S.L. 123.9 Art. 2Arrangements to have effect. AND THE DOUBLE The Republic of Double income, have This Contracting (1) This Contracting (2) There income, or on movable or salaries paid (3) The (a) In (b) In (4) This taxes which are or in place of, any territory Convention. other any laws. as defined any area law, as

It is hereby declared -

(a) that the arrangements specified in the Convention out in the Schedule to this Order have been made with the Government of the Islamic Republic of Pakistan with a view to affording relief from double taxation and preventing fiscal evasion in relation to the following taxes imposed by the laws of the Islamic Republic of Pakistan: the income tax, super-tax and the surcharge;

(b) that it is expedient that those arrangements should have effect. SCHEDULE

CONVENTION BETWEEN THE REPUBLIC OF MALTA ISLAMIC REPUBLIC OF PAKISTAN FOR THE AVOIDANCE OF TAXATION AND THE PREVENTION OF FISCAL EVASION WITH THE RESPECT TO TAXES ON INCOME

Government of the Republic of Malta and the Government of the Islamic Pakistan, desiring to conclude a Convention for the Avoidance of Taxation and the Prevention of Fiscal Evasion with respect to taxes on agreed as follows:

CHAPTER I

Scope of the Convention

ARTICLE 1

Personal Scope

Convention shall apply to persons who are residents of one or both of the States.

ARTICLE 2

Taxes Covered Convention shall apply to taxes on income imposed on behalf of each State irrespective of the manner in which they are levied. shall be regarded as taxes on income all taxes imposed on total elements of income, including taxes on gains from the alienation of immovable property, as well as taxes on the total amounts of wages and by enterprises. existing taxes to which the Convention shall apply are:

the case of Pakistan: the income tax, supertax and the surcharge, (hereinafter referred to as "Pakistan tax"). the case of Malta: the income tax and surtax, including prepayments of tax whether made by deduction at source or otherwise, (hereinafter referred to as "Malta tax").

Convention shall also apply to any identical or substantially similar imposed after the date of signature of this Convention in addition to, the existing taxes by either Contracting State or by the Government of to which the present Convention is extended under Article 27 of this The competent authorities of the Contracting States shall notify to each significant changes which have been made in their respective taxation

CHAPTER II

Definitions

ARTICLE 3

General Definitions

(1) In this Convention, unless the context otherwise requires -

(a) the term "Pakistan" used in a geographical sense means Pakistan in the Constitution of the Islamic Republic of Pakistan and also includes outside the territorial waters of Pakistan which in accordance with international has been or may hereafter be designated, under the laws of Pakistan, within which the rights of Pakistan with respect to the sea-bed and sub-soil natural resources may be exercised;

(b) the term "Malta" when used in a geographical sense means the Malta including the Island of Malta, the Island of Gozo, the other Maltese Archipelago together with the territorial waters thereof, outside the territorial sea of Malta which, in accordance with international been or may hereafter be designated, under the law of Malta concerning continental shelf, as an area within which the rights of Malta with respect bed and sub-soil and their natural resources may be exercised;

(c) the teams "a Contracting State" and "the other Contracting Pakistan or Malta as the context requires;

(d) the term "person" includes an individual, a company and any persons;

(e) the term "company" means any body corporate or any entity which as a body corporate for tax purposes;

(f) the terms "enterprise of a Contracting State" and "enterprise Contracting State" mean, respectively, an enterprise carried on by Contracting State and an enterprise carried on by a resident of the other State;

(g) the term "national" means -

(i) any individual possessing the citizenship of a Contracting

(ii) any legal person, partnership and association deriving its from the law in force in a Contracting State;

(h) the term "competent authority" means:

(i) in the case of Pakistan, the Central Board of Revenue;

(ii) in the case of Malta, the Minister responsible for authorised representative.

(2) In the application of this Convention by a Contracting State, otherwise defined shall, unless the context otherwise requires, have which it has under the laws of that Contracting State relating to the taxes the subject of this Convention.

