Double Taxation Relief (Taxes on Income)

L.N. 182 of 2018

INCOME TAX ACT

(CAP. 123)

Double Taxation Relief (Taxes on Income)

(The Federal Democratic Republic of Ethiopia) Order, 2018

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 is the Double Taxation Relief Citation.

(Taxes on Income) (The Federal Democratic Republic of Ethiopia)

Order, 2018.

Article 2

CONVENTION

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF MALTA

AND

THE GOVERNMENT OF THE FEDERAL DEMOCRATIC

REPUBLIC OF ETHIOPIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND

THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME

The Government of the Republic of Malta and the Government

of the Federal Democratic Republic of Ethiopia desiring to conclude a

Convention 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 Convention shall apply to persons who are residents of one

or both of the Contracting States.

Article 2

TAXES COVERED

1. This Convention shall apply to taxes on income imposed on

behalf of a Contracting State or of its political subdivisions or local

authorities, irrespective of the manner in which they are levied.

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

imposed on total income, or on elements of income, including taxes on

gains from the alienation of movable or immovable property and taxes

on the total amounts of wages or salaries paid by enterprises.

It is hereby declared:-

Arrangements to

have effect.

(a) that the arrangements specified in the Convention set

out in the Schedule to this Order (hereinafter referred to as "the

Convention") have been made with the Government of the

Federal Democratic Republic of Ethiopia with a view to

affording relief from double taxation in relation to the following

taxes imposed by the laws of the Federal Democratic Republic of

Ethiopia

-

the tax on income and profit; and

-

the tax on income from mining, petroleum and

agricultural activities;

(b) that it is expedient that those arrangements should

have effect following the entry into force of the Convention and

in accordance with the relevant provisions of the Convention;

(c) that the Convention shall enter into force on such date

as may be announced by notice in the Government Gazette.

The existing taxes to which the Convention shall apply are

in particular

(a)

in the case of Malta

the income tax;

(hereinafter referred to as "Malta tax");

(b)

in the case of Ethiopia

(i)

the tax on income and profit; and

(ii) the tax on income from mining, petroleum and

agricultural activities;

(hereinafter referred to as "Ethiopian tax").

The Convention shall apply also to any identical or

substantially similar taxes that are imposed after the date of signature

of the Convention in addition to, or in place of, the existing taxes. The

competent authorities of the Contracting States shall notify each other

of any significant changes that have been made in their respective

taxation laws.

Article 3

GENERAL DEFINITIONS

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

otherwise requires

(a) the terms "a Contracting State" and "the other

Contracting State" mean Malta or and Ethiopia;

(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 term "Ethiopia" means the Federal Democratic

Republic of Ethiopia, when used in a geographical sense, it

means the national territory and any other area which in

accordance with international law and the laws of Ethiopia is or

may be designated as an area in which Ethiopia exercises

sovereign rights or jurisdiction;

(d) the term "person" includes an individual, a company

and any other body of persons;

(e) the term "company" means any body corporate or any

entity that is treated as a body corporate for tax purposes;

(f) the terms "enterprise of a Contracting State" and

"enterprise of the other Contracting State" mean respectively an

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

enterprise carried on by a resident of the other Contracting State;

(g) the term "international traffic" means any transport

by a ship or aircraft operated by an enterprise which has its place

of effective management in a Contracting State, except when

such transport is operated solely between places in the other

Contracting State;

(h)

the term "national", in relation to a Contracting State,

means

(i) any individual possessing the nationality

of that Contracting State; and

(ii) any legal person, partnership or

association deriving its status as such from the laws

in force in that Contracting State;

(i)

the term "competent authority" means

(i) in the case of Malta, the Minister responsible

for finance or his authorised representative;

(ii) in the case of Ethiopia, the Minister of Finance

and Economic Cooperation or his authorised

representative.

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

a Contracting State, any term not defined therein shall, unless the

context otherwise requires, have the meaning that it has at that time

under the law of that State for the purposes of the taxes to which the

Convention applies any meaning under the applicable tax laws of that

State prevailing over a meaning given to the term under other laws of

that State.

