DOUBLE TAXATION RELIEF ON TAXES ON INCOME WITH SOUTH AFRICA ORDER

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH SOUTH AFRICA

SUBSIDIARY LEGISLATION 123.45

DOUBLE TAXATION RELIEF ON TAXES ON

INCOME WITH SOUTH AFRICA ORDER

12th November, 1997

LEGAL NOTICE 89 of 1998, as amended by Legal Notice 392 of 2013.

The title of this Order is Double Taxation Relief on Taxes

on Income with South Africa Order.

AGREEMENT

BETWEEN MALTA AND SOUTH AFRICA

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 South Africa,

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

prevention of fiscal evasion with respect to taxes on income, have agreed as follows

CHAPTER I

SCOPE OF THE AGREEMENT

ARTICLE 1

Personal Scope

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

Contracting States.

ARTICLE 2

Taxes Covered

1. The existing taxes to which this Agreement shall apply are

(a) in Malta

the income tax;

(hereinafter referred to as "Malta tax");

(b) in South Africa

(i) the normal tax;

(ii) the non-resident shareholders’ tax; and

(iii) the secondary tax on companies;

(hereinafter referred to as "South African tax").

2. This Agreement shall apply also to any identical or substantially similar

taxes which 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 which have been made in their

respective taxation laws.

It is hereby declared

(a) that the arrangements specified in the Agreement set

out in the Schedule to this Order have been made with

the Government of South Africa with a view to

affording relief from double taxation in relation to the

following taxes imposed by the laws of South Africa

(i) the normal tax;

(ii) the non-resident shareholders’ tax; and

(iii) the secondary tax on companies;

(b) that it is expedient that those arrangements should

have effect.

Notwithstanding the other provisions of this Article, this Agreement shall

not apply to tax paid or payable in Malta in accordance with the provisions of sub-

article (13) of article 56 of the Income Tax Act concerning the chargeable income of

any person engaged in the production of petroleum produced in Malta or any

substantially similar provision which is imposed after the date of signature of this

Agreement.

CHAPTER II

DEFINITIONS

ARTICLE 3

General Definitions

1. For the purposes of this Agreement, 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, and any

area outside the territorial waters of Malta which has been or may hereafter be

designated, in accordance with international law and under the law of Malta

concerning the continental shelf, as an area within which the rights of Malta with

respect to the seabed and subsoil and their natural resources may be exercised;

(b) the term "South Africa" means the Republic of South Africa and, when used

in a geographical sense, includes the territorial sea thereof as well as any area

outside the territorial sea, including the continental shelf, which has been or may

hereafter be designated, under the laws of South Africa and in accordance with

international law, as an area within which South Africa may exercise sovereign

rights or jurisdiction;

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

Malta or South Africa as the context requires;

(d) the term "person" includes an individual, a company and any other body of

persons;

(e) the term "company" means any body corporate or any entity which 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, except when the ship or aircraft is

operated solely between places in the other Contracting State;

(h)

the term "competent authority" means

(i)

in Malta: the Minister responsible for finance or his authorised

representative;

(ii) in South Africa: the Commissioner for Inland Revenue or his authorised

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 the Agreement by a Contracting State any term

not defined therein shall, unless the context otherwise requires, have the meaning

which it has under the laws of that State concerning the taxes to which this

Agreement applies.

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 that person’s domicile, residence, place of management or any other

criterion of a sim ilar nature, and also includes that State and any political

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

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

that State.

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

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

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

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

vital interests);

(b) if the State in which he has his centre of vital interests cannot be

determined, or if he has no permanent home available to him in either

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

habitual abode;

(c) if he has an habitual abode in both States or in neither of them, he shall

be deemed to be a resident of the State of which he is a national;

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

authorities of the Contracting States shall settle the question by mutual

agreement.

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

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

resident of the State in which its place of effective management is situated, or, if that

cannot be established, the competent authorities of the Contracting States shall settle

the question by mutual agreement and determine the mode of application of this

Agreement to such person.

ARTICLE 5

Permanent Establishment

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

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

wholly or partly carried on.

2. The term "permanent establishment" includes especially

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop; and

(f)

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

*as amended by Protocol reproduced in Legal Notice 392 of 2013.

natural resources including an offshore drilling site.