ARTICLE 4

Fiscal Domicile

(1) For the purposes of this Convention, the term "resident of any person who, under the law of that State, is liable to taxation therein his domicile, residence, place of management or any other criterion of a by reason of the provisions of paragraph (1) an individual is a both Contracting States, then his status shall be determined as follows:

shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closest (centre of vital interests). the Contracting State in which he has this centre of vital interests cannot be determined, or if he has no permanent home available to him either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode. he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national. he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question mutual agreement. by reason of the provisions of paragraph (1) a company is a resident Contracting States, then it shall be deemed to be a resident of the Contracting whose law it derives its status as such. by reason of the provisions of paragraph (1) a person other than an a company is a resident of both Contracting States, the competent the Contracting States shall by mutual agreement endeavour to settle and to determine the mode of application of the Convention to such

ARTICLE 5

Permanent Establishment the purposes of this Convention the term "permanent establishment" place of business in which the business of the enterprise is wholly or out. term "permanent establishment" shall include especially-place of management; branch; office; factory; workshop; mine, quarry or other place of extraction of natural resources including an offshore drilling site; building site or construction or assembly project which exists for more than 12 months. enterprise of a Contracting State shall be deemed to have a permanent in other Contracting State if it carries on supervisory activities in that other State for more than 12 months in connection with a construction project.

(4) The term "permanent establishment" shall not be deemed to include

(a) the use of facilities solely far the purpose of storage, display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging enterprise solely for the purpose of processing by another

(d) the maintenance of a fixed place of business solely for purchasing goods or merchandise, or for collecting information, enterprise;

(e) the maintenance of a fixed place of business solely for advertising, for the supply of information, for scientific similar activities which have a preparatory or auxiliary the enterprise.

(5) A person acting in a Contracting State on behalf of an enterprise Contracting State - other than an agent of an independent status to whom

(6) applies - shall be deemed to be a permanent establishment in the State if he has, and habitually exercises in that State, an authority contracts in the name of the enterprise, unless his activities are purchase of goods or merchandise for the enterprise.

(6) An enterprise of a Contracting State shall not be deemed permanent establishment in the other Contracting State merely because business in that other State through a broker, general commission agent agent of an independent status, where such persons are acting in the ordinary of their business.

(7) The fact that a company which is a resident of a Contracting or is controlled by a company, which is a resident of the other Contracting which carries on business in that other State (whether through establishment or otherwise), shall not of itself make either company establishment of the other.

CHAPTER III

Taxation of Income

ARTICLE 6

Income from Immovable Property

(1) Income from immovable property may be taxed in the Contracting which such property is situated.

(2) The term "immovable property" shall be defined in accordance of the Contracting State in which the property in question is situated. in any case include property accessory to immovable property, rights provisions of general law respecting immovable property apply, immovable property and rights to variable or fixed payments as consideration working of, or the right to work, mineral deposits, sources and resources; ships, boats and aircraft shall not be regarded as immovable provisions of paragraph (1) shall apply to income derived from the letting, or use in any other form of immovable property. provisions of paragraphs (1) and (3) shall also apply to the income from property of an enterprise and to income from immovable property used performance of professional services.

ARTICLE 7

Business Profits profits of an enterprise of a Contracting State shall be taxable only in unless the enterprise carries on business in the other Contracting State permanent establishment situated therein. If the enterprise carries on aforesaid, the profits of the enterprise may be taxed in the other State but of them as is attributable to that permanent establishment. Subject to the provisions of paragraph (3), where an enterprise of a State carries on business in the other Contracting State through a establishment situated therein, there shall in each Contracting State be that permanent establishment the profits which it might be expected to were a distinct and separate enterprise engaged in the same or similar under the same or similar conditions and dealing wholly independently enterprise of which it is a permanent establishment. determination of the profits of a permanent establishment, there shall deductions expenses which are incurred for the purposes of the establishment including executive and general administrative expenses so whether in the State in which the permanent establishment is situated or far as it has been customary in a Contracting State to determine the attributed to a permanent establishment on the basis of an of the total profits of the enterprise to its various parts, nothing in shall preclude that Contracting State from determining the profits to be an apportionment as may be customary. The method of apportionment however, be such that the result shall be in accordance with the embodied in this Article.

profits shall be attributed to a permanent establishment by reason of the by that permanent establishment of goods or merchandise for the purposes of the preceding paragraphs, the profits to be attributed to establishment shall be determined by the same method year by year good and sufficient reason to the contrary. profits include items of income which are dealt with separately in of this Convention, then the provisions of those Articles shall not be provisions of this Article.

