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KUALA LUMPUR 28.01.1984 Materia Accordo: DOPPIE IMPOSIZIONI

ACCORDO PER EVITARE LE DOPPIE IMPOSIZIONI E PER PREVENIRE LEEVASIONI FISCALI IN MATERIA DI IMPOSTE SUL REDDITO, CON PROTOCOLLO ESCAMBIO DI LETTERE

II trattato non n disponibile in formatoelettronicoTipo: EsternoNazione/Organizzazione: MALAYSProgressivo: 012Data Firma Accordo: 28/01/1984Vigente in Italia: SiVigenza Internazionale dal: 25/01/1986Vigenza Italia: 00/00/0000Accordo Tipo: BILATERALEArchivio Posizione: 32 KW 1Archivio Numerazione: 7Stato: MALAYSIALuogo firma KUALA LUMPURAccordo: 28.01.1984

Provvedimento Legislativo: L. N. 607 DEL 14.10.1985 - GUN. 262 SO DEL07.11.1985

Data delta Ratifica, NOTIFICATO IL 21.12.1985 - 18.04.1986.Notifica,Adesione: COMUNICATO IN GU N. 109 DE 13.05.1986In Vigore dal: SI 25.01.1986 RETROATTIVAMENTE

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AGREEMENT RETdEEN THE GOVERNMENT OF THE REPUBLIC ' ITALY

ABU THE LVERNMENT OF MALAYSIA FOR THE AVOLDANCF

OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH

RESPECT TO TAXES ON INCOME

THE GOVERNMENT OF THE REPUBLIC OF ITALY

AND

THE GOVERNMENT OF MALAYSIA

DESIRING to conclude an Agreement for the

avoidance of double taxation and the prevention

of fiscal evasion with respect to taxes on income,

HAVE AGREED AS FOLLOWS:

ARTICLE 1

Personal Scope

The Agreement shall apply Co persons who are residents ofone or both of the Contracting States.

Article 2

Taxes Covered

1. The taxes which are the subject of this Agreement are:

in the case of Italy:

- the personal income tax (l'im posta sul reddito delleoersone fisiche);

- the corporate income tax (l'imposta sul reddito dellepersone giuridiche);even if they are collected by withholding taxes at thesource;

(hereinafter referred to as "Italian tax")

in the case of Malaysia:

- income tax and excess profit tax;

- supplementary income taxes, that is, tin profits tax,development tax and timber profits tax; and

- petroleum income tax;(hereinafter referred to as "Malaysian tax").

2. This Agreement shall also apply to any identical orsubstantially similar taxes which are im posed after the date ofsignature of this Agreement in addition to, or in place of, theexisting taxes. The competent authorities of the Contracting,States shall notify each other of any significant changes whichhave been made in their respective taxation laws.

Article 3

General Definitions

In this Agreement, unless the context otherwise requires:

the term "Malaysia" means the Federation of Malaysiaand includes any area adjacent to the territorialwaters of Malaysia which has been or may hereafter bedesignated under the laws of Malaysia concerning theContinental Shelf as an area within which the rightsof Malaysia with respect to the sea bed and sub-soiland their natural resources may be exercised;

the term "Italy" means the Republic of Italy andincludes the areas beyond the territorial sea of Italyand in particular the sea bed and sub-soil adjacentto the territories of the peninsula and of the Italianislands and situated beyond the territorial sea up tothe limits prescribed by the Italian laws to permitthe exploration and exploitation of natural resourcesof the said areas;

the terms "a Contracting State" and "the otherContracting State" mean Italy or Malaysia as thecontext requires;

the term "person" shall have the meaning assigned toit in the taxation laws of the resnective ContractingStates;

the term "company" means any body corporate or anyentity which is treated as a body corporate in thetaxation laws of the respective Contracting States;

the term "tax" means Malaysian tax or Italian tax, asthe context requires;

the terms "enterprise of a Contracting State" and"enterprise of the other Contracting State" meanrespectively an enterprise carried on by a residentof a Contracting State and an enterprise carried onby a resident of the other Contracting State;

the term "international traffic" means an y transportby a ship or aircraft operated by an enterprise whichhas its place of effective management in a ContractingState, exce pt when the ship or aircraft is operatedsolely between places in the other Contracting, State;

(i) the term "national"means

any individual possessing the nationality orcitizenship of a Contracting State;

any legal person, partnership, association andother entity deriving its status as such from thelaw in force in a Contracting State;

J

(j) the term "competent authority" means

in the case of Italy, the Ministry of Finance;

in the case of Mala y sia, the Minister of Financeor his authorised representative.

2. As regards the application of the Agreement by a ContractingState any term not otherwise defined shall, unless the contextotherw i se requires, have the meaning which it has under the lawsof that Contracting State relating to the taxes which are thesubject of the Agreement.

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Article 4

Fiscal Domicile

1. For the purposes of this Agreement, the term "resident ofa Contracting State" means:

in the case of Italy, a person who is resident in Italyfor the purposes of Italian tax; or

in the case of Malaysia, a person who is resident inMalaysia for the purposes of Malaysian tax.

2. Where by reason of the provisions of paragraph 1 anindividual is a resident of both Contracting States, then hisstatus shall be determined as follows:

he shall be deemed to be a resident of the ContractingState in which he has a permanent home available tohim. If he has a permanent home available to him inboth Contracting States he shall be deemed to be aresident of the Contracting State with which hispersonal and economic relations are closer (centre ofvital interest);

if the Contracting State in which he has his centreof vital interest cannot be determined or if he hasnot a permanent home available to him in eitherContracting State, he shall be deemed to be a residentof the Contracting State in which he has an habitualabode;

if he has an habitual abode in both Contracting Statesor in neither of them, he shall be deemed to he aresident of the Contracting State of which he is anational;

if he is a national of both Contracting States or ofneither of them, the competent authorities of theContracting States shall settle the question by mutualagreement.

3. Where by reason of the provisions of paragraph 1 a personother than an individual is a resident of both Contracting States,then it shall be deemed to be a resident of the Contracting Statein which its place of effective management is situated.

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Article 5

Permanent establishment

For the purposes of this Agreement, the term "permanentestablishmen t " means a fixed place of business in which thebusine ss of the enterprise is wholly or partly carried on.

9 . The term "permanent establishment" shall include especially:

a place of management;a branch;an office;a factory;a workshop;a farm or plantation;a mine, oil or gas well, quarry or other place of extractionof natural resources including timber or other forestproduce;a building site or construction, .installation or assemblyproject which exists for more than six months.

3. The term "permanent establishment" shall not be deemed toinclude:

the use of facilities solely for the purpose of storage,display or delivery of goods or merchandise belonging tothe enterprise;

the maintenance of a stock of goods or merchandise belongingto the enterprise solely for the purpose of storage, displayor delivery;

the maintenance of a stock of goods or merchandise belongingto the enterprise solely for the purpose of processing byanother enterprise;

the maintenance of a fixed place of business solely for thePurpose of purchasing Roods or merchandise, or for collect-ing information, for the enterprise;

le) the maintenance of a fixed place of business solely for thepurpose of advertising, for the supply of information, forscientific research or for similar activities which havea preparatory or auxiliary character, for the enterprise.

4. An enterprise of a Contracting State shall be deemed to havea permanent establishment in the other Contracting State if itcarries on supervisory activities in that other State for morethan six months in connection with a construction, installationor assembly project which is being undertaken in that other State.

5. A person acting in a Contracting State on behalf of anenterprise of the other Contracting State - other than an agent

an independent status to whom paragraph 6 applies - shall bedeemed to be a permanent establishment in the first-mentionedState, if:

(a) he has and habitually exercises in the first-mentioned State

an authority to conclude contracts on behalf of the enter-prise, unless his activities are limited to the purchaseof goods or merchandise for that enterprise;

(b)

he has no such authority, but maintains in the first-mentioned State a stock of goods or merchandise from whichhe regularly delivers goods or merchandise on behalf of theenternrise.

An enterprise of a Contracting State shall not be deemedto have a permanent establishment in the other Contracting Statemerely because it carries on business in that other State througha broker, general commission agent or any other agent of anindependent status, where such persons are acting in the ordinarycourse of their business.

The fact that a company which is a resident of a ContractingState controls or is controlled by a com pany which is a residentof the other Contracting State or which carries on business inthat other State (whether through a permanent establishment orotherwise) shall not of itself constitute either com pany apermanent establishment of the other.