3. The term "permanent establishment" likewise encompasses

(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 of 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, but only where activities of that nature

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

State for a period or periods aggregating more than six months within

any 12-month period.

An enterprise of a Contracting State shall be deemed to have a permanent

establishment in the other Contracting State if equipment is being used or installed

in that other State, or supervision thereof is carried out, by, for or under contract with

the enterprise during a period or periods aggregating more than six months within

any 12-month period.

Notwithstanding the preceding provisions of this Article, the term

"permanent establishment" shall be deemed not to include

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

of goods or merchandise belonging to the enterprise;

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

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

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

enterprise solely for the purpose of processing by another enterprise;

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

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

enterprise;

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

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

auxiliary character;

(f)

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

of activities mentioned in 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.

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

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

on behalf of an enterprise and has, and habitually exereises, in a Contracting State an

authority to conclude contracts in the name of the enterprise, that enterprise shall be

deemed to have a permanent establishment in that State in respect of any activities

which that person undertakes for the enterprise, unless the activities of such person

are limited to those mentioned in paragraph 5 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 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 and the transactions between

that agent and the enterprise are not made under arm’s length conditions, 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.

CHAPTER III

TAXATION OF INCOME

ARTICLE 6

Income from Immovable Property

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

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

Contracting State may be taxed in that other State.

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

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

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

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

general law respecting immovable property apply, usufruct of immovable property

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

right to work, or to explore for, 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 or with other associated

enterprises with which it deals.

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 incurred in the Contracting State in which the permanent

establishment is situated or elsewhere.

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 purpose 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.

8. The provisions of this Article shall not affect the provisions of the law of a

Contracting State regarding the taxation of profits from the business of insurance.

ARTICLE 8

International Traffic

1. Profits of an enterprise of a Contracting State from the operation of ships or

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

2. For the purposes of this Article, profits from the operation of ships or

aircraft in international traffic shall include

(a) profits derived from the rental on a bare boat basis of ships or aircraft

used in international traffic,

(b) profits derived from the use or rental of containers,

if such profits are incidental to the profits to which the provisions of paragraph 1

apply.

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

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

ARTICLE 9

Associated Enterprises

1. Where -

(a) an enterprise of a Contracting State participates directly or indirectly in

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

Contracting State, or

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

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

enterprise of the other Contracting State,

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

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

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

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

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

accordingly.

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

State - and taxes accord in gly - prof its on which an enterp rise 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) where the dividends are paid by a company which is resident of South

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

so charged shall not exceed

(i)

5 per cent of the gross amount of the dividends if the beneficial

owner is a company which holds at least 10 per cent of the capital

of the company paying the dividends; or

(ii)

10 per cent of the gross amount of the dividends in all other cases.

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

to a resident of South Africa 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.

The competent authorities of the Contracting States shall by mutual

agreement settle the mode of application of these limitations.

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 participating in profits (not being debt claims), 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 Contracting 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

*as amended by Protocol reproduced in Legal Notice 392 of 2013.

other 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 om pa n y’s u n d is tr ib u t ed p r o f it s, ev en if t h e d i v id en d s p ai d o r t he

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

other State.

ARTICLE 11 *

Interest

1. Interest arising in a Contracting Stats 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 recipient is the beneficial

owner of the interest, 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 if

(a) the payer of the interest is the Government of that Contracting State or a

political subdivision or a local authority thereof; or

(b) the interest is paid to the Government of the other Contracting State or a

political subdivision or a local authority thereof; or

(c) the interest is paid by the Central Bank of that Contracting State or to

the Central Bank of the other Contracting State; or

(d) the interest is paid to any institution or body which is wholly owned,

directly or indirectly, by the other Contracting State or a political

subdivision or a local authority thereof; or

(e) the interest arises in respect of any debt instrument listed on a

recognised stock exchange.

4. For the purposes of paragraph 3(e), the term "recognised stock exchange"

means

(a) in Malta, the Malta Stock Exchange;

(b) in South Africa, the Johannesburg Stock Exchange;

(c) any other stock exchange agreed upon by the competent authorities of

the Contracting States

5. 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

*as amended by Protocol reproduced in Legal Notice 392 of 2013.

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.

6. 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

o th er C o nt r actin g St ate i n wh ich t he in ter es t ar ise s, t h ro u g h a p er m an en t

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

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

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

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

shall apply.