ARTICLE 8

Shipping and Air Transport derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State. Notwithstanding the provisions of paragraph (1) of Article 7, profits derived from the operation of ships or aircraft used principally to transport goods exclusively between places in a Contracting State may be taxed

(3) The provisions of paragraphs (1) and (2) shall also apply to to in those paragraphs derived by an enterprise of a Contracting participation in a pool, a joint business or in an international operating

(4) For the purposes of this Article, profits derived from the operation or aircraft in international traffic also include income derived from -

(a) the rental, lease or maintenance of ships or aircraft;

(b) the rental, lease, use or maintenance of containers, trailers transport of containers and other related equipment;

(c) training schemes, management and other services:

Provided that such income -

(i) accrues to a resident of a Contracting State whose wholly or mainly derived from the operation of ships international traffic; and

(ii) is paid by a resident of the other Contracting State is also wholly or mainly derived from the operation aircraft in international traffic.

(5) Notwithstanding the other provisions of this Article, profits operation of a ship in international traffic derived by a company which of Malta having more than 25 per cent of its capital owned, directly or persons not residents of Malta, may be taxed in Pakistan unless the company that the profits derived from the operation of such ship are subject without regard to any relief therefrom as provided for in section 86 of Shipping Act, or in any identical or similar provision.

ARTICLE 9

Associated Enterprises

(1) Where -

(a) an enterprise of a Contracting State participates directly the management, control or capital of an enterprise Contracting State, or (b the same persons participate directly or indirectly in the control or capital of an enterprise of a Contracting enterprise of the other Contracting State, and in either case conditions are made or imposed between the two their commercial or financial relations which differ from those which between independent enterprises, then any profits which would, conditions, have accrued to one of the enterprises, but, by reason of those have not so accrued, may be included in the profits of that enterprise accordingly.

ARTICLE 10

Dividends

(1) Dividends paid by a company which is a resident of a Contracting resident of the other Contracting State may be taxed in that other State. However, such dividends may be taxed in the Contracting State of which the paying the dividends is a resident, and according to the law of that State where the dividends are paid by a company resident of Pakistan to a company resident of Malta which is the beneficial owner thereof, and which owns 20 per cent or more of the voting power of the first-mentioned company, the Pakistan tax so charged shall not exceed 15 per cent of the gross amount; where the dividends are paid by a company resident of Malta to a resident of Pakistan who is the beneficial owner thereof, Malta tax shall not exceed that chargeable on the company paying the dividends in respect of the profits so distributed, and the shareholder shall be entitled receive a credit in respect of the tax paid by the company on the profits so distributed. paragraph shall not affect the taxation of the company in respect of the which the dividends are paid. term "dividends" as used in this Article means income from shares, shares or "jouissance" rights, mining shares, founders’ shares or other being debt-claims, participating in profits, as well as income from other rights which is subjected to the same taxation treatment as income from taxation law of the State of which the Company making the distribution provisions of paragraphs (1) and (2) shall not apply if the recipient of being a resident of a Contracting State, carries on business in the other State, of which the company paying the dividends is a resident, through establishment situated therein or performs in that other State services from a fixed base situated therein and the holding in respect of dividends are paid is effectively connected with such permanent or fixed base. In such a case, the provisions of Article 7 or Article 14, may be, shall apply.

a company which is a resident of a Contracting State derives profits from the other Contracting State, that other State may not impose any tax dividends paid by the company to persons who are not residents of that other subject the company’s undistributed profits to a tax on undistributed profits, dividends paid or the undistributed profits consist wholly or partly of income arising in such other State.

ARTICLE 11

Interest

Interest arising in a Contracting State and paid to a resident of the other State may be taxed in that other State.

