Double Taxation Relief (Taxes on Income)

L.N. 448 of 2013

INCOME TAX ACT

(CAP. 123)

Double Taxation Relief (Taxes on Income)

(Republic of India) Order, 2013

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

Tax Act, the Minister for Finance has made the following order:-

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

on Income) (Republic of India) Order, 2013.

Article 2

AGREEMENT

BETWEEN

THE GOVERNMENT OF MALTA

AND

THE GOVERNMENT OF THE REPUBLIC OF INDIA

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 Republic of India,

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

prevention of fiscal evasion with respect to taxes on income and with a view to

promoting economic cooperation between the two countries, have agreed as

follows

Article 1

PERSONS COVERED

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

Contracting States.

Article 2

TAXES COVERED

1. This Agreement 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 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 (hereinafter referred to as "the

Agreement") have been made with the Government of the

Republic of India with a view to affording relief from double

taxation in relation to the following taxes imposed by the laws

of the Republic of India

-

the income tax, including any surcharge

thereon;

(b)

that it is expedient that those arrangements should

have effect following the entry into force of the Agreement

order and in accordance with the relevant provisions of the

Agreement;

(c)

that the Agreement shall enter into force on such

date as may be announced by notice in the Government Gazette.

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

a)

in India, the income tax, including any surcharge thereon;

(hereinafter referred to as "Indian tax");

b)

in Malta, the income tax;

(hereinafter referred to as "Malta 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. The competent authorities of the Contracting

States shall notify each other of any significant changes that have been made in

their respective taxation laws.

Article 3

GENERAL DEFINITIONS

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

requires

a)

the term "India" means the territory of India and includes the

territorial sea and airspace above it, as well as any other maritime zone in

which India has sovereign rights, other rights and jurisdiction, according to

the Indian law and in accordance with international law, including the U.N.

Convention on the Law of the Sea;

b)

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;

c)

the terms "Contracting State" and "the other Contracting State"

mean the Republic of India or Malta as the context requires;

d)

the term "person" includes an individual, a company, a body of

persons and any other entity which is treated as a taxable unit under the

taxation laws in force in the respective Contracting States;

e)

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

is treated as a body corporate for tax purposes;

f)

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

g)

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;

h)

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

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

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

State;

i)

the term "competent authority" means

(i) in India: the Finance Minister, Government of India, or its

authorized representative;

(ii) in Malta: the Minister responsible for Finance or his

authorized representative;

j)

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;

k)

the term "tax" means Indian or Malta tax, as the context requires,

but shall not include any amount which is payable in respect of any default or

omission in relation to the taxes to which this Agreement applies or which

represents a penalty or fine imposed relating to those taxes;

l)

the term "fiscal year" means

(i) in the case of India: the financial year beginning on the 1st

day of April;

(ii) in the case of Malta: the year immediately preceding the

‘year of assessment’ as defined in the Income Tax Act (Cap. 123).

2. As regards the application of the Agreement 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 Agreement applies and 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

RESIDENT

1. For the purposes of this Agreement, 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 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.

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 endeavour to 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. If

the State in which its place of effective management is situated cannot be

determined, then the competent authorities of the Contracting States shall

endeavour to settle the question by mutual agreement.

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;

f)

a sales outlet;

g)

a farm, plantation or other place where agricultural, forestry,

plantation or related activities are carried on; and

h)

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

extraction of natural resources including an offshore drilling site.

3. (a)

A building site or construction, installation or assembly project or

supervisory activities in connection therewith constitutes a permanent

establishment only if such site, project or activities last more than six months.

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

enterprise through employees or other personnel engaged by the enterprise for

such purpose constitutes a permanent establishment, but only where activities of

that nature continue (for the same or connected project) within a Contracting State

for a period or periods aggregating more than 90 days within any 12-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

occasional 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 occasional

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.

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

other than an agent of an independent status to whom paragraph 7 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; or

c)

habitually secures orders in the first-mentioned State, wholly or

almost wholly for the enterprise itself.

Notwithstanding the preceding provisions of this Article, an insurance

enterprise of a Contracting State shall, except in regard to re-insurance, be deemed

to have a permanent establishment in the other Contracting State if it collects

premiums in the territory of that other State or insures risks situated therein

through a person other than an agent of an independent status to whom paragraph 7

applies.

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

a Contracting State merely because it carries on business in that 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.

However, when the activities of such an agent are devoted wholly or almost wholly

on behalf of that enterprise, he will not be considered an agent of an independent

status within the meaning of this paragraph.

