Details of the Malta – Moldova Income Tax Treaty (2014), signed on 10 April 2014 have become available. The treaty generally follows the OECD Model, with some deviations, including the following:
- a building site, a construction, assembly or installation project, or supervisory activities in connection therewith constitute a permanent establishment (PE) only if such site, project or activities last for more than 12 months; and
- article 7 of the treaty follows the article on business profits of the UN Model (2001). Additionally, it provides that no profits shall be attributed to a PE by reason of the mere purchase by that PE of goods or merchandise for the enterprise (article 7(5)).
The maximum rates of withholding tax are:
Dividends:
- dividends paid by a company resident of Moldova to a resident of Malta: 5% on dividends; and
- dividends paid by a company resident of Malta to a resident of Moldova: Malta tax on the gross amount of the dividends may not exceed that chargeable on the profits out of which the dividends are paid;
- 5% on interest; and
- 5% on royalties.
(Extract taken from IBFD)
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