However, such interest may be taxed in the Contracting State in which it according to the law of that State, but if the recipient is the beneficial interest, the tax so charged shall not exceed 10 per cent of the gross interest. Notwithstanding the provisions of paragraph (2) -interest arising in Malta and paid to the Government of Pakistan or to the State Bank of Pakistan shall be exempt from Malta tax;

(b) interest arising in Pakistan and paid to the Malta Government, Central Bank of Malta or the Malta Development Corporation exempt from Pakistan tax;

(c) interest arising in a Contracting State to a financial institution other Contracting State, not less than 51 per cent of carrying voting rights are held by the Government of that shall be exempt from tax in the first-mentioned State.

(4) The term "interest" as used in this Article means income from every kind, whether or not secured by mortgage, and whether or not carrying to participate in the debtor’s profits, and, in particular, income from securities and income from bonds or debentures, including premiums attaching to bonds or debentures.

(5) The provisions of paragraphs (1) and (2) shall not apply if the the interest, being a resident of a Contracting State, carries on business Contracting State in which the interest arises, through a permanent situated therein, or performs in that other State professional services base situated therein and the debt-claim in respect of which the interest effectively connected with such permanent establishment or fixed case, the provisions of Article 7 or Article 14, as the case may be, shall

(6) Interest shall be deemed to arise in a Contracting State, when that State itself, a political subdivision, a local authority or a resident Where, however, the person paying the interest, whether he is a Contracting State or not, has in a Contracting State a permanent establishment connection with which the indebtedness on which the interest is paid and such interest is borne by such permanent establishment, then such be deemed to arise in the Contracting State in which the permanent establishment situated.

(7) Where, owing to a special relationship between the payer and or between both of them and some other person, the amounts or the having regard to the debt-claim for which it is paid, exceeds the would have been agreed upon by the payer and the recipient in the absence relationship, the provisions of this Article shall apply only to the amount. In that case, the excess part of the payments shall remain taxable to the law of each Contracting State, due regard being had to the other this Convention.

ARTICLE 12

Royalties

(1) Royalties arising in a Contracting State and paid to a resident Contracting State shall be taxable only in that other State if such beneficial owner of the royalties and the royalties consist of payments received as consideration for the use of, or the right to use, any copyright artistic or scientific work, including cinematographic films or tapes for broadcasting.

(2) Royalties arising in a Contracting State and paid to a resident Contracting State may be taxed in that other Contracting State if the royalties of payments of any kind received as a consideration for the use of, or the any patent, trade mark, design, model, plan, secret formula or process, commercial or scientific equipment, or information concerning commercial or scientific experience. However, such royalties may also State in which they arise, and according to the law of that State, but is the beneficial owner of the royalties, the tax so charged shall not cent of the gross amount of such royalties.

provisions of paragraphs (1) and (2) shall not apply if the recipient of being a resident of a Contracting State, carries on business in the other State in which the royalties arise through a permanent establishment therein, or performs in that other State professional services from a fixed therein, and the right or property in respect of which the royalties are effectively connected with such permanent establishment or fixed base. In provisions of Article 7 or Article 14, as the case may be, shall apply. Royalties shall be deemed to arise in a Contracting State when the payer is itself, a political subdivision, a local authority or a resident of that State. however, the person paying the royalties, whether he is a resident of a State or not, has in a Contracting State a permanent establishment in with which the liability to pay the royalties was incurred, and such borne by such permanent establishment, then such royalties shall be arise in the Contracting State in which the permanent establishment is owing to a special relationship between the payer and the recipient both of them and some other person, the amount of the royalties paid, to the use, right or information for which they are paid exceeds the would have been agreed upon by the payer and the recipient in the such relationship, the provisions of this Article shall apply only to the amount. In that case, the excess part of the payments shall remain according to the law of each Contracting State, due regard being had to the provisions of this Convention. sum derived from sources within one of the Contracting States from the rights by a resident of the other Contracting State who does not carry business in the first-mentioned Contracting State through a permanent situated therein with which the patent rights are effectively connected, exempt from tax in the first-mentioned Contracting State.

