DOUBLE TAXATION RELIEF (TAXES ON INCOME) (THE KINGDOM OF SAUDI ARABIA) ORDER

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(THE KINGDOM OF SAUDI ARABIA)

SUBSIDIARY LEGISLATION 123.138

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(THE KINGDOM OF SAUDI ARABIA) ORDER

15th January, 2013

LEGAL NOTICE 25 of 2013, as modified by S.L.123.183.

This title of this Order is the Double Taxation Relief (Taxes

on Income) (The Kingdom of Saudi Arabia) Order.

CONVENTION BETWEEN

THE GOVERNMENT OF MALTA AND

THE GOVERNMENT OF THE KINGDOM OF SAUDI ARABIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

TAX EVASION WITH RESPECT TO TAXES ON INCOME

The Government of Malta and the Government of the Kingdom of Saudi Arabia,

desiring to conclude a Convention for the avoidance of double taxation and the

prevention of tax 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 administrative 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 Convention set

out in the Schedule to this Order have been made with

the Government of The Kingdom of Saudi Arabia with

a view to affording relief from double taxation in

relation to the following taxes imposed by the laws of

The Kingdom of Saudi Arabia

(i) the Zakat; and

(ii) the natural gas investment tax;

(b) that it is expedient that those arrangements should

have effect;

(c) that the Convention has entered into force on 1st

December 2012.

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The existing taxes to which this 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 the Kingdom of Saudi Arabia

-

the Zakat;

-

the income tax including the natural gas investment tax

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

The provisions of this Convention shall also apply to any identical or

substantially similar taxes which are imposed by either Contracting State after the

date of signature of this Convention in addition to, or in place of, the existing taxes.

The competent authorities in both Contracting States shall notify each other of any

significant changes which 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 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

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with international law and its national law, including its legislation

relating to the exploration of the continental shelf and exploitation of its

natural resources;

(b)

the term "Kingdom of Saudi Arabia" means the territory of the Kingdom

of Saudi Arabia which also includes the area outside the territorial

waters, where the Kingdom of Saudi Arabia exercises its sovereign and

jurisdictional rights in their waters, sea bed, sub-soil and natural

resources by virtue of its law and international law;

(c)

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

Malta or the Kingdom of Saudi Arabia, as the context requires;

(d)

the term "person" includes an individual, a company and any other body

of persons including the State and its administrative sub-divisions or

local authorities;

(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 of a Contracting State which has its place of

effective management in a Contracting State, except when the ship or

aircraft is operated solely between places in the other Contracting State;

(h)

the term "competent authority" means

(i) in the case of Malta: the Minister responsible for finance or his

authorised representative;

(ii) in the case of the Kingdom of Saudi Arabia, the Ministry of

Finance represented by the Minister of Finance or his authorized

representative;

(i)

the term "national" means

(i) any individual possessing the nationality of a Contracting State;

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

such from the laws in force in a Contracting State.

2. As regards the application of this 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 in that

State 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 administrative 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 of this Article, an

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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 Contracting State in

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

home available to him in both Contracting States, he shall be deemed to

be a resident only of the Contracting State with which his personal and

economic relations are closer (centre of vital interests);

(b) if the Contracting 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 Contracting State, he shall be deemed to be a resident only

of the Contracting State in which he has an habitual abode;

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

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

of which he is a national;

(d) if he is a national of both Contracting 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 of this Article, 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 workshop; and

(f)

any place of extraction of natural resources.

3. The term “permanent establishment” also includes

(a) A building site, a construction, assembly or installation project, or

supervisory activities, in connection therewith, but only where such

site, project or activities continue for a period more than 6 months;

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

enterprise through employees or other personnel engaged by the

enterprise for such purpose, but only where activities of that nature

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

State for a period or periods aggregating more than 6 months within any

12-month period.