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 6

INCOME FROM IMMOVABLE PROPERTY

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

property 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 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 7

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 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 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 State in which the permanent establishment is situated

or elsewhere, in accordance with the provisions of and subject to the limitations of

the tax laws of that State. However, no such deduction shall be allowed in respect

of amounts, if any, paid (otherwise than towards reimbursement of actual

expenses) by the permanent establishment to the head office of the enterprise or

any of its other offices, by way of royalties, fees or other similar payments in

return for the use of patents, know-how or other rights, or by way of commission

or other charges for specific services performed or for management, or, except in

the case of banking enterprises, by way of interest on moneys lent to the permanent

establishment. Likewise, no account shall be taken, in the determination of the

profits of a permanent establishment, for amounts charged (otherwise than toward

reimbursement of actual expenses), by the permanent establishment to the head

office of the enterprise or any of its other offices, by way of royalties, fees or other

similar payments in return for the use of patents, know-how or other rights, or by

way of commission or other charges for specific services performed or for

management, or, except in the case of a banking enterprise, by way of interest on

moneys lent to the head office of the enterprise or any of its other offices.

4. Insofar 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. 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 derived by an enterprise of a Contracting State from the

operation of ships or aircraft in international traffic shall be taxable only in that

State.

2. Profits derived by a transportation enterprise which is a resident of a

Contracting State from the use, maintenance, or rental of containers (including

trailers and other equipment for the transport of containers) used for the transport

of goods or merchandise in international traffic shall be taxable only in that

Contracting State unless the containers are used solely within the other Contracting

State.

3. For the purposes of this Article interest on investments directly

connected with the operation of ships or aircraft in international traffic shall be

regarded as profits derived from the operation of such ships or aircraft if they are

integral to the carrying on of such business, and the provisions of Article 11 shall

not apply in relation to such interest.

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 9

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.

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

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 this Agreement and the competent authorities of the

Contracting States shall if necessary consult each other.

Article 10

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 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 State, but

a)

if the dividends are paid by a company that is a resident of India

to a resident of Malta who is the beneficial owner thereof, the tax charged by

India shall not exceed 10 per cent of the gross amount of the dividends;

b)

if the dividends are paid by a company that is a resident of Malta

to a resident of India who is the beneficial owner thereof, the tax charged by

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

chargeable on the profits out of which the dividends are paid.

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 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

7 or Article 14, 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 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 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 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 State.

Article 11

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 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a

Contracting State shall be exempt from tax in that State, provided that it is derived

and beneficially owned by

a)

the Government, a political subdivision or a local authority of the

other Contracting State; or

b)

(i) in the case of India, the Reserve Bank of India, the Export-

Import Bank of India, the National Housing Bank; and

(ii) in the case of Malta, Central Bank of Malta; or

c)

any other institution as may be agreed upon from time to time

between the competent authorities of the Contracting States through

exchange of letters.

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 paragraphs 1 and 2 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 case the provisions of Article 7 or Article 14, as the case may

be, shall apply.

6. 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.

7. Where, by reason of a special relationship between the payer and the

beneficial owner or between both of them and some other person, the amount of

the interest, having regard to the debt claim for which it is paid, exceeds the

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

in the absence of such relationship, the provisions of this Article shall apply only

to the last mentioned amount. In such case, the excess part of the payments shall

remain taxable according to the laws of each Contracting State, due regard being

had to the other provisions of this Agreement.

Article 12

ROYALTIES AND FEES FOR TECHNICAL SERVICES

1. Royalties or fees for technical services 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 or fees for technical services 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 or fees for technical services is a

resident of the other Contracting State the tax so charged shall not exceed 10 per

cent of the gross amount of the royalties or fees for technical services.

3. (a)

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 television or radio 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.

(b) The term "fees for technical services" as used in this Article

means payments of any kind, other than those mentioned in Articles 14 and 15 of

this Agreement as consideration for managerial or technical or consultancy

services, including the provision of services of technical or other personnel.

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

owner of the royalties or fees for technical services being a resident of a

Contracting State, carries on business in the other Contracting State in which the

royalties or fees for technical services 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 or fees for technical services are paid is effectively connected with such

permanent establishment or fixed base. In such case the provisions of Article 7 or

Article 14, as the case may be, shall apply.

5. (a)

Royalties and fees for technical services shall be deemed to arise

in a Contracting State when the payer is that State itself, a political subdivision, a

local authority, or a resident of that State. Where, however, the person paying the

royalties or fees for technical services, 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 or fees for technical

services was incurred, and such royalties or fees for technical services are borne by

such permanent establishment or fixed base, then such royalties or fees for

technical services shall be deemed to arise in the Contracting State in which the

permanent establishment or fixed base is situated.

(b) Where under sub-paragraph (a) royalties or fees for technical

services do not arise in one of the Contracting States, and the royalties relate to the

use of, or the right to use, the right or property, or the fees for technical services

relate to services performed, in one of the Contracting States, the royalties or fees

for technical services shall be deemed to arise in that Contracting State.

