Cross-Border Business Benefits of Malta Tax System--US-Malta Treaty

Cross-Border Business Benefits of Malta Tax System--US-Malta Treaty

 

By Sanford J. Davis, Mitchell R. Kops, William Kambas and Theodore Ahlgren

 

Excerpt: 2011 Emerging Issues 5869


SUMMARY: Malta has emerged as an increasingly attractive jurisdiction for multinational enterprises. In recent years, Malta has entered the EU and revised its banking and tax regimes to attract multinational business and cross-border investment. After 13 years without a treaty, Malta and the US have entered into a new income tax treaty, effective 1/1/2011, which should continue to encourage investment and business activity between the US and Malta.

During the last decade, Malta has entered the European Union ("EU") and revised its banking and tax regimes to attract multinational businesses and cross-border investment. Despite a 35 percent corporate tax rate, the effective tax on Malta companies and investors is lessened considerably by various mechanisms that eliminate double taxation of corporate earnings.

In this setting, Malta and the United States entered into a new income tax treaty effective on January 1, 2011 (the "New Treaty"), following a 13-year hiatus without a governing treaty. The New Treaty and Malta's investor friendly tax regime should continue to encourage investment and business activity between the US and Malta.

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ABOUT THE AUTHOR(S):
Sanford J. Davis is a partner at Withers Bergman LLP. He advises domestic and foreign clients on a broad range of U.S. and international tax issues. His practice is both transactional and advisory, focusing on corporate, M&A, partnership, and international taxation. He can be reached at: sanford.davis@withers.us.com or +1 212 848 9855.

Mitchell R. Kops is a partner at Withers Bergman LLP. He advises on U.S. income tax and business planning matters for U.S. and non-U.S. individuals, closely-held partnerships and corporations and other business and investment entities, including advising on U.S. income tax matters in connection with domestic and cross-border transactions and structures. He can be reached at mitchell.kops@withers.us.com or +1 203 974 0391.

William J. Kambasis an associate at Withers Bergman LLP. He advises on many aspects of purely domestic as well as inbound and outbound personal and business transactions and investments applicable to entrepreneurs and closely held businesses as well as U.S. and non-U.S. family offices and their associated trusts. He can be reached at william.kambas@withers.us.com or +1 203 974 0313.

Theodore C. Ahlgren advises clients on matters relating to international and domestic income and estate planning, including U.S. federal income tax practice and procedure and voluntary disclosure issues. He regularly works with multinational business and investment structures, including complex financial instruments.

The authors would also like to thank Angela M. Klemack, an associate at Withers Bergman LLP, for her valuable assistance in the preparation of this Analysis.