4. Notwithstanding the preceding provisions of this Article, the term

"permanent establishment" shall be deemed not to include

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(a) the use of facilities solely for the purpose of storage, display or delivery

of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the

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

(c) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of

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

enterprise;

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

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

auxiliary character;

(f) the maintenance of a fixed place of business solely for any combination

of activities mentioned in sub-paragraphs (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;

(g) the sale of goods or merchandise belonging to the enterprise displayed

at an occasional temporary fair or exhibition after the closing of the said

fair or exhibition.

Notwithstanding the provisions of paragraphs 1 and 2 of this Article, where

a person - other than an agent of an independent status to whom paragraph 6 of this

Article applies - is acting in a Contracting State on behalf of an enterprise of the

other Contracting State, 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 the first-mentioned Contracting 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 of this Article

which, if exercised through a fixed place of business, would not make this fixed

place of business a permanent establishment under the provisions of that paragraph.

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

permanent establishment in the other Contracting State merely because it carries on

business in that other Contracting State through a broker, general commission agent

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

the ordinary course of their business.

The fact that a company which is a resident of a Contracting State controls

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

which carries on business in that other State (whether through a permanent

establishment or otherwise), shall not of itself constitute either company a

permanent establishment of the other.

Article 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 Contracting 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. This

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

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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 of this Article 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 of this Article 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 of this Article, 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 Contracting State in which the permanent establishment

is situated or elsewhere. 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 or other rights, or by way of commission, for specific services performed or

for management, or, except in the case of a banking enterprise, by way of income

from debt-claims with regard to moneys lent to the permanent establishment.

Likewise, no account shall be taken, in the determination of the profits of a

p e r m a n e n t e s t a b l i s h m e n t , f o r a m o u n t s c h a rg e d ( o t h e r w i s e t h a n t o w a r d s

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 or other rights, or by way of

commission for specific services performed or for management, or, except in the

case of a banking enterprise, by way of income from debt-claims with regard to

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

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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. Nothing in this Article shall affect the operation of any law of a Contracting

State relating to tax imposed on income derived by non-residents from insurance

activities.

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

SHIPPING AND AIR TRANSPORT

1. Profits of an enterprise of a Contracting State 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. The term "profits derived from the international operation of a ship or

aircraft" includes

(i)

profits derived from the rental on a full (time or voyage) basis of a ship

or aircraft used in international transport;

(ii) profits derived from the rental on a bareboat basis of a ship or aircraft

used in international transport;

(iii) profits derived from the use or rental of containers and related

equipment used in international transport that is incidental to income

from the international operation of a ship or aircraft.

3. 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.

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 that

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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 Contracting State.

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

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

that State, but

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

Kingdom of Saudi Arabia to a resident of Malta who is the beneficial

owner thereof, the tax so charged in the Kingdom of Saudi Arabia shall

not exceed 5 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 the Kingdom of Saudi Arabia 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. In any case, under the full imputation system adopted by Malta,

there is no final 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.

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 of this Article 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 of this Convention, 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

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situated in that other State, nor subject the company's undistributed profits to a tax

o n t h e c o m p a n y ' s u n d i s t r i b u t e d p r o f i t s , e v e n i f t h e d i v i d e n d s pa i d o r t h e

undistributed profits consist wholly or partly of profits or income arising in such

other State.

Article 11

INCOME FROM DEBT-CLAIMS

1. Income from debt-claims arising in a Contracting State and paid to a

resident of the other Contracting State shall be taxable only in that other Contracting

State.

2. The term "Income from Debt-Claims" 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 debt-claims for the purpose of this

Article.

3. The provisions of paragraphs 1 of this Article shall not apply if the

beneficial owner of the income from debt-claims, being a resident of a Contracting

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

debt-claims arises, through a permanent establishment situated therein, or performs

in that other Contracting State independent personal services from a fixed base

situated therein, and the debt-claim in respect of which such income is paid is

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

the provisions of Article 7 or Article 14 of this Convention, as the case may be, shall

apply.