Article 4

RESIDENT

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

Contracting State" means any person who, under the laws of that State,

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

incorporation, place of management or any other criterion of a similar

nature, and also includes that State and any political subdivision or

local authority thereof. This term, however, does not include any

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

sources in that State.

2. Where by reason of the provisions of paragraph 1 an

individual is a resident of both Contracting States, then his status shall

be determined as follows

(a) he shall be deemed to be a resident only of the State

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

permanent home available to him in both States, he shall be

deemed to be a resident only of the State with which his personal

and economic relations are closer (centre of vital interests);

(b) if the State in which he has his centre of vital interests

cannot be determined, or if he has not a permanent home

available to him in either State, he shall be deemed to be a

resident only of the State in which he has an habitual abode;

(c) if he has an habitual abode in both States or in neither

of them, he shall be deemed to be a resident only of the State of

which he is a national;

(d) if he is a national of both States or of neither of them,

the competent authorities of the Contracting States shall settle

the question by mutual agreement.

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

other than an individual is a resident of both Contracting States, then it

shall be deemed to be a resident only of the State in which its place of

effective management is situated.

Article 5

PERMANENT ESTABLISHMENT

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

establishment" means a fixed place of business through which the

business of an enterprise is wholly or partly carried on.

2. The term "permanent establishment" includes especially

(a)

a place of management;

(b)

a branch;

(c)

an office;

(d)

a factory;

(e)

a sales outlet;

(f)

a workshop;

(g) a mine, an oil or gas well, a quarry or any other place

of extraction of natural resources.

(h) a commercial warehouse (in relation to a person

carrying on business in the field of storage); and

(i) a farm, plantation or other place where agricultural,

forestry, plantation or related activities are carried on.

3. A building site or construction or installation project

constitutes a permanent establishment only if it lasts more than six

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 stock of goods or merchandise

belonging to the enterprise, which is exhibited at a trade fair or

exhibition, and which is sold by the enterprise at the end of such

fair or exhibition, provided that the frequency of such trade fair

or exhibition shall not exceed once in a twelve month period;

(e) the maintenance of a fixed place of business solely

for the purpose of purchasing goods or merchandise, or of

collecting information, for the enterprise;

(f) the maintenance of a fixed place of business solely

for the purpose of advertising for the enterprise;

(g) 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;

(h) the maintenance of a fixed place of business solely

for any combination of activities mentioned in sub-paragraphs

(a) to (g), 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 on behalf of an enterprise and has, and

habitually exercises, in a Contracting State an authority to conclude

contracts in the name of the enterprise, that enterprise shall be deemed

to have a permanent establishment in that State 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.

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 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, where the

activities of such an agent are devoted wholly or mainly to that

enterprise and conditions are made or imposed between that enterprise

and the agent in their commercial and financial relations which differ

from those which would have been made between independent

enterprises he would 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 (including income from agriculture or forestry)

situated in the other Contracting State may be taxed in that other State.

2. The term "immovable property" shall have the meaning

which it has under the law of the Contracting State in which the

property in question is situated. The term shall in any case include

property accessory to immovable property, livestock and equipment

used in agriculture and forestry, rights to which the provisions of

general law respecting landed property apply, usufruct of immovable

property and rights to variable or fixed payments as consideration for

the working of, or the right to work, mineral deposits, sources and

other natural resources; ships 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 are 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. This

provision shall apply subject to limitations under the domestic law,

provided that those limitations are consistent with the principles of

paragraph 2 of Article 24.

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 Convention, then the provisions of

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

Article 8

INTERNATIONAL TRAFFIC

1. Profits from the operation of ships or aircraft in

international traffic shall be taxable only in the Contracting State in

which the place of effective management of the enterprise is situated.

2. If the place of effective management of a shipping

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

Contracting State in which the home harbour of the ship is situated, or,

if there is no such home harbour, in the Contracting State of which the

operator of the ship is a resident.