ARTICLE 13

Capital Gains from the alienation of immovable property, as defined in paragraph 6, may be taxed in the Contracting State in which such property is from the alienation of movable property forming part of the business permanent establishment which an enterprise of a Contracting State has Contracting State or of movable property pertaining to a fixed base a resident of a Contracting State in the other Contracting State for the performing professional services, including such gains from the such a permanent establishment (alone or together with the whole of such a fixed base, may be taxed in the other State. However, gains alienation of ships or aircraft operated by an enterprise of a Contracting international traffic and movable property pertaining to the operation of aircraft, shall be taxable only in that Contracting State. from the alienation of any property other than those mentioned in and (2) shall be taxable only in the Contracting State of which the resident. ARTICLE 14

Independent Personal Services

(1) Income derived by a resident of a Contracting State professional services or other independent activities of a similar character taxable only in that State unless he has a fixed base regularly available other Contracting State for the purpose of performing his activities. If fixed base, the income may be taxed in the other Contracting State but of it as is attributable to that fixed base.

(2) The term "professional services" includes, especially, scientific, literary, artistic, educational or teaching activities independent activities of physicians, lawyers, engineers, architects, accountants.

ARTICLE 15

Dependent Personal Services

(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, other similar remuneration derived by a resident of a Contracting State an employment shall be taxable only in that State unless the employment in the other Contracting State. If the employment is so exercised such as is derived therefrom may be taxed in that other State.

(2) Notwithstanding the provisions of paragraph (1), remuneration resident of a Contracting State in respect of an employment exercised Contracting State shall be taxable only in the first-mentioned State if

(a) the recipient is present in the other State for a period exceeding in the aggregate 183 days in the calendar year

(b) the remuneration is paid by, or on behalf of, an employer resident of the other State, and

(c) the remuneration is not borne by a permanent establishment base which the employer has in the other State.

(3) Notwithstanding the preceding provisions of this Article, remuneration respect of an employment exercised aboard a ship or aircraft international traffic by an enterprise of a Contracting State may be State.

ARTICLE 16

Directors’ Fees Directors’ fees and similar payment derived by a resident of a Contracting his capacity as a member of the board of directors or any other similar company which is a resident of the other Contracting State may be taxed State.

ARTICLE 17

Artistes and Athletes

(1) Notwithstanding the provisions of Articles 14 and 15, income public entertainers, such as theatre, motion picture, radio or television musicians, and by athletes, from their personal activities as such may State in which these activities are exercised. Notwithstanding the provisions of Article 7, where the activities mentioned

(1) of this Article are provided in a Contracting State by an enterprise Contracting State the profits derived from providing these activities by enterprise may be taxed in the first-mentioned Contracting State.

provisions of paragraphs (1) and (2) shall not apply in the case of sports programmes sponsored by or on behalf of each of the Contracting

ARTICLE 18

Pensions

Subject to the provisions of paragraph (1) of Article 19, pensions and other remuneration paid to a resident of a Contracting State shall be taxable only in used in this Article the term "pensions and other similar remuneration" periodic payments made after retirement in consideration of past or by way of compensation for injuries received in connection with employment.

ARTICLE 19

Government Service Remuneration, other than a pension, paid by a Contracting State or a subdivision or a local authority thereof to any individual in respect of rendered to that State or subdivision or local authority thereof shall be in that State. However, such remuneration shall be taxable only in the other Contracting services are rendered in that State and the recipient is a resident of that Contracting State who -a national of that State; or did not become a resident of that State solely for the purpose of performing the services. Any pension paid by, or out of funds created by, a Contracting State or subdivision or a local authority thereof to any individual in respect of rendered to that State or subdivision or local authority thereof shall be in that State. However, such pension shall be taxable only in the other Contracting State if is a national of and a resident of that State. provisions of Articles 15, 16 and 18 shall apply to remuneration and respect of services rendered in connection with any business carried on Contracting State or a political subdivision or a local authority thereof. provisions of paragraph (1)(a) shall likewise apply in respect of paid, under a development assistance programme of a Contracting political subdivision or a local authority thereof, out of funds exclusively that State, those political subdivisions or local authorities thereof, to a volunteer seconded to the other Contracting State with the consent of State. ARTICLE 20

Teachers, Students and Trainees

(1) A resident of a Contracting State who visits the other Contracting period not exceeding two years, for the purpose of teaching or university, research institute, college, school or other educational establishment that other Contracting State shall be exempt from tax in that other Contracting in respect of any payments which he receives for such activity.