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

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

income from debt-claims, 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 Contracting State.

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

they arise and according to the laws of that Contracting State, but if the recipient is

the beneficial owner of the royalties, the tax so charged shall not exceed

(a) 5 per cent of the gross amount of the royalties which are paid for the use

of, or the right to use, industrial, commercial, or scientific equipment;

(b) 7 per cent of the gross amount of the royalties in all other cases.

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

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

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

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

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

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commercial, or scientific equipment, or for information concerning industrial,

commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 of this Article 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 of

this Convention, as the case may be, shall apply.

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

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

a resident of a Contracting State or not, has in a Contracting State a permanent

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

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

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

in which the permanent establishment or fixed base is situated.

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

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

royalties, having regard to the use, right or information for which they are paid,

exceeds the amount which would have been agreed upon by the payer and the

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

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

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

regard being had to the other provisions of this Convention.

Article 13

CAPITAL GAINS

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

immovable property referred to in Article 6 of this Convention 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 Contracting 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 Contracting State.

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

4 of this Article representing a participation of 20 per cent or more in a company

which is a resident of a Contracting State may be taxed in that Contracting State.

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

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preceding paragraphs 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 Contracting State except in the following circumstances, when such

income may also be taxed in the other Contracting State

(a) if he has a fixed base regularly available to him in the other Contracting

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

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

that other Contracting State; or

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

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

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

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

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

Contracting State.

2. The term "professional services" includes especially independent scientific,

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

activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15

DEPENDENT PERSONAL SERVICES

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

Convention, 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

Contracting State unless the employment is exercised in the other Contracting State.

If the employment is so exercised, such remuneration as is derived therefrom may be

taxed in that other Contracting State.

2. Notwithstanding the provisions of paragraph 1 of this Article, 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 Contracting 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 Contracting State, and

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

base which the employer has in the other Contracting 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 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

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

Article 17

ARTISTES AND SPORTS PERSONS

1. Notwithstanding the provisions of Articles 14 and 15 of this Convention,

income derived by a resident of a Contracting State as an entertainer, such as a

theatre, motion picture, radio or television artiste, or a musician, or as a

sportsperson, from his personal activities as such exercised in the other Contracting

State, may be taxed in that other Contracting 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 of this Convention, be taxed in the Contracting State in which

the activities of the entertainer or sportsperson are exercised.

3. Income derived by a resident of a Contracting State from activities exercised

in the other Contracting State as envisaged in paragraphs 1 and 2 of this Article,

shall be exempt from tax in that other Contracting State if the visit to that other

Contracting State is supported wholly or mainly by public funds of the first-

mentioned Contracting State, an administrative subdivision or a local authority

thereof, or takes place under a cultural agreement or arrangement between the

Governments of the Contracting States.

Article 18

PENSIONS

1. Subject to the provisions of paragraph 2 of Article 19 of this Convention,

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

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

2. Notwithstanding the provisions of paragraph 1 of this Article, pensions paid

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

system of a Contracting State or an administrative subdivision or a local authority

thereof shall be taxable only in that Contracting State.

Article 19

GOVERNMENT SERVICE

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

paid by a Contracting State or an administrative 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

Contracting State.

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

taxable only in the other Contracting State if the services are rendered in

that other Contracting State and the individual is a resident of that

Contracting State who

(i) is a national of that Contracting State; or

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

purpose of rendering the services.

2. (a) Any pensions and other similar remuneration paid by, or out of funds

created by, a Contracting State or an administrative subdivision or a

local authority thereof to an individual in respect of services rendered to

that Contracting State or subdivision or authority shall be taxable only

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(THE KINGDOM OF SAUDI ARABIA)

in that Contracting 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 other Contracting State.

3. The provisions of Articles 15, 16, 17 and 18 of this Convention 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 an

administrative subdivision or a local authority thereof.

Article 20

STUDENTS

1. Payments which a student, trainee 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 Contracting State, provided that such payments

arise from sources outside that Contracting State.