3. For the purposes of this Article, profits from the operation

of ships or aircraft in international traffic include

(a)

profits from the rental on a bareboat basis of ships or

aircraft;

(b) profits from the use, maintenance or rental of

containers (including trailers and related equipment for the

transport of containers) used for the transport of goods or

merchandise; and

(c) profits from the sale of tickets for such transportation

on behalf of other enterprises,

where such rental, use, maintenance or sale of tickets, as the case

may be, is incidental to the operation of ships or aircraft in

international traffic.

4. For the purposes of this Article, interest on funds 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, and the provisions of Article 11 shall not apply in relation to

such interest.

5. 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 that State - and taxes accordingly - profits on which an

enterprise of the other Contracting State has been charged to tax in that

other State and the profits so included are profits which would have

accrued to the enterprise of the first-mentioned State if the conditions

made between the two enterprises had been those which would have

been made between independent enterprises, then that other State shall

make an appropriate adjustment to the amount of the tax charged

therein on those profits. In determining such adjustment, due regard

shall be had to the other provisions of this Convention 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) where the dividends are paid by a company which is a

resident of Ethiopia to a resident of Malta who is the beneficial

owner thereof, the tax so charged in Ethiopia shall not exceed

five per cent of the gross amount of the dividends;

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

resident of Malta to a resident of Ethiopia who is the beneficial

owner thereof, Malta tax on the gross amount of the dividends

shall not exceed that chargeable on the profits out of which the

dividends are paid. Under the Maltese law presently in force,

income tax paid by a company, as is referable to that part of its

profits which is distributed by way of dividends, is assimilated

with the personal income tax of the shareholder in receipt of such

dividends. In the shareholder’s hands, the dividend is charged to

tax after being grossed up with the tax paid by the company on

the profits out of which such dividend is paid and the relevant

amount of tax, so assimilated, is set off against the shareholder’s

tax liability on his income from all sources liable to tax.

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, "jouissance" shares or "jouissance" rights, 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 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 five per

cent of the gross amount of the interest.

3. 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.

4. The provisions of paragraph 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.

5. 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 Contracting State in which the permanent establishment or fixed

base is situated.

6. Where, by reason of a special relationship between the

payer and the beneficial owner or between both of them and some

other person, the amount of the interest, having regard to the debt-

claim for which it is paid, exceeds the amount which would have been

agreed upon by the payer and the beneficial owner in the absence of

such relationship, the provisions of this Article shall apply only to the

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

shall remain taxable according to the laws of each Contracting State,

due regard being had to the other provisions of this Convention.

Article 12

ROYALTIES

1. Royalties arising in a Contracting State and paid to a

resident of the other Contracting State may be taxed in that other State.

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

Contracting State in which they arise and according to the laws of that

State, but if the beneficial owner of the royalties is a resident of the

other Contracting State, the tax so charged shall not exceed five 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

computer software, cinematograph films and recordings on tape or

other media used for radio or television broadcasting or other means of

reproduction or transmission, 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 paragraph 1and 2 shall not apply if the

beneficial owner of the royalties, being a resident of a Contracting

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

royalties arise through a permanent establishment situated therein, or

performs in that other State independent personal services from a fixed

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

royalties are paid is effectively connected with such permanent

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

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

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

when the payer is a resident of that State. Where, however, the person

paying the royalties, whether he is a resident of a Contracting State or

not, has in a Contracting State a permanent establishment or a fixed

base in connection with which the liability to pay the royalties was

incurred, and such royalties are borne by such permanent

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

arise in the Contracting State in which the permanent establishment or

fixed base is situated.

6. Where, by reason of a special relationship between the

payer and the beneficial owner or between both of them and some

other person, the amount of the royalties, having regard to the use,

right or information for which they are paid, exceeds the amount

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

owner in the absence of such relationship, the provisions of this Article

shall apply only to the last-mentioned amount. In such case, the excess

part of the payments shall remain taxable according to the laws of each

Contracting State, due regard being had to the other provisions of this

Convention.

Article 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 in

which the place of effective management of the enterprise is situated.

4. Gains derived by a resident of a Contracting State from the

alienation of shares deriving more than 50 per cent of their value

directly or indirectly from immovable property situated in the other

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

respect of professional services or other activities of an independent

character shall be taxable only in that State unless he has a fixed base

regularly available to him in the other Contracting State for the

purpose of performing his activities. If he has such a fixed base, the

income may be taxed in the other State but only so much of it as is

attributable to that fixed base.