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

that State itself, a political sub-division, a local authority or 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.

8. 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

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

Contracting State may be taxed in that other State.

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

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

owner of the royalties, the tax so charged shall not exceed 10 per cent of the gross

amount of the royalties.

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

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

literary, artistic or scientific works including cinematograph films, any patent, trade

mark, design or model, plan, secret formula or process, or for information

concerning industrial, commercial or scientific experience.

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

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

ot her C on tr actin g State in wh ich th e r o yalt ies ar is e, th ro u gh a p er m anen t

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 th e r oyalties are p aid is effectively connected with such per manent

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

the case may be, shall apply.

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

that State itself, a political sub-division, a local authority or 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 obligation 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 Agreement.

ARTICLE 13

Alienation of Property

1. Income or 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. Income or gains from the alienation of shares or comparable interests in a

company, the assets of which consist wholly or principally of immovable property,

may be taxed in the Contracting State in which the assets or the principal assets of

the company are situated.

3. Income or 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 income or

gains from the alienation of such a permanent establishment (alone or with the whole

enterprise) or of such fixed base, may be taxed in the other State.

4. Income or gains from the alienation of ships or aircraft operated in

international traffic by an enterprise of a Contracting State, or movable property

pertaining to the operation of such ships or aircraft shall be taxable only in that

State.

5. Income or gains from the alienation of any property other than that referred

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

the alienator is a resident.

ARTICLE 14

Independent Personal Services

1. Income derived by a resident of a Contracting State in respect of

professional services or other activities of an independent character shall be taxable

only in that State. However, such income may be taxed in the other Contracting State

in the following circumstances

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

State for the purpose of performing his activities (in which 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; or

(c) if the net income for his services in the other Contracting State is

derived from residents of that State and exceeds in the currency of that

State the equivalent of 20,000 United States dollars during the fiscal

year.

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 and 19, 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 of a company which is a

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

A RTICLE 17

Entertainers and Sportsmen

1. Notwithstanding the provisions of Articles 7, 14 and 15, income derived by

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

radio or television artiste, or a musician, or as a sportsman, from his 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 sportsman in his capacity as such accrues not to the entertainer or sportsman

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

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

entertainer or sportsman are exercised.

ARTICLE 18

Pensions and Annuities

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

remuneration and annuities arising in a Contracting State and paid to a resident of

the other Contracting State may be taxed in the first-mentioned 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, 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 salaries, wages and 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 and 18 shall apply to salaries, wages and

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.

4. Salaries, wages and similar remuneration paid under a development

assistance programme of a Contracting State, out of funds exclusively supplied by

that State to a specialist or volunteer seconded to the other Contracting State with the

consent of that other State, shall be deemed to have been paid by the first-mentioned

State and shall be taxable only in that State.

ARTICLE 20

Students and Business Apprentices

A student or business apprentice who is present in a Contracting State solely for

the purpose of his education or training and who is, or immediately before being so

present was, a resident of the other Contracting State, shall be exempt from tax in the

first-mentioned State on payments received from outside that first-mentioned State

for the purposes of his maintenance, education or training.

ARTICLE 21

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.

CHAPTER IV

ELIMINATION OF DOUBLE TAXATION

ARTICLE 22

Elimination of Double Taxation

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

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

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

of this Agreement, there is included in a Malta assessment income from sources

within South Africa, the South African tax on such income shall be allowed as a

credit against the relative Malta tax payable thereon.

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

Where South African tax is, in accordance with the provisions of this Agreement,

paid by South African residents in respect of income which, in terms of the

provisions of this Agreement, is taxable in Malta, Malta tax on such income shall be

deducted from the South African tax but in an amount not exceeding that proportion

of the South African tax which such items of income bear to the entire income.

3. Where the Agreement provides that income arising in a Contracting State

shall be relieved from tax in that State, either in full or in part, and, under the law in

force in the other Contracting State, such income is subject to tax by reference to the

amount thereof which is remitted to or received in that other State and not by

reference to the full amount thereof, then the relief to be allowed in the first-

mentioned State shall apply only to so much of the income as is remitted to or

received in the other State.

CHAPTER V

SPECIAL PROVISIONS

ARTICLE 23

Non-Discrimination

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

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

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

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

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

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

the Contracting States.

