DOUBLE TAXATION RELIEF (TAXES ON INCOME) (REPUBLIC OF INDIA) ORDER (republicofindia)

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

SUBSIDIARY LEGISLATION 123.34

DOUBLE TAXATION RELIEF (TAXES ON INCOME)

(REPUBLIC OF INDIA) ORDER

20th December, 2013

LEGAL NOTICE 448 of 2013, as modified by S.L.123.183.

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

on Income) (Republic of India) Order.

Article 2

AGREEMENT

BETWEEN

THE GOVERNMENT OF MALTA

AND

THE GOVERNMENT OF THE REPUBLIC OF INDIA

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME

The Government of Malta and the Government of the Republic of India, desiring

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

fiscal evasion with respect to taxes on income and with a view to promoting

economic cooperation between the two countries, have agreed as follows

Article 1

PERSONS COVERED

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

Contracting States.

Article 2

TAXES COVERED

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

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

the manner in which they are levied.

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

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

movable or immovable property and taxes on the total amounts of wages or salaries

paid by enterprises.

It is hereby declared

(a) that the arrangements specified in the Agreement set

out in the Schedule to this Order (hereinafter referred

to as "the Agreement") have been made with the

Government of the Republic of India with a view to

affording relief from double taxation in relation to the

following taxes imposed by the laws of the Republic of

India

-

the income tax, including any surcharge thereon;

(b) that it is expedient that those arrangements should

have effect following the entry into force of the

Agreement order and in accordance with the relevant

provisions of the Agreement;

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

as may be announced by notice in the Government

Gazette. *

*the Agreement came into force on the 7th February, 2014 - see L.N. 67 of 2014.

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

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

a)

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

(hereinafter referred to as "Indian tax");

b)

in Malta, the income tax;

(hereinafter referred to as "Malta tax").

The Agreement shall apply also to any identical or substantially similar

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

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

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

respective taxation laws.

Article 3

GENERAL DEFINITIONS

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

a)

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

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

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

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

Convention on the Law of the Sea;

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

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;

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

the Republic of India or Malta as the context requires;

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

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

laws in force in the respective Contracting States;

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

treated as a body corporate for tax purposes;

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

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;

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

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

or aircraft is operated solely between places in the other Contracting

State;

the term "competent authority" means

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

authorized representative;

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

representative;

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;

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

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

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

which represents a penalty or fine imposed relating to those taxes;

the term "fiscal year" means

(i)

in the case of India: the financial year beginning on the 1st day of

April;

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

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

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

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

the meaning that it has at that time under the law of that State for the purposes of the

taxes to which the Agreement applies and any meaning under the applicable tax laws

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

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

Article 4

RESIDENT

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

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

reason of his domicile, residence, place of management or any other criterion of a

similar nature and also includes that State and any political subdivision or local

authority thereof. This term, however, does not include any person who is liable to

tax in that State in respect only of income from sources in that State.

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

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

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);

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;

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;

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

authorities of the Contracting States shall endeavour to settle the

question by mutual agreement.

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

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

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

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

determined, then the competent authorities of the Contracting States shall endeavour

to settle the question by mutual agreement.

Article 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term "permanent establishment"

means a fixed place of business through which the business of an enterprise is

wholly or partly carried on.

2. The term "permanent establishment" includes especially

a place of management;

a branch;

an office;

a factory;

a workshop;

a sales outlet;

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

or related activities are carried on; and

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

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

natural resources including an offshore drilling site.

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

supervisory activities in connection therewith constitutes a permanent

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

months.

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

enterprise through employees or other personnel engaged by the

enterprise for such purpose constitutes a permanent establishment, but

only where activities of that nature continue (for the same or connected

project) within a Contracting State for a period or periods aggregating

more than 90 days within any 12-month period.

4. Notwithstanding the preceding provisions of this Article the term

"permanent establishment" shall be deemed not to include

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

occasional delivery of goods or merchandise belonging to the

enterprise;

the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of storage, display or occasional

delivery;

the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of processing by another enterprise;

the maintenance of a fixed place of business solely for the purpose of

purchasing goods or merchandise or of collecting information, for the

enterprise;

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;

the maintenance of a fixed place of business solely for any combination

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

overall activity of the fixed place of business resulting from this

combination is of a preparatory or auxiliary character.

