DOUBLE TAXATION RELIEF ON TAXES ON INCOME WITH THE REPUBLIC OF ALBANIA ORDER

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH THE REPUBLIC OF ALBANIA

SUBSIDIARY LEGISLATION 123.53

DOUBLE TAXATION RELIEF ON TAXES ON

INCOME WITH THE REPUBLIC OF ALBANIA

ORDER

23rd November, 2000

LEGAL NOTICE 122 of 2001.

The title of this order is the Double Taxation Relief on

Taxes on Income with the Republic of Albania Order.

CONVENTION BETWEEN THE GOVERNMENT OF MALTA

AND THE GOVERNMENT OF THE REPUBLIC OF ALBANIA

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 Albania,

desiring, for the purpose of further developing and facilitating their economic

relationship, to conclude a Convention for the avoidance of double taxation and the

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

Article 1

PERSONAL SCOPE

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

the Contracting States.

Article 2

TAXES COVERED

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

Contracting State or of its 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.

It is hereby declared

(a) that the arrangements specified in the Convention set

out in the Schedule to this Order have been made with

the Republic of Albania with a view to affording relief

from double taxation in relation to the following taxes

imposed by the laws of the Republic of Albania

(i)

the tax on the profits of juridical persons;

(ii)

the tax on small business activities;

(iii)

the individual income tax;

(b)

that it is expedient that those arrangements should

have effect;

(c)

that the Convention has entered into force on the 23

November, 2000.

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

(a) in Albania

(i)

the tax on the profits of juridical persons;

(ii)

the tax on small business activities;

(iii)

the individual income tax;

(hereinafter referred to as "Albanian Tax");

(b)

in Malta

the income tax;

(hereinafter referred to as "Malta tax").

The Convention shall apply also to any identical or substantially similar

taxes which are imposed after the date of signature of the Convention in addition to,

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

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

respective taxation laws.

Notwithstanding the other provisions of this Article , the Convention shall

not apply to taxes paid or payable in a Contracting State under its domestic law,

concerning taxable income of any person engaged in the production of petroleum,

provided that such activities are performed under the provisions of particular

contracts between the Government of that Contracting State and the aforesaid

persons.

Article 3

GENERAL DEFINITIONS

1. For the purposes of this Convention unless the context otherwise requires

(a) the term "Albania" means the Republic of Albania, and when used in a

geographical sense means the territory of the Republic of Albania

including territorial waters and air space over them as well as any area

beyond the territorial seas of the Republic of Albania which, in

accordance with international law and the laws of the Republic of

Albania, is an area within which the Republic of Albania may exercise

its rights with respect to the seabed and subsoil and their natural

resources;

(b) the term "Malta" means the Republic of Malta and, when used in a

geographical sense, means the Island of Malta, the Island of Gozo and

the other islands of the Maltese archipelago including the territorial

waters thereof, 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;

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

Albania or Malta 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 legal entity which is treated as a

juridical person 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 "national" means

(i)

any individual possessing the nationality of a Contracting State;

(ii)

any juridical person, partnership or association deriving its status

as such from the laws in force in a Contracting State;

(h) the term "international traffic" means any transport by a ship or an

aircraft operated by an enterprise which has its place of effective

management in a Contracting State, except when the ship or aircraft is

operated solely between places in the other Contracting State;

(i)

the term "competent authority" means

(i)

in the case of Albania, the Minister of Finance or his authorised

representative;

(ii)

in the case of Malta, the Minister responsible for finance or his

authorised representative.

2. As regards the application of this Convention by a Contracting State, any

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

meaning which it has under the law of that State concerning the taxes to which the

Convention applies.

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH THE REPUBLIC OF ALBANIA

Article 4

RESIDENT

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

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

reason of his domicile, residence, place of management, place of registration or any

other criterion of a similar nature. But this term 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 not a 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.

Article 5

PERMANENT ESTABLISHMENT

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

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

wholly or partly carried on.

2. The term "permanent establishment" includes especially

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop, and

(f)

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

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

within any 12-month period commencing or ending in the calendar year

concerned; and

(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 country for a

period or periods aggregating more than six months within any 12-

month period, commencing or ending in the calendar year concerned.

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

"permanent establishment" shall be deemed not to include

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

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

enterprise solely for the purpose of processing by another enterprise;

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

purchasing goods or merchandise or of collecting information, for the

enterprise;

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

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

auxiliary character;

(f)

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

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

overall activity of the fixed place of business resulting from this

combination is of a preparatory or auxiliary character.