2. The term "professional services" includes especially

independent scientific, literary, artistic, educational or teaching

activities as well as the independent activities of physicians, lawyers,

engineers, architects, dentists and accountants.

Article 15

DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18, 19, 20 and 21,

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 by a resident of a Contracting State in respect of

an employment exercised aboard a ship or aircraft operated in

international traffic may be taxed in the Contracting State in which the

place of effective management of the enterprise is situated.

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 of 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 his or her 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 or her capacity as such accrues

not to the entertainer or sportsperson himself or herself 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. Notwithstanding the provisions of paragraphs 1 and 2,

income derived from the activities referred to in paragraph 1 within the

framework of cultural or sports exchanges agreed to by the

Governments of the Contracting States and carried out other than for

the purpose of profit, shall be exempt from tax in the Contracting State

in which these activities are exercised.

Article 18

PENSIONS AND ANNUITIES

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 and any annuity

paid to such a resident shall be taxable only in that State.

2. Notwithstanding the provisions of paragraph 1, such

pension or similar remuneration or annuity made under the social

security legislation of a Contracting State shall be taxable only in that

State.

3. The term "annuity" means a stated sum payable

periodically at stated times during life or during a specified or

ascertainable period of time under an obligation to make the payments

in return for adequate and full consideration in money or money's

worth.

Article 19

GOVERNMENT SERVICE

1. (a) Salaries, wages and other similar remuneration 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) Notwithstanding the provisions of paragraph 1,

pensions and other similar remuneration 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 pensions and similar remuneration

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, pensions and other similar remuneration 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

STUDENTS AND BUSINESS APPRENTICES

1. Payments which a student or business apprentice who is or

was immediately before visiting a Contracting State a resident of the

other Contracting State and who is present in the first-mentioned State

solely for the purpose of his education or training, receives for the

purpose of his maintenance, education or training shall not be taxed in

that State, provided that such payments arise from sources outside that

State.

2. In respect of grants, scholarships and remuneration from

employment not covered by paragraph 1, a student or business

apprentice referred to in that paragraph shall, in addition, be entitled

during such education or training to the same exemptions, reliefs or

reductions in respect of taxes available to residents of the Contracting

State which he is visiting.

Article 21

PROFESSORS AND RESEARCHERS

1. An individual who is or was a resident of a Contracting

State immediately before making a visit to the other Contracting State

and who, at the invitation of any university, college, school or other

similar non-profitable educational institution, which is recognized by

the Government of that other Contracting State, is present in that other

State for a period not exceeding two years from the date of his first

arrival in that other Contracting State, solely for the purpose of

teaching or research or both, at such educational institution shall be

exempt from tax in that other Contracting State on his remuneration

for teaching or research.

2. The provisions of paragraph 1 of this Article shall not apply

to income from research if such research is undertaken not in the

public interest but for the private benefit of a specific person or

persons.

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

Convention shall be taxable only in that State.

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

other than income from immovable property as defined in paragraph 2

of Article 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 paragraphs 1 and 2,

items of income of a resident of a Contracting State not dealt with in

the foregoing Articles of this Convention and arising in the other

Contracting State may also be taxed in that other State.

Article 23

ELIMINATION OF DOUBLE TAXATION

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

follows

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 Convention, there is included

in a Malta assessment income from sources within Ethiopia, the

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

relative Malta tax payable thereon.

2. In the case of Ethiopia, double taxation shall be eliminated

as follows

Where a resident of Ethiopia derives income, which in

accordance with the provisions of this Convention, may be taxed in

Malta, Ethiopia shall allow as a deduction from the tax on the income

of that resident an amount equal to the income tax paid in Malta.

Such deduction shall not, however, exceed that part of the

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

attributable to the income which may be taxed in Malta.

3. For the purpose of paragraph 1, where the income arising in

Ethiopia is exempt or taxed at a reduced rate in Ethiopia, for a limited

period of time in accordance with the laws and regulations of Ethiopia

aimed at promoting economic development, then the tax on such

income which has been exempt or taxed at a reduced rate in Ethiopia

shall be credited against the tax on income owing in Malta where the

beneficial owner of this income is a resident.