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

other than an agent of an independent status to whom paragraph 7 applies - is acting

in a Contracting State on behalf of an enterprise of the other Contracting State, that

enterprise shall be deemed to have a permanent establishment in the first-mentioned

Contracting State in respect of any activities which that person undertakes for the

enterprise, if such a person

has and habitually exercises in that State an authority to conclude

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

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

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

business a permanent establishment under the provisions of that

paragraph; or

has no such authority, but habitually maintains in the first-mentioned

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

goods or merchandise on behalf of the enterprise; or

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

wholly for the enterprise itself.

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

Notwithstanding the preceding provisions of this Article, an insurance

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

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

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

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

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

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

broker, general commission agent or any other agent of an independent status,

provided that such persons are acting in the ordinary course of their business.

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

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

status within the meaning of this paragraph.

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

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

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

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

permanent establishment of the other.

Article 6

INCOME FROM IMMOVABLE PROPERTY

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

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

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

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

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

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

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

rights to variable or fixed payments as consideration for the working of, or the right

to work, mineral deposits, sources and other natural resources; ships, boats and

aircraft shall not be regarded as immovable property.

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

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

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

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

for the performance of independent personal services.

Article 7

BUSINESS PROFITS

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

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

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

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

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

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

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

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

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

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

activities under the same or similar conditions and dealing wholly independently

with the enterprise of which it is a permanent establishment.

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

3. In determining the profits of a permanent establishment, there shall be

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

permanent establishment, including executive and general administrative expenses

so incurred, whether in the State in which the permanent establishment is situated or

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

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

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

the permanent establishment to the head office of the enterprise or any of its other

offices, by way of royalties, fees or other similar payments in return for the use of

patents, know-how or other rights, or by way of commission or other charges for

specific services performed or for management, or, except in the case of banking

enterprises, by way of interest on moneys lent to the permanent establishment.

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

permanent establishment, for amounts charged (otherwise than toward

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

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

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

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

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

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

4. Insofar as it has been customary in a Contracting State to determine the

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

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

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

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

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

principles contained in this Article.

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

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

enterprise.

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

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

unless there is good and sufficient reason to the contrary.

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

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

affected by the provisions of this Article.

Article 8

SHIPPING AND AIR TRANSPORT

1. Profits derived by an enterprise of a Contracting State from the operation of

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

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

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

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

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

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

State.

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

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

profits derived from the operation of such ships or aircraft if they are integral to the

carrying on of such business, and the provisions of Article 11 shall not apply in

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

relation to such interest.

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

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

Article 9

ASSOCIATED ENTERPRISES

1. Where

a)

an enterprise of a Contracting State participates directly or indirectly in

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

Contracting State, or

b)

the same persons participate directly or indirectly in the management,

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

enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in

their commercial or financial relations which differ from those which would be made

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

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

have not so accrued, may be included in the profits of that enterprise and taxed

accordingly.

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

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

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

profits which would have accrued to the enterprise of the first-mentioned State if the

conditions made between the two enterprises had been those which would have been

made between independent enterprises, then that other State shall make an

appropriate adjustment to the amount of the tax charged therein on those profits. In

determining such adjustment, due regard shall be had to the other provisions of this

Agreement and the competent authorities of the Contracting States shall if necessary

consult each other.

Article 10

DIVIDENDS

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

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

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

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

that State, but

a)

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

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

by India shall not exceed 10 per cent of the gross amount of the

dividends;

b)

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

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

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

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

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

profits out of which the dividends are paid.

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

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

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

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

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

INTEREST

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

Contracting State may be taxed in that other State.

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

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

interest is a resident of the other Contracting State, the tax so charged shall not

exceed 10 per cent of the gross amount of the interest.

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

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

and beneficially owned by

a)

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

Contracting State; or

b)

(i)

in the case of India, the Reserve Bank of India, the Export-Import

Bank of India, the National Housing Bank; and

(ii)

in the case of Malta, Central Bank of Malta; or

c)

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

the competent authorities of the Contracting States through exchange of

letters.

4. The term "interest" as used in this Article means income from debt claims of

every kind, whether or not secured by mortgage and whether or not carrying a right

to participate in the debtor's profits, and in particular, income from government

securities and income from bonds or debentures, including premiums and prizes

attaching to such securities, bonds or debentures. Penalty charges for late payment

shall not be regarded as interest for the purpose of this Article.

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

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

ot he r C o n tr a c t i ng St a t e in wh ic h the interest arises, through a pe r m a n e n t

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

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

services from a fixed base situated therein, and the debt claim in respect of which the

interest is paid is effectively connected with such permanent establishment or fixed

base. In such case the provisions of Article 7 or Article 14, as the case may be, shall

apply.

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

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

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

establishment or a fixed base in connection with which the indebtedness on which

the interest is paid was incurred, and such interest is borne by such permanent

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

which the permanent establishment or fixed base is situated.

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

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

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

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

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

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

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

other provisions of this Agreement.

Article 12

ROYALTIES AND FEES FOR TECHNICAL SERVICES

1. Royalties or fees for technical services arising in a Contracting State and

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

2. However, such royalties or fees for technical services may also be taxed in

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

if the beneficial owner of the royalties or fees for technical services is a resident of

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

gross amount of the royalties or fees for technical services.

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

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

copyright of literary, artistic or scientific work including cinematograph

films or films or tapes used for television or radio broadcasting, any

patent, trade mark, design or model, plan, secret formula or process, or

for the use of, or the right to use, industrial, commercial or scientific

equipment, or for information concerning industrial, commercial or

scientific experience.

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

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

of this Agreement as consideration for managerial or technical or

consultancy services, including the provision of services of technical or

other personnel.

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

of the royalties or fees for technical services being a resident of a Contracting State,

carries on business in the other Contracting State in which the royalties or fees for

technical services arise, through a permanent establishment situated therein, or

performs in that other State independent personal services from a fixed base situated

therein, and the right or property in respect of which the royalties or fees for

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

establishment or fixed base. In such case the provisions of Article 7 or Article 14, as

the case may be, shall apply.

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

5. (a) Royalties and fees for technical services shall be deemed to arise in a

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

subdivision, a local authority, or a resident of that State. Where,

however, the person paying the royalties or fees for technical services,

wheth er he is a resi dent of a Cont ractin g State o r n ot, has i n a

Contracting State a permanent establishm ent or a fixed base in

connection with which the liability to pay the royalties or fees for

technical services was incurred, and such royalties or fees for technical

services are borne by such permanent establishment or fixed base, then

such royalties or fees for technical services shall be deemed to arise in

the Contracting State in which the permanent establishment or fixed

base is situated.

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

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

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

technical services relate to services performed, in one of the

Contracting States, the royalties or fees for technical services shall be

deemed to arise in that Contracting State.

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

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

royalties or fees for technical services, having regard to the use, right or information

for which they are paid, exceeds the amount which would have been agreed upon by

the payer and the beneficial owner in the absence of such relationship, the provisions

of this Article shall apply only to the last-mentioned amount. In such case, the

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

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

Article 13

CAPITAL GAINS

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

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

State may be taxed in that other State.

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

property of a permanent establishment which an enterprise of a Contracting State has

in the other Contracting State or of movable property pertaining to a fixed base

available to a resident of a Contracting State in the other Contracting State for the

purpose of performing independent personal services, including such gains from the

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

of such fixed base, may be taxed in that other State.

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

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

be taxable only in the Contracting State of which the alienator is a resident.

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

Contracting State may be taxed in that State.

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

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

alienator is a resident.

Article 14

INDEPENDENT PERSONAL SERVICES

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

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

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

similar character shall be taxable only in that State except in the following

circumstances when such income may also be taxed in the other Contracting State

a)

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

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

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

that other State; or

b)

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

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

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

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

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

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

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

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

accountants.

