Ethiopia & Malta Double Tax Treaty

A double tax treaty between Malta and the Federal Democratic Republic of Ethiopia was signed on 12 April 2018 and published on 5 June 2018. It has not yet entered into force and will do so upon exchange of relevant notifications.

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Ethiopia Withholding Taxes

The main features of the Malta-Ethiopia tax treaty are as follows:

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Elimination of double taxation

Double taxation is eliminated by the allowance of a credit for any tax suffered in the source country against the tax liability for that income in the residence country.

Taxation of dividends

The double tax treaty between Malta and Ethiopia sets out a maximum withholding tax of 5 per cent on a payment of dividends from a company in Ethiopia to a shareholder resident in Malta, who is the beneficial owner thereof.

No withholding tax is charged on dividends paid by a company in Malta to a shareholder resident in Ethiopia (as a result of domestic law provisions).

Taxation of interest

The double tax treaty between Malta and Ethiopia sets out a maximum withholding tax of 5 per cent on interest paid to the beneficial owner thereof.

No withholding tax is charged on interest paid by a Malta resident person to a person resident in Ethiopia (as a result of domestic law provisions).

Taxation of royalties

The double tax treaty between Malta and Ethiopia sets out a maximum withholding tax of 5 per cent on royalties paid to the beneficial owner thereof.

No withholding tax is charged on royalties paid by a Malta resident person to a person resident in Ethiopia (as a result of domestic law provisions).

Artistes and Sportsmen

Income derived by a person from entertainment or sports may be taxed in the state where the activities are exercised.

Pensions

Pensions and similar remuneration in consideration of past employment and any annuity (other than pensions paid under the social security legislation of a contracting state, which shall be taxable in that state only) shall be taxable in the country of residence only.

Other income

Income not specifically dealt with in the Malta Ethiopia double tax treaty shall be taxable in the country of residence only.

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When navigating tax matters from Malta to Ethiopia and from Ethiopia to Malta, it’s essential to understand how the Double Tax Treaty between the two countries impacts taxation on income, capital gains, and other financial obligations. This treaty ensures that individuals and businesses benefit from reduced tax liabilities and avoid the risk of double taxation. By leveraging this agreement, both residents and companies can optimise their tax position when operating or investing across Malta to Ethiopia or Ethiopia to Malta. Please contact us should you require any more information on the Malta-Ethiopia Double Tax Treaty and the unique tax planning opportunities.

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