(2) A resident of one of the Contracting States who is temporarily other Contracting State solely -

(a) as a student at a recognized university, college or school Contracting State;

(b) as an apprentice to acquire technical, professional experience from a person other than his employer or an referred to in (c) below;

(c) as the recipient of a grant, allowance or award for the primary of study or research from a religious, charitable, educational organization of the former State; or

(d) as a trainee under arrangements with the Government Contracting State or any agency or instrumentality thereof purpose of training, study or orientation, shall not be taxed in the other Contracting State in respect of remittances abroad for the purpose of his maintenance, education or training or scholarship grant.

ARTICLE 21

Other Income

(1) Items of income of a resident of a Contracting State, wherever dealt with in the foregoing Articles of this Convention shall be taxable State.

(2) The provisions of paragraph (1) shall not apply if the recipient income, being a resident of a Contracting State, carries on business Contracting State through a permanent establishment situated therein, that other State professional services from a fixed base situated therein, or property, in respect of which the income is paid, is effectively connected such permanent establishment or fixed base. In such a case, the provisions 7 or Article 14, as the case may be, shall apply.

CHAPTER IV

Elimination of Double Taxation

ARTICLE 22

Elimination of Double Taxation

(1) Subject to the provisions of Pakistan tax law regarding the credit against Pakistan tax in respect of foreign tax, Malta tax payable, directly or by deduction by a person resident in Pakistan, in respect of sources within Malta (including income accruing or arising in Malta provisions of the law of Pakistan, to accrue or arise in Pakistan) shall be credit against any Pakistan tax payable in respect of that income. Subject to the provisions of the law of Malta regarding the allowance of Malta tax in respect of foreign tax, where, in accordance with the this Convention there is included in a Malta assessment income from Pakistan, Pakistan tax on such income shall be allowed as a credit relative Malta tax payable thereon. purpose of allowing credit in accordance with the provisions of this referred to in paragraph (2) of Article 11 and paragraph (2) of Article Convention, shall be deemed to have been effectively borne at the rate charged plus 15 pear cent of the net income from the sources referred to in provisions, so however that the rate of tax shall in no case be deemed to be per cent of the net income.

CHAPTER V

Special Provisions

ARTICLE 23

Non-discrimination nationals of a Contracting State shall not be subjected in the other State to any taxation or any requirement connected therewith which is burdensome than the taxation and connected requirements to which that other State in the same circumstances are or may be subjected.

taxation on a permanent establishment which an enterprise of a State has in the other Contracting State shall not be less favourably other State than the taxation levied an enterprises of that other State same activities. where the provisions of paragraph (1) of Article 9, paragraph (7) of or paragraph (5) of Article 12 apply, interest, royalties and other paid by an enterprise of a Contracting State to a resident of the other State shall, for the purpose of determining the taxable profits of such deductible under the same conditions as if they had been paid to a first-mentioned State: provided that the provisions of this paragraph without prejudice to the requirements of the law of either Contracting States deduction of the said disbursements. Enterprises of a Contracting State, the capital of which is wholly or partly controlled, directly or indirectly, by one or more residents of the other State, shall not be subjected in the first-mentioned Contracting State to or any requirement connected therewith which is other or more than the taxation and connected requirements to which other similar that first-mentioned State are or may be subjected.

Nothing contained in the other paragraphs of this Article shall be construed -obliging either of the Contracting States to grant to persons not resident in its territory those personal allowances and reliefs for tax purposes which are by law available only to persons who are so resident; affecting any provisions of the law of Pakistan regarding the grant of rebate of tax to companies fulfilling specified requirements regarding the declaration and payment of dividends.