Article 15

DEPENDENT PERSONAL SERVICES

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

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

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

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

as is derived therefrom may be taxed in that other State.

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

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

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

a)

the recipient is present in the other State for a period or periods not

exceeding in the aggregate 183 days in any twelve month period

commencing or ending in the fiscal year concerned, and

b)

the remuneration is paid by, or on behalf of, an employer who is not a

resident of the other State, and

c)

the remuneration is not borne by a permanent establishment or a fixed

base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration

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

international traffic by an enterprise of a Contracting State may be taxed in that

State.

Article 16

DIRECTORS’ FEES

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

State in his capacity as a member of the board of directors in a company which is a

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

Article 17

ARTISTES AND SPORTSPERSONS

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a

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

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

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

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

State.

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

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

himself but to another person, that income may, notwithstanding the provisions of

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

entertainer or sportsperson are exercised.

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

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

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

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

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

entertainer or sportsperson is a resident.

Article 18

PENSIONS

1. Subject to the provisions of paragraph 2 of Article 19, pensions and other

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

past employment shall be taxable only in that State.

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

payments made under the social security legislation of a Contracting State shall be

taxable only in that State.

Article 19

GOVERNMENT SERVICE

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

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

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

subdivision or authority shall be taxable only in that State.

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

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

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

(i) is a national of that State; or

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

rendering the services.

2. (a) Any pension paid by, or out of funds created by, a Contracting State or a

political subdivision or a local authority thereof to an individual in

respect of services rendered to that State or subdivision or authority

shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting

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

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages

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

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

subdivision or a local authority thereof.

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

Article 20

PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

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

Contracting State immediately before visiting the other Contracting State for the

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

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

in that other State on any remuneration for such teaching or research for a period not

exceeding two years from the date of his arrival in that other State.

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

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

of some private person or persons.

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

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

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

year.

Article 21

STUDENTS

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

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

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

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

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

of his maintenance, education or training.

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

be reasonable or customarily required to complete the education or training

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

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

Article 22

OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not

dealt with in the foregoing Articles of this Agreement shall be taxable only in that

State.

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

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

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

Contracting State through a permanent establishment situated therein, or performs in

that other State independent personal services from a fixed base situated therein, and

the right or property in respect of which the income is paid is effectively connected

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

Article 7 or Article 14, as the case may be, shall apply.

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

State derives income from sources within the other Contracting State in the form of

lotteries, crossword puzzles, races including horse races, card games and other

games of any sort or gambling or betting of any form or nature whatsoever, such

income may be taxed in the other Contracting State.

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

Article 23

METHODS FOR ELIMINATION OF DOUBLE TAXATION

Double taxation shall be eliminated as follows

1. In India

Where a resident of India derives income which, in accordance with the

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

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

equal to the tax paid in Malta.

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

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

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

Where in accordance with any provision of the Agreement income

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

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

of such resident, take into account the exempted income.

2. In Malta

Subject to the provisions of the law of Malta regarding the allowance of

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

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

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

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

payable thereon.

Where in accordance with any provision of the Agreement, income

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

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

of such resident, take into account the exempted income.

Article 24

NON-DISCRIMINATION

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

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

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

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

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

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

the Contracting States.

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

Contracting State has in the other Contracting State shall not be less favorably levied

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

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

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

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

family responsibilities which it grants to its own residents. This provision shall not

be construed as preventing a Contracting State from charging the profits of a

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

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

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

conflict with the provisions of paragraph 3 of Article 7.

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

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

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

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

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

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

resident of the first-mentioned State.

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

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

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

or any requirement connected therewith which is other or more burdensome than the

taxation and connected requirements to which other similar enterprises of the first-

mentioned State are or may be subjected.

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

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

Article 25

MUTUAL AGREEMENT PROCEDURE

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

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

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

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

State of which he is a resident or, if his case comes under paragraph 1 of Article 24,

to that of the Contracting State of which he is a national. The case must be presented

within three years from the first notification of the action resulting in taxation not in

accordance with the provisions of the Agreement.

