The Double Taxation Relief (Taxes on Income) (Malta) Order 1995

PART II EXCHANGE OF NOTES

	London 12th May 1994
Your Excellency

I have the honour to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Malta for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which has been signed today and to propose on behalf of the Government of the United Kingdom of Great Britain and Northern Ireland that:

(a) with reference to Articles 7 and 9, it is understood that nothing contained therein shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including the determination of such liability by the exercise of discretion or the making of an estimate by the competent authority of that State in cases in which, from the information available to the competent authority of that State, it is not possible or practicable to ascertain the profits to be attributed to a permanent establishment, provided that that law shall be applied, so far as the information available to the competent authority permits, consistently with the principles of the said two Articles;

(b) with reference to paragraph (9) of Article 11, it is understood that the relevant institution, agency or instrumentality shall in the case of the United Kingdom be the Export Credits Guarantee Department and shall in the case of Malta be the Export Credit Guarantee Company Ltd;

(c) with reference to paragraph 6 of Article 22, it is understood that at the request of one competent authority both Contracting States shall enter into discussions about extending the period referred to in paragraph (5) at any time so that, in the event of an agreement to extend that period being reached, there should be no discontinuity in the application of the Article.

(d) with reference to paragraph (2) of Article 23, the provisions of this Convention shall not apply:

(i) to persons who are entitled to a special tax benefit under the Malta International Business Activities Act 1988 except for those persons who opt under Section 41 of the said Act to be subject to the normal provisions of the Income Tax Act (Cap 123); or

(ii) to persons who and to the extent to which under the provisions of the Merchant Shipping Act 1973 are not subject to tax on the profits derived from the operation of ships in international traffic; or

(iii) to persons entitled to any special tax benefit in respect of distributions by a trust subject to the provisions of the Offshore Trusts Act 1988 given that a trust as laid down in that Act is not vested with legal personality and therefore cannot benefit under the Convention in its own right; or

(iv) to persons entitled to any special tax benefit under any substantially similar law subsequently enacted and which is agreed by the competent authorities of the Contracting States as included within the terms of paragraph (2) of Article 23 of this Convention.

If the foregoing proposals are acceptable to the Government of Malta, I have the honour to suggest that the present Note and Your Excellency’s reply to that effect should be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the entry into force of this Convention.

	Nicholas Carter On behalf of the Secretary of State for Foreign and Commonwealth Affairs
	London 12th May 1994
Your Excellency

I have the honour to acknowledge receipt of Your Excellency’s Note of today which reads as follows:

“I have the honour to refer to the Convention between of the United Kingdom of Great Britain and Northern Ireland and the Government of Malta for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which has been signed today and to propose on behalf of the Government of the United Kingdom of Great Britain and Northern Ireland that:

(a) with reference to Articles 7 and 9, it is understood that nothing contained therein shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person, including the determination of such liability by the exercise of discretion or the making of an estimate by the competent authority of that State in cases in which, from the information available to the competent authority of that State, it is not possible or practicable to ascertain the profits to be attributed to a permanent establishment, provided that that law shall be applied, so far as the information available to the competent authority permits, consistently with the principles of the said two Articles;

(b) with reference to paragraph (9) of Article 11, it is understood that the relevant institution, agency or instrumentality shall in the case of the United Kingdom be the Export Credits Guarantee Department and shall in the case of Malta be the Export Credit Guarantee Company Ltd;

(c) with reference to paragraph 6 of Article 22, it is understood that at the request of one competent authority both Contracting States shall enter into discussions about extending the period referred to in paragraph (5) at any time so that, in the event of an agreement to extend that period being reached, there should be no discontinuity in the application of the Article.

(d) with reference to paragraph (2) of Article 23, the provisions of this Convention shall not apply:

(i) to persons who are entitled to a special tax benefit under the Malta International Business Activities Act 1988 except for those persons who opt under Section 41 of the said Act to be subject to the normal provisions of the Income Tax Act (Cap 123); or

(ii) to persons who and to the extent to which under the provisions of the Merchant Shipping Act 1973 are not subject to tax on the profits derived from the operation of ships in international traffic; or

(iii) to persons entitled to any special tax benefit in respect of distributions by a trust subject to the provisions of the Offshore Trusts Act 1988 given that a trust as laid down in that Act is not vested with legal personality and therefore cannot benefit under the Convention in its own right; or

(iv) to persons entitled to any special tax benefit under any substantially similar law subsequently enacted and which is agreed by the competent authorities of the Contracting States as included within the terms of paragraph (2) of Article 23 of this Convention.

If the foregoing proposals are acceptable to the Government of Malta, I have the honour to suggest that the present Note and Your Excellency’s reply to that effect shall be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the entry into force of this Convention.”

The foregoing proposals being acceptable to the Government of Malta, I have the honour to confirm that Your Excellency’s Note and this reply shall be regarded as constituting an agreement between the two Governments in this matter which shall enter into force at the same time as the entry into force of the Convention.

I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration.