By means of LN 182 of 2018, the Government of Malta has published the text of a new double taxation agreement with Ethiopia. In terms of Articles 11 and 12 of the treaty, the two countries have agreed to have a shared jurisdiction to tax on interest and royalties. With respect to these two types of income, the source country (i.e. the State in which the interest and the royalties arise) will have a primary right to tax while the residence country of the recipient of the income will have a secondary right to tax with the obligation to grant relief from double taxation.
With respect to dividends, Article 11 stipulates that the two countries may tax such income with the country in which the company paying the dividends is resident having a primary right to tax while the country of residence of the recipient will have a secondary right to tax with the obligation to grant relief from double taxation. Notwithstanding this, Ethiopia will limit its withholding taxing rights to 5% of the gross dividends. Malta on the other hand does not withhold any tax on distribution of dividends by Maltese companies to recipients resident in Ethiopia.
The treaty is not yet in force.
