Malta ratifies the MLI

Deloitte Malta Tax Alert

22 May 2018

Malta has ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (the ‘MLI’) by means of Legal Notice 142 of 2018, as published in the Malta Government Gazette No. 19,984 of 27 April 2018.

Subsequent to the deposit of the ratification instruments by five jurisdictions to the OECD’s depository, the MLI will enter into force on 1 July 2018, pursuant to which jurisdictions shall be able to swiftly transpose the results of the OECD/G20 BEPS Project by way of modifying their existing double tax conventions. The MLI is restricted solely to tax agreements and does not affect any provision of domestic law.

As of today, Malta has concluded 77 double tax conventions, 73 of which have been included into Malta’s list of covered tax agreements (‘CTAs’), and out of which:

  • 55 CTAs will effectively be modified by the MLI, as the treaty partners are also MLI signatories and have included the respective treaty with Malta in their list of CTAs;
  • 16 CTAs will not be modified by the MLI, as the treaty partners are not MLI signatories; and
  • 2 CTAs will not be modified by the MLI, as the treaty partners, although MLI signatories, have not included their treaties with Malta in their lists of CTAs.

Based on Malta’s Reservations and Notifications, Malta will apply:

  • The “Minimum Standard”, which includes provisions dealing with the object and purpose of CTAs (article 6 of the MLI), prevention of treaty abuse (article 7 of the MLI, excluding the “Limitation of Benefits” clause, which has not been opted for), as well as the mutual agreement procedure and corresponding adjustments (articles 16 and 17 of the MLI);
  • Provisions of article 9(4) of the MLI in connection with capital gains from alienation of shares or interests of entities deriving their value principally from immovable property; and
  • Provisions dealing with arbitration procedure subject to certain reservations (articles 18-26 of the MLI).     

The date of entry into force of the MLI in Malta shall be announced by notice in the Malta Government Gazette.

The date when the MLI becomes applicable with respect to a particular CTA depends on the dates of entry into force of the MLI in both Malta and the treaty partner to the said CTA.

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