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 or fees for technical services, 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 Agreement.

Article 13

CAPITAL GAINS

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

immovable property referred to in Article 6 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 of which the alienator is a resident.

4. Gains from the alienation of shares in a company which is a resident of

a Contracting State may be taxed in that State.

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 State of which the

alienator is a resident.

Article 14

INDEPENDENT PERSONAL SERVICES

1. Income derived by an individual who is a resident of a Contracting State

from the performance of professional services or other independent activities of a

similar 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 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, surgeons,

dentists and accountants.

Article 15

DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18, 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 therefrom 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 by an enterprise of a Contracting State may be taxed in that

State.

Article 16

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 in a

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

other State.

Article 17

ARTISTES AND SPORTSPERSONS

1. Notwithstanding the provisions of Articles 14 and 15, 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

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 7, 14 and 15, be taxed in the Contracting State in which

the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2, shall not apply to income from

activities performed in a Contracting State by entertainers or sportspersons if the

activities are substantially supported by public funds of one or both of the

Contracting States or of political subdivisions or local authorities thereof. In such a

case, the income shall be taxable only in the Contracting State of which the

entertainer or sportsperson is a resident.

Article 18

PENSIONS

1. Subject to the provisions of paragraph 2 of Article 19, 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 the social security legislation of a Contracting State shall be

taxable only in that State.

Article 19

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 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 State.

3. The provisions of Articles 15, 16, 17 and 18 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 20

PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

1. A professor, teacher or research scholar who is or was a resident of the

Contracting State immediately before visiting the other Contracting State for the

purpose of teaching or engaging in research, or both, at a university, college or

other similar approved institution in that other Contracting State shall be exempt

from tax in that other State on any remuneration for such teaching or research for a

period not exceeding two years from the date of his arrival in that other State.

2. This Article shall apply to income from research only if such research is

undertaken by the individual in the public interest and not primarily for the benefit

of some private person or persons.

3. For the purposes of this Article, an individual shall be deemed to be a

resident of a Contracting State if he is resident in that State in the fiscal year in

which he visits the other Contracting State or in the immediately preceding fiscal

year.

Article 21

STUDENTS

1. A student who is or was a resident of one of the Contracting States

immediately before visiting the other Contracting State and who is present in that

other Contracting State solely for the purpose of his education or training, shall

besides grants, loans and scholarships be exempt from tax in that other State on

payments made to him by persons residing outside that other State for the purposes

of his maintenance, education or training.

2. The benefits of this Article shall extend only for such period of time as

may be reasonable or customarily required to complete the education or training

undertaken, but in no event shall any individual have the benefits of this Article,

for more than six consecutive years from the date of his first arrival in that other

State.

Article 22

OTHER INCOME

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

not dealt with in the foregoing Articles of this Agreement 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 6, 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 7 or Article 14, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraph 1, if a resident of a

Contracting State derives income from sources within the other Contracting State

in the form of lotteries, crossword puzzles, races including horse races, card games

and other games of any sort or gambling or betting of any form or nature

whatsoever, such income may be taxed in the other Contracting State.

Article 23

METHODS FOR ELIMINATION OF DOUBLE TAXATION

Double taxation shall be eliminated as follows

1. In India

a)

Where a resident of India derives income which, in accordance

with the provisions of this Agreement, may be taxed in Malta, India shall

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

equal to the tax paid in Malta.

Such deduction shall not, however, exceed that portion of the tax as

computed before the deduction is given, which is attributable, as the case

may be, to the income which may be taxed in Malta.

b)

Where in accordance with any provision of the Agreement

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

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

such resident, take into account the exempted income.

2. In Malta

a)

Subject to the provisions of the law of Malta regarding the

allowance of a credit against Malta tax in respect of foreign tax, where, in

accordance with the provisions of this Agreement, there is included in a

Malta assessment income from sources within India, the Indian tax on such

income shall be allowed as a credit against the relative Malta tax payable

thereon.

b)

Where in accordance with any provision of the Agreement,

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 24

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, 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 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 favorably

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. This provision shall

not be construed as preventing a Contracting State from charging the profits of a

permanent establishment which a company of the other Contracting State has in

the first mentioned State at a rate of tax which is higher than that imposed on the

profits of a similar company of the first mentioned Contracting State, nor as being

in conflict with the provisions of paragraph 3 of Article 7.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of

Article 11, or paragraph 6 of Article 12, 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.

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

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

Article 25

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 Agreement, 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 24, 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 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 State, 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 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 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 States may communicate

with each other directly for the purpose of reaching an agreement in the sense of

the preceding paragraphs. When it seems advisable in order to reach agreement to

have an oral exchange of opinions, such exchange may take place through a

Commission consisting of representatives of the competent authorities of the

Contracting States.

