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Tax Treaties Signed between Israel and Malta and initialed with Panama

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Monday, August 15th, 2011

A treaty for the avoidance of double taxation has been signed between Israel and
Malta, and a treaty for the avoidance of double taxation has been initialed between
Israel and Panama. The treaties will enter into effect on completion of ratification
proceedings in the two countries.
The treaty signed with Malta includes a clause for the exchange of information
between the tax authorities of both countries, based on the model treaty of the OECD.
The tax withholding rates in the country where the payment is made (the country of
origin) have been set at 5% of interest payments and 0%-15% of dividends. With
regard to royalties and capital gains, taxation will be only in the seller’s country of
domicile. A company carrying out a construction project in the other country will be
charged tax in that country only if the project’s duration is over 12 months.
The treaty initialed with Panama also includes a clause for the exchange of
information between the tax authorities of both countries, based on the model treaty
of the OECD. The tax withholding rates in the country where the payment is made
(the country of origin) have been set at 15% of interest, dividends and royalty
payment. A company carrying out a construction project in the other country will be
charged tax in that country only if the project’s duration is over 9 months.
Director of State Revenue Department in the Israeli Ministry of Finance, Acc. Frida
Israeli, said, “the treaties have been signed as part of the Ministry of Finance’s policy
of expanding the network of treaties signed by Israel, which grant concessions
regarding double taxation stemming from mutual investments on the one hand, and enable the exchange of information between the countries’ tax authorities on the
other.”
The Israeli negotiations teams were headed by Talia Dolan-Gadish, Attorney at
Law, legal advisor to the State Revenues Department. Team members included Rivka
Lapiner, CPA, Senior Deputy to the State Revenue Commissioner, Sharon Aharoni,
CPA (and Attorney at Law), Director of the International Taxation Unit at the Israel
Tax Authority, and Noam Kot, Attorney at Law, from the Legal Bureau of the Israel
Tax Authority.