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

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

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

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

Agreement. Any agreement reached shall be implemented notwithstanding any time

limits in the domestic law of the Contracting States.

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

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 the Agreement. They may also consult together for

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

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

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

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

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

consisting of representatives of the competent authorities of the Contracting States.

Article 26

EXCHANGE OF INFORMATION

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

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

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

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

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

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

the Agreement. The exchange of information is not restricted by Articles 1 and 2.

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

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

treated as secret in the same manner as information obtained under the domestic laws

of that State and shall be disclosed only to persons or authorities (including courts

and administrative bodies) concerned with the assessment or collection of, the

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

the taxes referred to in paragraph 1, or the oversight of the above. Such persons or

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

information in public court proceedings or in judicial decisions. Notwithstanding the

foregoing, information received by a Contracting State may be used for other

purposes when such information may be used for such other purposes under the laws

of both States and the competent authority of the supplying State authorizes such

use.

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

impose on a Contracting State the obligation

a)

to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Contracting State;

b)

to supply information (including documents or authenticated copies of

the documents) which is not obtainable under the laws or in the normal

course of the administration of that or of the other Contracting State;

c)

to supply information which would disclose any trade, business,

industrial, commercial or professional secret or trade process, or

information the disclosure of which would be contrary to public policy

(ordre public).

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

Article, the other Contracting State shall use its information gathering measures to

obtain the requested information, even though that other State may not need such

information for its own tax purposes. The obligation contained in the preceding

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

limitations be construed to permit a Contracting State to decline to supply

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

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

Contracting State to decline to supply information solely because the information is

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

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

Article 27

LIMITATION OF BENEFITS

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

provisions to prevent tax evasion.

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

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

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

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

Agreement that would not otherwise be available.

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

covered by the provisions of this Article.

Article 28

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

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

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

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

under the provisions of special agreements.

Article 29

ENTRY INTO FORCE

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

channels, of the completion of the procedures required by the respective laws for the

entry into force of this Agreement.

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

notifications referred to in paragraph 1 of this Article.

3. The provisions of this Agreement shall have effect

a)

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

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

Agreement enters into force; and

b)

In Malta, in respect of taxes on income derived during any calendar year

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

day of January immediately following the date on which the Agreement

enters into force.

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

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

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

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

effect.

Article 30

TERMINATION

This Agreement shall remain in force indefinitely until terminated by a

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

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

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

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

effect

a)

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

first day of April next following the calendar year in which the notice is

given;

b)

In Malta, in respect of taxes on income derived during any calendar year

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

day of January immediately following the date on which the notice is

given.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have

signed this Agreement.

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

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

interpretation, the English text shall prevail.

George Vella

Preneet Kaur

For the Government

For the Government of

of Malta

the Republic of India

DOUBLE TAXATION RELIEF

(TAXES ON INCOME) (REPUBLIC OF INDIA)

PROTOCOL

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

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

India for the avoidance of double taxation and the prevention of fiscal evasion with

respect to taxes on income, have agreed that the following shall form an integral part

of the Agreement.

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

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

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

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

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

a)

any person enjoying a special fiscal treatment under the provisions of

the Malta Merchant Shipping Act, 1973 to the extent that it is not

subject to tax on the profits derived from the operation of ships in

international traffic; or

b)

any company licensed under the Malta Freeport Act of 1989 to the

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

license; or

c)

any person that enjoys a special fiscal treatment under any law similar

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

signature of this Agreement.

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

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

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

of signature of this Agreement, the laws of Malta change to provide assistance in

collection of taxes to any country which is not a member of the European Union or

Malta agrees to extend such assistance to any country which is not a member of the

European Union, then Malta shall forthwith inform the Indian competent authority

and the competent authorities of the Contracting States shall by mutual agreement

settle the mode of extending assistance in collection of taxes to each other.

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

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

interpretation, the English text shall prevail.

George Vella

Preneet Kaur

For the Government

For the Government of

of Malta

the Republic of India