Double taxation agreement with Ukraine

The Government of Malta has just published the new agreement with Ukraine for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. With respect to interest and royalties (Articles 11 and 12), both States have a greed on a shared jurisdiction to tax so that the source […]

Written By ACT Team

On December 11, 2017
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The Government of Malta has just published the new agreement with Ukraine for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

With respect to interest and royalties (Articles 11 and 12), both States have a greed on a shared jurisdiction to tax so that the source country will have a limited primary right to tax the income, while the residence country will have a secondary right to tax with the obligation to grant relief from double taxation.  The tax by the source country must not exceed 10% in both cases.   In terms of the Maltese Income Tax Act, interest and royalties received by non-residents is exempt from Malta tax and therefore no tax is withheld on such payments. 

The two countries have also agreed on a shared jurisdiction to tax with respect to dividends (Article 10).  The right to tax by the source country is again limited.  The tax withheld by the source country on such dividends should not exceed 5% of the gross amount of the dividends if the beneficial owner of the dividends is a company which holds directly at least 20% of the capital of the company paying the dividends.  The tax is increased to 15% in all other cases.  In view of its full imputation system, Malta does not withhold any tax on distributions of dividends, irrespective of the nationality, domicile or residence of the beneficial owner of those dividends. 

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].