Article 26

EXCHANGE OF INFORMATION

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

information (including documents or authenticated copies of the documents) as is

foreseeably relevant for carrying out the provisions of this Agreement or to the

administration or enforcement of the domestic laws concerning taxes of every kind

and description, imposed on behalf of the Contracting States, or of their political

subdivisions or local authorities, insofar as the taxation thereunder is not contrary

to the Agreement. The exchange of information is not restricted by Articles 1 and

2.

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

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

domestic laws of that State 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, the determination of

appeals in relation to the taxes referred to in paragraph 1, or the oversight of the

above. 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. Notwithstanding the foregoing, information received by a

Contracting State may be used for other purposes when such information may be

used for such other purposes under the laws of both States and the competent

authority of the supplying State authorizes such use.

3. In no case shall the provisions of paragraphs 1 and 2 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 (including documents or authenticated

copies of the documents) 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).

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

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

measures to obtain the requested information, even though that other State 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 State 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 State 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 27

LIMITATION OF BENEFITS

1. Nothing in this Agreement shall affect the application of the domestic

provisions to prevent tax evasion.

2. Benefits of this Agreement shall not be available to a resident of a

Contracting State, or with respect to any transaction undertaken by such a resident,

if the main purpose or one of the main purposes of the creation or existence of such

a resident or of the transaction undertaken by him, was to obtain benefits under this

Agreement that would not otherwise be available.

3. The case of legal entities not having bona fide business activities shall

be covered by the provisions of this Article.

Article 28

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement 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

1. The Contracting States shall notify each other in writing, through

diplomatic channels, of the completion of the procedures required by the

respective laws for the entry into force of this Agreement.

2. This Agreement shall enter into force on the date of the later of the

notifications referred to in paragraph 1 of this Article.

3. The provisions of this Agreement shall have effect

a)

In India, in respect of income derived in any fiscal year beginning

on or after the first day of April next following the calendar year in which the

Agreement enters into force; and

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.

4. The Agreement between and Malta and the Republic of India for the

Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to

Taxes on Income signed on 28th September, 1994 shall terminate and cease to have

effect from the date on which the provisions of this Agreement commence to have

effect.

Article 30

TERMINATION

This Agreement shall remain in force indefinitely until terminated by a

Contracting State. Either Contracting State may terminate the Agreement, through

diplomatic channels, by giving notice of termination at least six months before the

end of any calendar year beginning after the expiration of five years from the date

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

have effect

a)

In India, in respect of income derived in any fiscal year on or

after the first day of April next following the calendar year 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 authorized thereto,

have signed this Agreement.

DONE in duplicate at Valletta this 8 day of April 2013, each in the Hindi and

English languages, both texts being equally authentic. In case of divergence of

interpretation, the English text shall prevail.

George Vella

Preneet Kaur

For the Government

For the Government of

of Malta

the Republic of India

PROTOCOL

The Government of Malta and the Government of the Republic of India on

signing at Valletta, on the 8 April, 2013, the Agreement between Malta and the

Republic of India for the avoidance of double taxation and the prevention of fiscal

evasion with respect to taxes on income, have agreed that the following shall form

an integral part of the Agreement.

1. With reference to sub-paragraph (b) of paragraph 2 of Article 10, it is

understood that, under the full imputation system adopted by Malta, there is no

withholding tax on dividends in addition to the tax chargeable in respect of the

profits or income of the company out of which the dividends are paid.

2. The provisions of Articles 6 to 22 of the Agreement shall not apply to

a)

any person enjoying a special fiscal treatment under the

provisions of the Malta Merchant Shipping Act, 1973 to the extent that it is

not subject to tax on the profits derived from the operation of ships in

international traffic; or

b)

any company licensed under the Malta Freeport Act of 1989 to

the extent that it is not subject to tax on its profits as a result of such license;

or

c)

any person that enjoys a special fiscal treatment under any law

similar to those referred to in (a) or (b) above, enacted in Malta after the

signature of this Agreement.

3. It is understood that at the date of signature of this Agreement, the laws

of Malta permit it to lend assistance in collection of taxes on income, profits or

gains only to countries that are members of the European Union. However, if after

the date of signature of this Agreement, the laws of Malta change to provide

assistance in collection of taxes to any country which is not a member of the

European Union or Malta agrees to extend such assistance to any country which is

not a member of the European Union, then Malta shall forthwith inform the Indian

competent authority and the competent authorities of the Contracting States shall

by mutual agreement settle the mode of extending assistance in collection of taxes

to each other.

DONE in duplicate at Valletta this 8 day of April 2013, each in the English

and Hindi languages, both texts being equally authentic. In case of divergence of

interpretation, the English text shall prevail.

George Vella

Preneet Kaur

For the Government

For the Government of

of Malta

the Republic of India

€2.25