Malta, Saudi Arabia Sign Double Taxation Agreement

The tax treaty between Malta and Saudi Arabia was signed on the 4th January 2012 and approved by Saudi Arabia’s Cabinet on September 17, 2012. This was recently published in Malta’s Government Gazette on 15 January 2013.

The tax treaty is largely based on the OECD Model Convention on Income and Capital. However, under the Treaty a building site, a construction, assembly or installation project, or supervisory activities, in connection therewith qualify as a Permanent Establishment if such activity has a duration of more than 6 months.

Withholding tax rate

The withholding tax rate on dividends paid by a company which is a resident of Saudi Arabia is 5%. The withholding tax rate on royalties is also 5% if they are paid for the use of, or the right to use, industrial, commercial or scientific equipment but it is 7% in all other cases.

It is important to note that no withholding tax is applicable on ‘income from debt claims’ (referred to as interest in other tax treaties).