2. Remuneration which a student, trainee or business apprentice who is or was

formerly a resident of a Contracting State derives from an employment which he

exercises in the other Contracting State for a period or periods not exceeding in the

aggregate 183 days in the fiscal year concerned shall not be taxed in that other

Contracting State if the employment is directly related to his studies or

apprenticeship.

Article 21

TEACHERS AND RESEARCHERS

An individual who is a resident of a Contracting State immediately before making

a visit to the other Contracting State and who, at the invitation of any recognized

university, college, school or other similar educational institution or scientific

research institution, visits that other Contracting State for a period not exceeding 3

years from the date of his arrival in that other Contracting State solely for the

purpose of teaching or research or both at such educational or research institution,

shall be exempt from tax in that other Contracting State on any remuneration derived

from such teaching or research.

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 of this Convention,

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 of this Convention, as the case may be,

shall apply.

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(THE KINGDOM OF SAUDI ARABIA)

Article 23

METHODS FOR ELIMINATION OF DOUBLE TAXATION

1. Where a resident of a Contracting State derives income which, in accordance

with the provisions of this Convention, may be taxed in the other Contracting State,

the first-mentioned Contracting State shall allow as a credit against the tax on the

income of that resident, an amount equal to the income tax paid in that other

Contracting State.

Such credit shall not, however, exceed that part of the income tax, as computed

before the credit is given, which is attributable to the income which may be taxed in

that other Contracting State.

2. In the case of the Kingdom of Saudi Arabia, the methods for elimination of

double taxation will not prejudice the provisions of the Zakat collection regime as

regards Saudi nationals.

Article 24

MUTUAL AGREEMENT PROCEDURE

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

States result or will result for him in taxation not in accordance with the provisions

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

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

State of which he is a resident. The case must be presented within three years from

the first notification of the action resulting in taxation not in accordance with the

provisions of the Convention.

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

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

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

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

Convention. Any agreement reached shall be implemented notwithstanding any time

limits in the domestic law of the Contracting States.

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

r e s o l v e b y m u t u a l a g r e e m e n t a n y d i ff i c u l t i e s o r d o u b t s a r i s i n g a s t o t h e

interpretation or application of this Convention. They may also consult together for

the elimination of double taxation in cases not provided for in this Convention.

4. The competent authorities of the Contracting States may communicate with

each other for the purpose of reaching an agreement in the sense of the preceding

paragraphs.

5. The competent authorities of the Contracting States may by mutual

agreement settle the appropriate mode of application of this Convention and,

especially, the requirements to which the residents of a Contracting State shall be

subjected in order to obtain, in the other Contracting State, the tax reliefs or

exemptions provided for by this Convention.

Article 25

EXCHANGE OF INFORMATION

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

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

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

Convention insofar as the taxation thereunder is not contrary to the Convention. The

exchange of information is not restricted by Article 1 of this Convention.

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(THE KINGDOM OF SAUDI ARABIA)

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

treated as confidential 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 covered by this Convention. Such persons or

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

information in public court proceedings or in judicial decisions.

3. In no case shall the provisions of paragraphs 1 and 2 of this Article 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 of this Article 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 of this Article 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 26

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 27

MISCELLANEOUS PROVISIONS

Nothing in this Convention shall affect the application of the domestic provisions

to prevent tax evasion and tax avoidance.

Article 28

ENTRY INTO FORCE

1. Each of the Contracting States shall notify the other through diplomatic

channels the completion of the procedures required by its law for the entry into force

of this Convention. The Convention shall enter into force on the first day of the

second month following the month in which the latter of these notifications was

received.

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(THE KINGDOM OF SAUDI ARABIA)

2. The provisions of this Convention shall apply

(a) with regard to taxes withheld at source, in respect of amounts paid on or

after the first day of January next following the date upon which this

Convention enters into force; and

(b) with regard to other taxes, in respect of taxable years beginning on or

after the first day of January next following the date upon which this

Convention enters into force.