4. The provisions of paragraph 3 shall apply for the first ten

years for which this Convention is effective. The competent authorities

of the Contracting States may consult each other to determine whether

this period may be extended.

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 favourably levied in that other State than the taxation

levied on enterprises of that other State carrying on the same activities.

This provision shall not be construed as obliging a Contracting State to

grant to residents of the other Contracting State any personal

allowances, reliefs and reductions for taxation purposes on account of

civil status or family responsibilities which it grants to its own

residents.

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

paragraph 6 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 Contracting 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 Convention, he may,

irrespective of the remedies provided by the domestic law of the

Contracting 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 Convention.

2. The competent authority shall endeavour, if the objection

appears to it to be justified and if it is not itself able to arrive at a

satisfactory solution, to resolve the case by mutual agreement with the

competent authority of the other Contracting State, with a view to the

avoidance of taxation which is not in accordance with the Convention.

Any agreement reached shall be implemented notwithstanding any

time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall

endeavour to resolve by mutual agreement any difficulties or doubts

arising as to the interpretation or application of the Convention. They

may also consult together for the elimination of double taxation in

cases not provided for in the Convention.

4. The competent authorities of the Contracting States may

communicate with each other directly, including through a joint

commission consisting of themselves or their representatives, for the

purpose of reaching an agreement in the sense of the preceding

paragraphs.

Article 26

EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall

exchange such information as is foreseeably relevant for carrying out

the provisions of this Convention 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 Convention. 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, or 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 authorises 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 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

MEMBERS OF DIPLOMATIC MISSIONS

AND CONSULAR POSTS

Nothing in this Convention shall affect the fiscal privileges of

members of diplomatic missions or consular posts under the general

rules of international law or under the provisions of special

agreements.

Article 28

ENTRY INTO FORCE

1. The Contracting States shall notify each other in writing

through diplomatic channels that their legal requirements for entry into

force of this Convention have been fulfilled.

2. The Convention shall enter into force thirty days after the

date of the later of the notifications referred to in paragraph 1 and its

provisions shall have effect

(a)

in the case of Malta

in respect of taxes on income derived during any fiscal year

beginning on or after the first day of January immediately

following the date on which the Convention enters into force;

(b)

in the case of Ethiopia

(i) with regard to taxes withheld at source, in respect of

amounts paid on or after the eighth day of July next following the date

on which the Convention enters into force; and

(ii) with regard to other taxes, in respect of fiscal year

beginning on or after the eighth day of July next following the date on

which the Convention enters into force.

Article 29

TERMINATION

1. This Convention shall remain in force until terminated by a

Contracting State. Either Contracting State may terminate the

Convention at any time after five years from the date on which the

Convention enters into force by giving notice of termination, through

diplomatic channels, at least six months before the end of any fiscal

year.

2. In such event, the Convention shall cease to have effect

(a)

in the case of Malta

in respect of taxes on income derived during any fiscal year

beginning on or after the first day of January immediately

following the date on which the notice is given;

(b)

in the case of Ethiopia

(i) with regard to taxes withheld at source, in

respect of amounts paid on or after the eighth day of July

next following the date on which the notice is given; and

(ii) with regard to other taxes, in respect of fiscal

year beginning on or after the eighth day of July next

following the date on which the notice is given.

IN WITNESS WHEREOF the undersigned, being duly

authorised thereto by their respective Governments, have signed this

Convention.

DONE and signed at Valletta, this 12 th day of April, 2018 in

duplicate, in the English language only.

For the Government of the

For the Government of the

Republic of Malta

Federal Democratic Republic of

Ethiopia

Ms. Maria Camilleri Calleja

H.E. Zenebu Tadesse Woldetsadik

Director General, Political,

Ambassador Extraordinary and

European Affairs and Maltese

Plenipotentiary of the Federal

Living Abroad

Democratic Republic of Ethiopia

Ministry for Foreign Affairs

and Trade Promotion to Malta

€2.34