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

other than an agent of an independent status to whom paragraph 6 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

State in respect of any activities which that person undertakes for the enterprise, if

such a person

(a) has and habitually exercises in the first-mentioned State an authority to

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

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

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

place of business a permanent establishment under the provisions of that

paragraph; or

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

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

goods or merchandise on behalf of the enterprise.

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 shall not be considered to be an agent of an

independent status within the meaning of this paragraph.

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

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

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

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

permanent establishment of the other.

Article 6

INCOME FROM IMMOVABLE PROPERTY

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

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

Contracting State may be taxed in that other State.

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

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

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

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

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

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

to work, or to explore for, mineral deposits, sources and other natural resources.

Ships and aircraft shall not be regarded as immovable property.

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

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

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

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

for the performance of independent personal services.

Article 7

BUSINESS PROFITS

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

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

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

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

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

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

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

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

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

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

activities under the same or similar conditions and dealing wholly independently

with the enterprise of which it is a permanent establishment.

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

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

business 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.

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 Article s of this Convention, then the provisions of those Article s shall not be

affected by the provisions of this Article .

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 TRANSPORT

1. Profits from the operation of ships or aircraft in international traffic shall be

taxable only in the Contracting State in which the place of effective management of

the enterprise is situated.

2. If the place of effective management of a shipping enterprise is aboard a

ship, then it shall be deemed to be situated in the Contracting State in which the

home harbour of the ship is situated, or, if there is no such home harbour, in the

Contracting State of which the operator of the ship is a resident.

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

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

Article 9

ASSOCIATED ENTERPRISES

1. Where -

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

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

Contracting State, or

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

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

enterprise of the other Contracting State,

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

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

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

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

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

accordingly.

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

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

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

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

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

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

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

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

Convention and the competent authorities of the Contracting States shall, if

necessary, consult each other.

Article 10

DIVIDENDS

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

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

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

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

that State, but

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

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

Albanian 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 25 per cent of the voting

power of the company paying the dividends;

(ii)

15 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 Albania 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.

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 of

any kind, or other rights not being debt-claims, participating in profits, as well as

income from other corporate rights which is subjected to the same taxation treatment

as income from shares by the laws of the State of which the company making the

distribution is a resident.

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

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

other Contracting State of which the company paying the dividends is a resident,

through a permanent establishment situated therein, or performs in that other State

independent personal services from a fixed base situated therein, and the holding in

respect of which the dividends are paid is effectively connected with such permanent

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

the case may be, shall apply.

5. Where a company which is a resident of a Contracting State derives profits

or income from the other Contracting State, that other State may not impose any tax

on the dividends paid by the company except insofar as such dividends are paid to a

resident of that other State or insofar as the holding in respect of which the dividends

are paid is effectively connected with a permanent establishment or a fixed base

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

on the company’s undistributed profits, even if the dividends paid or the

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

other State.

Article 11

INTEREST

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

Contracting state may be taxed in that other State.

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

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

owner of the interest the tax so charged shall not exceed 5 percent of the gross

amount of the interest.

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

every kind, whether or not secured by mortgage, and whether or not carrying the

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

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

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

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

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

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

other Contracting State in which the interest arises, through a permanent

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

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

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

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

shall apply.

5. Interest 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 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.

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

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

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

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

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

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

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

other provisions of this Convention.

Article 12

ROYALTIES

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

Contracting State may be taxed in that other State.

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

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

owner of the royalties, the tax so charged shall not exceed 5 per cent of the gross

amount of the royalties.

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

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

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

for radio or television broadcasting, 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

other Contracting State in which the royalties arise, through a permanent

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

services from a fixed base situated therein, and the right or property in respect of

which the royalties are paid is effectively connected with such permanent

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

the case may be, shall apply.

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

that State itself, a political subdivision, 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 liability to pay the royalties was incurred,

and such royalties are borne by such permanent establishment or fixed base, then

such royalties shall be deemed to arise in the state in which the permanent

establishment or fixed base is situated.

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

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

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

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

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

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

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

regard being had to the other provisions of this Convention.

Article 13

CAPITAL GAINS

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

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

State may be taxed in that other State.

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

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

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

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

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

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

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

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

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

taxable only in the Contracting State in which the place of effective management of

the enterprise is situated.

4. Gains from the alienation of shares of a company the property of which

consists directly or indirectly principally of immovable property situated in 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 in

respect of professional or other activities of an independent 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 12-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, or

(c) if the remuneration for his activities in the other Contracting State is

paid by a resident of that Contracting State or is borne by a permanent

establishment or a fixed base situated in that Contracting State and

exceeds in the fiscal year the equivalent of 4,000 United States dollars.

