According to an IRS announcement on its website, the competent authorities of the U.S. and Malta have concluded an arrangement on the exchange of Country-by-Country Reports. The competent authority arrangement (CAA) for exchange of country-by-country reports is on the basis of a double tax convention (DTC). The agreement was signed on 20 July 2017.
Under the arrangement, both countries desire to increase international tax transparency and improve access of their respective tax authorities to information regarding the global allocation of the income, the taxes paid, and certain indicators of the location of economic activity among tax jurisdictions. The country-by-country report is an annual report filed by large multinational groups to be used by tax administrations. The CbC Report is one element of a standardized approach to transfer pricing documentation with a view to assessing high-level transfer pricing risks and other base erosion and profit shifting related risks, as well as for economic and statistical analysis.
The first fiscal year for which the U.S. and Malta intend to exchange CbC Reports is the fiscal years of MNE Groups commencing on or after January 1, 2016. The CbC Report is intended to be exchanged as soon as possible and no later than 18 months after the last day of the fiscal year of the MNE Group to which the CbC Report relates. CbC Reports with respect to fiscal years of MNE Groups commencing on or after January 1, 2017 are intended to be exchanged as soon as possible and no later than 15 months after the last day of the fiscal year of the MNE Group to which the CbC Report relates.
The Competent Authorities intend to exchange the CbC Reports automatically through a common schema in Extensible Markup Language (XML).
On 25 May 2017, the general council of Andorra approved the Double Taxation Agreement (DTA) with Malta for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.
On 1 May 2017, Mr. Petro Poroshenko, the President of Ukraine signed a law ratifying the Double Taxation Agreement (DTA) with Malta.
Under the provisions of the treaty, the withholding tax on dividend income shall not exceed 5% of the gross amount of the dividends if the beneficial owner is a company which controls directly or indirectly at least 20 per cent of the company paying the dividends and 15% of the gross amount of the dividends in all other cases. For interest and royalty income a maximum 10% withholding tax applies.
The Parliament of Ukraine on 13 April 2017 ratified the income and capital tax treaty with Malta. The Convention and the protocol to it were signed by the Government of Ukraine and the Government of Malta in September 2013.
Under the provisions of the treaty, the withholding tax on dividend income shall not exceed 5% of the gross amount of the dividends if the beneficial owner is a company which controls directly or indirectly at least 20 per cent of the company paying the dividends and 15% of the gross amount of the dividends in all other cases.
For interest and royalty income a maximum 10% withholding tax applies.
On 31 January 2017, the Tax Information Exchange Agreement (TIEA) between Singapore and Malta was entered into force. This Agreement provides for the effective exchange of information regarding tax matters between the tax authorities including automatic exchange of information which is necessary for the exchange of financial account information based on the international standards formulated by the OECD, and is expected to contribute to the prevention of international tax evasion and tax abuse.
According to a press release of 27 January 2017, published by the OECD, as part of continuing efforts to boost transparency by multinational enterprises (MNEs), Gabon, Hungary, Indonesia, Lithuania, Malta, Mauritius and the Russian Federation have signed the Multilateral Competent Authority Agreement for Country-by-Country Reporting (CbC MCAA), bringing the total number of signatories to 57. Lithuania and Hungary joined the Agreement in October and December 2016 respectively.
The CbC MCAA is an efficient mechanism that allows signatories to bilaterally and automatically exchange Country-by-Country Reports with each other, as contemplated by Action 13 of the BEPS Action Plan. It will help ensure that tax administrations obtain a better understanding of how MNEs structure their operations, while also ensuring that the confidentiality and appropriate use of such information is safeguarded. Information on the activation of exchange relationships under the MCAA will be released in due course.
Gabon, Indonesia, Malta, Mauritius and the Russian Federation signed the Agreement at a signing ceremony held during the second meeting of the Inclusive Framework on BEPS on 26-27 January 2017. The inclusive framework brings together over 100 countries and jurisdictions to collaborate on the implementation of the OECD/G20 Base Erosion and Profit Shifting (BEPS) package.
The Inland Revenue Department of Malta issued guidelines for the use of the Mutual Agreement Procedure under the provisions of Article 96(2) of the Income Tax Act (ITA), on 15 December 2016. The procedure permits the Malta Competent Authority to interact with their counterparts in contracting states to a tax treaty or parties to the Arbitration Convention, in order to resolve international tax disputes.