in the case of Malta).

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

Agreement.

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

accordance with the Agreement. Any agreement reached shall be implemented

notwithstanding any time limits in the domestic laws of the Contracting Parties.

3. The competent authorities of the Contracting Parties shall endeavour to

resolve by mutual agreement any difficulties or doubts arising as to the

interpretation or application of the Agreement. They may also consult together for

the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting Parties 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.

Article 24

Exchange of Information

1. The competent authorities of the Contracting Parties shall exchange

such information as is foreseeably relevant for carrying out the provisions of this

Agreement or to the administration or enforcement of the domestic laws of the

Contracting Parties concerning taxes covered by the Agreement, insofar as the

taxation thereunder is not contrary to the Agreement. The exchange of information

is not restricted by Article 1.

2. Any information received under paragraph 1 by a Contracting Party

shall be treated as secret in the same manner as information obtained under the

domestic laws of that Party and 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 referred to in paragraph 1. Such persons or

authorities shall use the information only for such purposes. They may disclose the

information in public court proceedings or in judicial decisions.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as

to impose on a Contracting Party the obligation

(a)

to carry out administrative measures at variance with the laws

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

(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

Party;

(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).

4. If information is requested by a Contracting Party in accordance with

this Article, the other Contracting Party shall use its information gathering

measures to obtain the requested information, even though that other Party may

not need such information for its own tax purposes. The obligation contained in the

preceding sentence is subject to the limitations of paragraph 3 but in no case shall

such limitations be construed to permit a Contracting Party to decline to supply

information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to permit a

Contracting Party to decline to supply information solely because the information

is held by a bank, other financial institution, nominee or person acting in an agency

or a fiduciary capacity or because it relates to ownership interests in a person.

Article 25

Members of Government Missions

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

government missions, including consular posts, under the general rules of

international law or under the provisions of special agreements.

Article 26

Entry into Force

1. Each of the Contracting Parties shall notify the other in writing of the

completion of the procedures required by its law for the bringing into force of this

Agreement. The Agreement shall enter into force on the date of the later of these

notifications.

2. The provisions of the Agreement shall thereupon have effect

(a)

in the Hong Kong Special Administrative Region

in respect of Hong Kong Special Administrative Region tax, for any

year of assessment beginning on or after the first day of April in the calendar

year next following that in which the Agreement enters into force;

(b)

in Malta

in respect of taxes on income derived during any calendar year or

accounting period, as the case may be, beginning on or after the first day of

January immediately following the date on which the Agreement enters into

force.

Article 27

Termination

This Agreement shall remain in force until terminated by a Contracting Party.

Either Contracting Party may terminate the Agreement by giving the other

Contracting Party written notice of termination at least six months before the end

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

the date of its entry into force. In such event, the Agreement shall cease to have

effect

(a)

in the Hong Kong Special Administrative Region

in respect of Hong Kong Special Administrative Region tax, for any

year of assessment beginning on or after the first day of April in the calendar

year next following that in which the notice is given;

(b)

in Malta

in respect of taxes on income derived during any calendar year or

accounting period, as the case may be, beginning on or after the first day of

January immediately following the date on which the notice is given.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have

signed this Agreement.

DONE in duplicate at Hong Kong this 8th day of November 2011, in the

English language.

For the Government

For the Government of the

of Malta

Hong Kong Special

Administrative Region of the

People’s Republic of China

JOSEPH CASSAR

K. C. CHAN

PROTOCOL

At the time of signing of the Agreement between the Government of Malta

and the Government of the Hong Kong Special Administrative Region of the

People’s Republic of Chinafor the avoidance of double taxation and the prevention

of fiscal evasion with respect to taxes on income ("the Agreement"), the two

Governments have agreed on the following provisions which shall form an integral

part of the Agreement.

I.

General

1. For the purposes of applying the Agreement an item of income, profit or

gain derived through a person that is fiscally transparent under the laws of either

Contracting Party, shall be considered to be derived by a resident of a Contracting

Party to the extent that the item is treated for the purposes of the taxation law of

such Contracting Party as the income, profit or gain of that resident. It is

understood that this paragraph shall not affect the taxation by a Contracting Party

of its residents.

2. Nothing in the Agreement shall prejudice the right of each Contracting

Party to apply its domestic laws and measures concerning tax avoidance, whether

or not described as such.

II.

With reference to Article 13 (Capital Gains)

It is understood that the term "recognised stock exchange" means

(a)

in the case of the Hong Kong Special Administrative Region, the

Stock Exchange of Hong Kong Limited;

(b)

in the case of Malta, the Malta Stock Exchange; and

(c)

any other stock exchange that may be agreed upon by the

competent authorities of the Contracting Parties.

III. With reference to Article 24 (Exchange of Information)

It is understood that

(a)

the Article does not require the Contracting Parties to exchange

information on an automatic or a spontaneous basis;

(b) information exchanged shall not be disclosed to any third

jurisdiction; and

(c)

in the case of Malta, the competent authority may disclose

information to the National Audit Office.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have

signed this Protocol.

DONE in duplicate at Hong Kong this 8th day of November 2011, in the

English language.

For the Government

For the Government of the

of Malta

Hong Kong Special

Administrative Region of the

People’s Republic of China

JOSEPH CASSAR

K. C. CHAN

€2.16