The new Income Tax Treaty and protocol between India and Malta entered into force on 7 February 2014 and will apply in India as from 1 April 2014 and as from 1 January 2015 in Malta.

The new treaty was signed on 8 April 2013 and replaces the old India and Malta Income Tax Treaty of 1994.

When in effect, the treaty provides that for dividends paid by a company in Malta to an Indian company, the Maltese tax on the dividends may not exceed the amount chargeable on the profits out of which the dividends are paid. In accordance with the treaty, the following withholding taxes will apply:

  • Dividends:

                  i. 10% if the dividends are paid by a company that is a resident of India to a resident of Malta.

                  ii.  0% if the dividends are paid by a company that is a resident of Malta to a resident of India.

  • Royalties: 10%.
  • Interest: 10%.