Malta has signed a double taxation agreement with Mauritius on 15th October 2014 in New York, which was published by means of Legal Notice 409 of 2014.
Article 10 of the treaty provides that dividends paid by a company which is a resident of one of the Contracting States (the source state) to a resident of the other Contracting State (the residence state) shall be taxable only in that other State. This means that dividends paid by a Malta company to a resident of Mauritius will not be subject to tax in Malta and Mauritius will have an exclusive right to tax the said dividends. Malta does not withhold any tax on the payment of dividends irrespective of the residence and nationality of the recipient of the dividends. In terms of Malta’s imputation system of tax, the shareholder is entitled to a credit of the tax paid by the Malta Company on the distributed profits.
The same tax treatment is found in the treaty with respect to the payment of interest and royalties. Article 11 (Interest) and Article 12 (Royalties) of the treaty state that interest and royalties arising in one of the Contracting States (source state) and paid to a resident of the other Contracting State (residence state) shall be taxable only in that other State i.e. in the residence state. This means that interest and royalties paid by a Maltese resident person to a person who is resident in Mauritius will not be subject to income tax in Malta and Mauritius will have an exclusive right to tax the interest and the royalties. In terms of Maltese income tax legislation, interest and royalties arising in Malta and paid to a non-resident person are not subject to income tax in Malta, provided certain conditions are satisfied.