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

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

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

Article 15

DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Article s 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 all the

following conditions are met

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

exceeding in the aggregate 183 days in any 12-month period

commencing or ending in the calendar year concerned;

(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 may be taxed in the Contracting State in which the place of

effective management of the enterprise is situated.

Article 16

DIRECTORS’ FEES

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

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

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

Article 17

ARTISTES AND SPORTSMEN

1. Notwithstanding the provisions of Article s 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

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

entertainer or sportsman are exercised.

Article 18

PENSIONS

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.

Article 19

GOVERNMENT SERVICE

1. (a) 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 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 local 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 other State.

3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and

pensions in respect of services rendered in connection with a business carried on by

a Contracting State or a political subdivision or a local authority thereof.

Article 20

STUDENTS AND BUSINESS APPRENTICES

Where a student or business apprentice who is or was immediately before

visiting a Contracting State a resident of the other Contracting State and who is

present in the first-mentioned State solely for the purpose of his education or

training, any payments received for the purpose of his maintenance, education or

training shall not be taxed in that State, provided that such payments arise from

sources outside that State.

Article 21

OTHER INCOME

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

dealt with in the foregoing Article s of this Convention shall be taxable only in that

State.

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

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

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

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

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

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

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

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

Article 22

ELIMINATION OF DOUBLE TAXATION

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

(a) Where a resident of Albania derives income which, in accordance with

the provisions of this Convention, may be taxed in Malta, Albania shall

allow as a deduction from Albanian tax on the income of that resident

an amount equal to the income tax paid in Malta. Such deduction shall

not, however, exceed that part of the Albanian tax, as computed before

the deduction is given, which is attributable to the income which may be

taxed in Malta.

(b) Where in accordance with any provision of the convention income

derived by a resident of Albania is exempt from tax in Albania, Albania

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

income of such resident, take into account the exempted income.

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

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

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

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

assessment income from sources within Albania, the Albanian tax on

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

payable thereon.

3. Where, under the laws of one of the Contracting States, any tax to which this

Convention applies has been exempted or reduced for a limited period of time to

promote economic development in that State, for the purposes of paragraphs 1 and 2

of this Article , such tax shall be deemed to have been paid.

Article 23

NON-DISCRIMINATION

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

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

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

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

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

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

the Contracting States.

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

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

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

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

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

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

family responsibilities which it grants to its own residents.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 6 of

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

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

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

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

resident of the first-mentioned State.

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

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

Contracting State, shall not be subjected in the first-mentioned 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.

Article 24

MUTUAL AGREEMENT PROCEDURE

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

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

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

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

State of which he is a resident 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 the Convention.

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

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

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

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

Convention. Any agreement reached shall be implemented notwithstanding any time

limits in the domestic law of the Contracting States.

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

resolve by mutual agreement any difficulties or doubts arising as to the

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

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

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

each other directly 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 necessary for carrying out the provisions of this Convention or of

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

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

exchange of information is not restricted by Article 1. Any information received 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) involved in the

assessment or collection of, the enforcement or prosecution in respect of, or the

determination of appeals in relation to, the taxes covered by the Convention. Such

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

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

2. In no case shall the provisions of paragraph 1 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).

Article 26

DIPLOMATIC AGENTS AND CONSULAR OFFICERS

Nothing in this Convention shall affect the fiscal privileges of diplomatic

agents and consular officers under the general rules of international law or under the

provisions of special agreements.

Article 27

ENTRY INTO FORCE

1. The Contracting States shall notify each other that the legal requirements for

the entry into force of this Convention have been complied with.

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

notifications referred to in paragraph 1 and its provisions shall have effect

(a) in Albania, in respect of income derived on or after the first day of

January of the calendar year next following that of the entry into force

of the Convention;

(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 next following the date on which the Convention enters

into force.

Article 28

TERMINATION

This Convention shall remain in force until terminated by a Contracting

State. Either Contracting State may terminate the Convention by giving written

notice of termination, through diplomatic channels, 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 Convention shall cease to have

effect

(a) in Albania, in respect of income derived on or after the first day of

January of the calendar year next following that in which the notice of

termination 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 next following the date on which the notice of

termination is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by

their respective Governments, have signed this Convention.

DONE in duplicate at Valletta this 2nd day of May, 2000 in the English and

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

between the texts, the English text shall prevail.

For the Government of Malta

For the Government of the Republic of Albania

JOE BORG

PASKAL MILO

Minister of Foreign Affairs

Minister of Foreign Affairs