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

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

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

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

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

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

family responsibilities which it grants to its own residents.

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

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

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

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

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

resident of the first-mentioned State.

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

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

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

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

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

mentioned State are or may be subjected.

5. In this Article the term "taxation'' means taxes which are the subject of this

Agreement.

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 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 23,

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 this 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 em e n t an 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.

ARTICLE 25 *

Exchange of Information

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

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

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, in so far as the taxation thereunder

is not contrary to the Agreement. The exchange of information is not restricted by

Articles 1 and 2.

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

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

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

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

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

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

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

information in public court proceedings or in judicial decisions.

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

impose on a Contracting State the obligation

(a) to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the

normal course of the administration of that or of the other Contracting

State;

(c) to supply information which would disclose any trade, business,

industrial, commercial or professional secret or trade process, or

information, the disclosure of which would be contrary to public policy

(ordre public).

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

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

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

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

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

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

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

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

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

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

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

*as substituted by Protocol reproduced in Legal Notice 392 of 2013.

ARTICLE 26

Diplomatic Agents and Consular Officers

Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or

consular officers under the general rules of international law or under the provisions

of special agreements.

CHAPTER VI

FINAL PROVISIONS

ARTICLE 27

Entry into Force

1. Each of the Contracting States shall notify to the other the completion of the

procedures required by its law for the bringing into force of this Agreement. The

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

2. The provisions of this Agreement shall apply

(a) in Malta in respect of taxes which are levied for any year of assessment

beginning on or after 1 January in the second calendar year immediately

following the year in which the Agreement enters into force; and

(b) in South Africa,

(i)

with regard to taxes withheld at source, in respect of amounts paid

or credited on or after the first day of January next following the

date upon which this Agreement enters into force; and

(ii) with regard to other taxes, in respect of income of taxable years

beginning on or after the first day of January next following the

date upon which this Agreement enters into force.

ARTICLE 28

Termination

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

Either Contracting State may terminate the Agreement through the diplomatic

channel, by giving notice of termination at least six months before the end of any

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

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

(a) in Malta

in respect of taxes which are levied for any year of assessment

beginning on or after 1 January of the second calendar year next

following the year in which such notice is given;

(b) in South Africa

(i)

with regard to taxes withheld at source, in respect of amounts paid

or credited after the end of the calendar year in which such notice

is given; and

(ii) with regard to other taxes, in respect of income derived during

any taxable year beginning after the end of the calendar year in

which such notice is given.

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

signed this Agreement.

DONE in duplicate at Rome this 16th day of May, 1997 in the English language.

HENRY DE GABRIELE

DR. KHORSHED GINWALA

FOR THE GOVERNMENT OF

FOR THE GOVERNMENT OF

MALTA

SOUTH AFRICA

PROTOCOL

At the moment of signing the Agreement between the Government of Malta and

the Government of South Africa for the Avoidance of Double Taxation and the

Prevention of Fiscal Evasion with respect to Taxes on Income, the undersigned have

agreed that the following provisions shall form an integral part of the Agreement

Concerning Article 10 it is understood that dividends arising outside South Africa

are not subjected to South African tax. Should there be any change in this system, or

any change in the imputation system presently applied in Malta, the Contracting

States will reconsider the provisions of that Article.

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

respective Governments, have signed this Protocol.

DONE in duplicate at Rome this 16th day of May, 1997 in the English language.

HENRY DE GABRIELE

DR. KHORSHED GINWALA

FOR THE GOVERNMENT OF

FOR THE GOVERNMENT OF

MALTA

SOUTH AFRICA

PROTOCOL

AMENDING THE AGREEMENT

BETWEEN

THE GOVERNMENT OF MALTA

AND

THE GOVERNMENT OF THE REPUBLIC OF SOUTH AFRICA

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND

THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME,

SIGNED AT ROME ON 16 MAY 1997

Preamble

The Government of Malta and the Government of the Republic of South Africa;

DESIRING to amend the Agreement for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income, signed at Rome, Italy

on 16 May 1997 (in this Protocol referred to as "the Agreement");

HAVE AGREED as follows

Article I

Paragraph 1 of Article 4 of the Agreement shall be deleted and replaced by the

following paragraph

"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 that person’s 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.".

