Barbados Malta Tax Treaty
The Barbados Malta Tax Treaty connects two of the world’s leading international business hubs, both of which feature large tax treaty networks spanning the globe.
Both countries offer large tax treaty networks which feature low withholding tax rates with partner countries. Both countries are also continuously working to expand their networks to benefit international business entities. The Barbados Malta Tax Treaty creates opportunities for parties in both jurisdictions by offering access to additional jurisdictions through the treaty partner’s respective network.
Similar to Barbados, Malta does not level withholding taxes on dividends, interest or royalties. These features, combined with Malta’s large network of Double Taxation Agreements with most major OECD economies, make Malta a popular choice for registering an International Holding Company.
Malta also offers low effective tax rates under the corporate tax refund mechanism. This means that the corporate tax rate of 35% on trading profits is effectively reduced upon the distribution of a dividend to the shareholders (Holding Companies) who at that time can claim a tax refund of 30% on trading profits, thereby reducing the net corporate tax rate within the group to just 5%.
Malta’s important geographic location in the Mediterranean as well as its developed infrastructure for shipping and manufacturing offer substantial advantages for businesses that wish to operate in nearby European and African countries.
Barbados Malta Double Taxation Agreement
Double Taxation Agreements (DTAs) are used to prevent double taxation between partner countries in order to minimize the international tax rates paid by companies and investors who operate internationally. This creates an environment that encourages trade and investment to take place between partner countries.
Both Barbados and Malta prevent double taxation by allowing the tax payable in the partner country to be deducted in the home country as a tax credit. This process prevents the same profits from being subjected to undue taxation and reduces the total international tax payable by the business.
Double taxation is avoided as follows:
• Tax payable in Malta on profits or income from sources within Malta shall be allowed as a credit against any Barbados tax computed by reference to the same profits or income.
• In the case of a dividend paid by a company that is a resident of Malta to a company that is a resident of Barbados and which holds directly at least 10% of the capital of the company paying the dividend, the credit shall take into account the Malta tax payable in respect of the profits out of which such dividend is paid.
• Tax payable in Barbados on profits or income from sources within Barbados may be allowed as a credit against the relative Malta tax payable.
In addition, Double Taxation Agreements outline the maximum withholding taxes that can be charged by treaty partners.
The Barbados Malta Tax Treaty applies withholding taxes as follows:
o The withholding tax charged in Barbados shall not exceed 5% if the beneficial owner is a company which owns at least 5% of the capital of the company paying the dividends. In all other cases, the maximum withholding tax is 15%.
o The withholding tax charged in Malta shall not exceed that chargeable on the profits out of which the dividends are paid.
• Interest: The maximum withholding tax charged shall not exceed 5%.
• Royalties: The maximum withholding tax charged shall not exceed 5%.
Barbados Tax Rates
The offshore tax rates charged on Barbados offshore businesses are very attractive. The tax charged on International Business Companies, Societies with Restricted Liability and International Banks starts at 2.5% and is reduced on a sliding scale to just 0.5%. Trusts are completely exemption from taxation.
Capital gains are exempt from taxation, while there are no withholding taxes charged on dividends, interest and royalties.
Barbados Business Structures
Barbados features a wide variety of international business structures, including:
Large Tax Treaty Networks Create a World of Opportunities
Both Barbados and Malta feature large, international tax treaty networks that create opportunities for businesses and investors worldwide. Malta’s extensive tax network and location make it a leading international business hub for the Mediterranean, European and African regions, while Barbados’ tax network and competitive tax rates make the island a leading international business hub in the Americas.
The Barbados Malta Tax Treaty has enabled both jurisdictions to further expand the reach of their networks and improve business opportunities for investors worldwide. Under the treaty, businesses and investors in both countries may now benefit from easy access to a leading international business jurisdiction on the other side of the Atlantic Ocean.