Article 29

TERMINATION

1. This Convention shall remain in force indefinitely but either of the

Contracting States may terminate this Convention through diplomatic channels, by

giving to the other Contracting State written notice of termination not later than 30

June of any calendar year starting five years after the year in which this Convention

entered into force.

2. In such event this Convention shall cease to apply

(a) with regard to taxes withheld at source, in respect of amounts paid after

the end of the calendar year in which such notice is given; and

(b) with regard to other taxes, in respect of taxable years beginning after the

end of the calendar year in which such notice is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their

respective Governments, have signed this Convention.

DONE in duplicate at Riyadh 4th day of January 2012 corresponding to the 10th

day of Safar 1433, in the English and Arabic languages, both texts being equally

authentic.

ON BEHALF OF THE

ON BEHALF OF THE GOVERNMENT

GOVERNMENT OF MALTA

OF THE KINGDOM OF SAUDI ARABIA

Tonio Borg

Ibrahim A. Al-Assaf

Deputy Prime Minister

Minister of Finance

and Minister of Foreign Affairs

PROTOCOL

At the moment of the signing the Convention between the Government of Malta

and the Government of the Kingdom of Saudi Arabia for the Avoidance of Double

Taxation and the Prevention of Tax Evasion with respect to Taxes on Income, the

undersigned have agreed upon the following provisions which shall be an integral

part of the Convention.

1. With reference to Article 4 (Residence) it is understood that the term

"resident of a Contracting State" includes

(a) a pension scheme established in that State; and

(b) an organisation that is established and is operated exclusively for

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(THE KINGDOM OF SAUDI ARABIA)

religious, charitable, scientific, cultural or educational purposes (or for

more than one of those purposes) and that is a resident of that State

according to its laws, notwithstanding that all or part of its income or

gains may be not subject or exempt from tax in that State.

2. With reference to Article 7 (Business Profits) it is understood that

(a) business profits derived by an enterprise of a Contracting State from the

exportation of merchandise to the other Contracting State shall not be

taxed in that other Contracting State. Where export contracts include

other activities carried on in the other Contracting State profits derived

from such activities may be taxed in the other Contracting State;

(b) the term “business profits” includes, but is not limited to income

derived from manufacturing, mercantile, banking, insurance, from the

operation of inland transportation, the furnishing of services and the

rental of tangible personal movable property. Such a term does not

include the performance of personal services by an individual either as

an employee or in an independent capacity.

3. With reference to Article 10 (Dividends) it is understood that

(a) The provisions of paragraph 2(b) of Article 10 shall continue to apply in

Malta as long as Malta operates the full imputation system of taxation

of company profits and of the subsequent distribution of such profits to

the company’s shareholders. If the present system is changed, the

Contracting States shall consult with each other to consider whether any

such change in Malta’s system of taxation would necessitate any

revision of the provisions of Article 10.

(b) Notwithstanding any provision of the Convention, profits of a company

of a Contracting State carrying on business in the other Contracting

State through a permanent establishment situated therein may, after

having been taxed under Article 7, be taxed on the remaining amount in

the Contracting State in which the permanent establishment is situated

and the tax so charged shall not exceed 5 per cent.

4. With reference to Article 25 (Exchange of Information) it is understood that

information received under the said Article shall be used only for the purposes of the

taxes covered by the Convention.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their

respective Governments, have signed this Protocol.

DONE in duplicate at Riyadh 4th day of January 2012 corresponding to the 10th

day of Safar 1433, in the English and Arabic languages, both texts being equally

ON BEHALF OF THE

ON BEHALF OF THE GOVERNMENT

GOVERNMENT OF MALTA

OF THE KINGDOM OF SAUDI ARABIA

Tonio Borg

Ibrahim A. Al-Assaf

Deputy Prime Minister

Minister of Finance

and Minister of Foreign Affairs