Article II

Paragraph 2 of Article 10 of the Agreement shall be deleted and replaced by the

following paragraph

"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 resident of

South Africa to a resident of Malta who is the beneficial owner

thereof, the tax so charged shall not exceed

(i) 5 per cent of the gross amount of the dividends if the

beneficial owner is a company which holds at least 10 per

cent of the capital of the company paying the dividends; or

(ii) 10 per cent of the gross amount of the dividends in all other

cases.

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

Malta to a resident of South Africa 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.

The competent authorities of the Contracting States shall by mutual

agreement settle the mode of application of these limitations.

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

the profits out of which the dividends are paid.".

ARTICLE III

Article 11 of the Agreement is amended by

(a) deleting paragraph 3 and substituting the following paragraph

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

a Contracting State shall be exempt from tax in that State if

(a) the payer of the interest is the Government of that

Contracting State or a political subdivision or a local

authority thereof; or

(b) the interest is paid to the Government of the other

Contracting State or a political subdivision or a local

authority thereof; or

(c) the interest is paid by the Central Bank of that Contracting

State or to the Central Bank of the other Contracting State;

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH SOUTH AFRICA

or

(d)

the interest is paid to any institution or body which is

wholly owned, directly or indirectly, by the other

Contracting State or a political subdivision or a local

authority thereof; or

(e)

the interest arises in respect of any debt instrument listed on

a recognised stock exchange.";

(b) inserting after paragraph 3 the following paragraph

"4. For the purposes of paragraph 3(e), the term "recognised stock

exchange" means

(a) in Malta, the Malta Stock Exchange;

(b) in South Africa, the Johannesburg Stock Exchange;

(c) any other stock exchange agreed upon by the competent

authorities of the Contracting States.";

(c) renumbering the existing paragraphs 4, 5, 6 and 7 as paragraphs 5, 6, 7

and 8 respectively.

ARTICLE IV

Article 25 of the Agreement shall be deleted and replaced by the following

"Article 25

Exchange of Information

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

information as is foreseeably relevant for carrying out the provisions of

this 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, in so far as the taxation thereunder is not contrary to the

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

and 2.

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

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

under the domestic laws of that State and shall be disclosed only to

persons or authorities (including courts and administrative bodies)

concerned with the assessment or collection of, the enforcement or

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

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

persons or authorities shall use the information only for such purposes.

They may disclose the information in public court proceedings or in

judicial decisions.

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

to impose on a Contracting State the obligation

(a) to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in

the normal course of the administration of that or of the other

Contracting State;

(c) to supply information which would disclose any trade, business,

industrial, commercial or professional secret or trade process, or

information, the disclosure of which would be contrary to public

policy (ordre public).

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

this Article, the other Contracting State shall use its information

gathering measures to obtain the requested information, even though

that other State may not need such information for its own tax purposes.

The obligation contained in the preceding sentence is subject to the

limitations of paragraph 3 but in no case shall such limitations be

construed to permit a Contracting State to decline to supply information

solely because it has no domestic interest in such information.

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

Contracting State to decline to supply information solely because the

information is held by a bank, other financial institution, nominee or

person acting in an agency or a fiduciary capacity or because it relates

to ownership interests in a person.".

Article V

1. Each of the Contracting States shall notify to the other in writing, through

the diplomatic channel, of the completion of the procedures required by its law for

the bringing into force of this Protocol, which shall form an integral part of the

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

these notifications.

2. (a) Subject to subparagraph (b), the provisions of the Protocol shall apply

from the date of entry into force thereof.

(b) Article II of the Protocol shall apply from the date of the introduction in

South Africa of the system of taxation at shareholder level of dividends

declared. South Africa shall notify Malta in writing, through the

diplomatic channel, of the completion of the procedures required by its

law for the bringing into force of the South African system of taxation

at shareholder level of dividends declared, as well as the date of entry

into force of this system.

Article VI

This Protocol shall remain in force for as long as the Agreement remains in force.

IN WITNESS WHEREOF the undersigned, duly authorised thereto by their

respective Governments, have signed and sealed this Protocol in two originals in the

English language.

DONE at Valletta, this 24 day of August 2012.

Tonio Fenech

Pravin Jamnadas Gordhan

For the Government of

For the Government of the

Republic of South Africa