ARTICLE 24

Mutual Agreement Procedure

(1) Where a resident of a Contracting State considers that the actions both of the Contracting States result or will result for him in taxation accordance with this Convention, he may, notwithstanding the remedies the national laws of those States, present his case to the competent authority Contracting State of which he is a resident.

(2) The competent authority shall endeavour, if the objection appears justified and if it is not itself able to arrive at an appropriate solution, case by mutual agreement with the competent authority of the other State, with a view to the avoidance of taxatian not in accordance Convention.

(3) The competent authorities of the Contracting States shall resolve by mutual agreement any difficulties or doubts arising interpretation or application of the Convention. They may also consult to the allocation of profits to a resident of a Contracting State and establishment in the other Contracting State or to the allocation of profits resident of a Contracting State and any associated person provided for

(4) The competent authorities of the Contracting States may communicate each other directly for the purpose of reaching an agreement in the preceding paragraphs.

ARTICLE 25

Exchange of Information

(1) The competent authorities of the Contracting States shall information as is necessary for the carrying out of this Convention domestic laws of the Contracting States concerning taxes covered Convention insofar as the taxation thereunder is in accordance with this and for the prevention or evasion of such taxes. The competent authorities through consultations, develop appropriate conditions, methods and concerning the matters respecting which such exchange shall be made, exchange of information regarding avoidance of tax where appropriate. information so exchanged shall be treated as secret, but may be disclosed person (including a court or administrative body) concerned with the enforcement or prosecution in respect of the taxes which are the Convention.

(2) In no case shall the provisions of paragraph (1) be construed on one of the Contracting States the obligation -

(a) to carry out administrative measures at variance with administrative practice of that or of the other Contracting

(b) to supply particulars which are not obtainable under the normal course of the administration of that or of the other State;

(c) to supply information which would disclose any trade, industrial, commercial or professional secret or trade information, the disclosure of which would be contrary to ARTICLE 26

Diplomatic and Consular Officials Nothing in this Convention shall affect the fiscal privileges of diplomatic or officials under the general rules of international law or under the provisions agreements. as, due to privileges granted to diplomatic or consular officials under rules of international law or under the provisions of special international income is not subject to tax in the receiving State, the right to tax shall be sending State.

ARTICLE 27

Territorial Extension present Convention may be extended, either in its entirety or with to any territory for whose international relations either State is and which imposes taxes substantially similar in character to those subject of the present Convention and any such extension shall take such date and subject to such modifications and conditions (including to termination) as may be specified and agreed to between the States in notes to be exchanged for this purpose. termination in respect of Pakistan or Malta of the present Convention 29 shall, unless otherwise expressly agreed to by both Contracting terminate the application of the present Convention to any territory to which has been extended under this Article.

CHAPTER VI

Final Provisions

ARTICLE 28

Entry into Force Convention shall be ratified and the instruments of ratification shall be Malta as soon as possible. Convention shall enter into force 30 days after the exchange of ratification, and its provisions shall have effect -Pakistan, in respect of Pakistan tax for the "previous years" (as defined by the tax laws of Pakistan) beginning on or after the first day January 1973; and Malta, in respect of Malta tax for any year of assessment beginning or after the first day of January 1974.

ARTICLE 29

Termination

Convention shall remain in force indefinitely but either of the Contracting on or before the thirtieth day of June in any calendar year beginning expiration of a period of three years from the date of its entry into force, other Contracting State, through diplomatic channels, written notice of termination and, in such event, the Convention shall cease to be effective:

(a) in Pakistan, in respect of Pakistan tax for the "previous defined by the tax laws of Pakistan) beginning on or after of January in the calendar year next following that in which termination is given; and

(b) in Malta, in respect of Malta tax for the years of assessment with the second year of assessment following the calendar which notice of termination is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto respective Governments, have signed this Convention. DONE at Valletta this 8th day of October, 1975, in duplicate language.

J ABELA AFTAB AHMAD For the Government of the For the Government Republic of Malta Islamic Republic of