Tax treaties signed with Malta and initialed with Panama

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.

(Communicated by the Israel Ministry of Finance)

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 nine 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.

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