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Relief of Double
Taxation
There
are four types of relief of double taxation available to a taxable Collective
Investment Scheme in accordance with the provisions of the Income Tax Act:
(1) double tax relief pursuant to a treaty (where a scheme has elected
to be taxable in Malta), (2) relief from tax on income subject to tax in
certain jurisdictions in the Commonwealth, (3) unilateral relief, and (4)
a (25%) flat-rate foreign tax credit.
Malta
has an extensive treaty network consisting of income tax treaties with
at least 25 countries and a further 12 treaties are concluded at a technical
level and awaiting ratification. Amongst other countries these include
Luxembourg, United Kingdom, Romania, India and Italy The dual tax treaty
network offers a number of benefits to fund managers and investment funds.
In particular, the election to be taxed in Malta, and thereby claim eligibility
for treaty benefits vis-à-vis numerous other countries, is particularly
advantageous to funds that generate principally long-term capital gains
rather than ordinary income, including emerging markets funds and funds
that invest in commodities or futures and options. For this reason,
Malta is a particularly attractive jurisdiction for offshore "hedge" funds. |
Investment
& Financial Services