— 9 —

Article 6

Income from immovable property

Income from immovable pro perty may be taxed in theContracting State in which such property is situated.

The term "immovable property" shall be defined in accordancewith the law of the Contracting State in which the property issituated. The term shall in any case include property accessoryto immovable pro perty, livestock and equi pment used in agricultureand forestry, rights to which the provisions of general lawrespecting landed property apply. The term shall also includeusufruct of immovable property and ri ghts to variable or fixedpayments as consideration for the working of, or the right towork, mineral deposits, oil or gas wells, quarries and otherplaces of extraction of natural resources or of timber or otherforest produce. Ships, boats and aircraft shall not be regardedas immovable property.

The provisions of paragra ph 1 shall a pply to income derivedfrom the direct use, letting or use in any other form of immovableproperty.

The provisions of para graph 1 and 3 shall apply also to theincome from the immovable property of an enterprise and to incomefrom immovable property used for the performance of professionalservices.

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Article 7

Business income

The income of an enterprise of a Contracting State shall betaxable only in that State, unless the enterprise carries onbusiness in the other Contracting State through a permanentestablishment situated therein. If the enterprise carries onbusiness as aforesaid, the income of the enterprise may be taxedin that other State but only so much of that income as isattributable to that permanent establishment.

Subject to the provisions of paragraph 3, where an enterpriseof a Contracting State carries on business in the otherContracting State through a permanent establishment situatedtherein, there shall in each Contracting State be attributed tothat permanent establishment the income which it might be expectedto make if it were a distinct and separate enterprise engaged inthe same or similar activities under the same or similarconditions and dealing wholly independently with the enterpriseof which it is a permanent establishment.

In the determination of the profits of a permanent establish-ment, there shall be allowed as deductions expenses which areincurred for the purposes of the permanent establishment includingexecutive and general administrative expenses so incurred, whetherin the State in which the permanent establishment is situated orelsewhere.

No income shall be attributed to a permanent establishmentby reason of the mere purchase by that permanent establishmentof goods or merchandise for the enterprise.

For the purposes of the preceding paragra phs, the income tobe attributed to the permanent establishment shall be determinedby the same method year by year unless there is good andsufficient reason to the contrary.

6. Where income includes any item of income which is dealt withse parately in another Article of this A greement, the provisionsof that other Article shall not be affected by the provisions ofthis Article.

Article 8

Shipping and air transport

Income of an enterprise from the operation of ship or air-craft in international traffic shall he taxable only in theContracti ng State in which the place of effective managemer y ofthe enterprise is situated.

The provisions of paragraph 1 shall also a pply to incomederived from the participation in a pool, a joint business or in-an international o perating agency.

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Article 9

Associated enterprises

Where

an enterprise of a Contracting Stateparticipates directly or indirectly inthe management, control or capital ofan enterprise of the other ContractingState, or

the same persons participate directlyor indirectly in the management, controlor capital of an enterprise of a ContractingState and an enter prise of the other ContractingState,

and in either case conditions are made or im posed between the twoenterprises in their commercial or financial relations whichdiffer from those which would be made between inde pendent enter-prises, then any income or profits which would, but for thoseconditions, have accrued to one of the enterprises, but, by reasonof these conditions, have not so accrued, ma y be included in theincome or profits of that enterprise and taxed accordingly.

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Article 10

ividends

Dividends paid by a comnanv which a resident of aContracti ng State to a resident of the other Contracting Statemav be taxed in that other scale.

Dividends paid by a company which is a resident of Italy toa resident of Malaysia may be taxed in Italy, and according tothe law of Italy, but if the recipient is the beneficial ownerof the dividends the tax so charged shall not exceed 10 per centof the gross amount of the dividends.

Dividends paid by a company which is a resident of Malaysiato a resident of Italy who is the beneficial owner and is subjectto Italian tax in respect thereof shall be exempt from any taxin Malaysia which is chargeable on dividends in addition to the'fax chargeable in respect of the income of the company:

Provided that nothing in this paragraph shall affect theprovisions of the Malaysian law under which the tax in respectof a dividend paid by a company resident in Malaysia from whichMalaysian tax has been, or has been deemed to be, deducted maybe adjusted by reference to the rate of tax appropriate to theMalaysian year of assessment immediately following that in whichthe dividend was paid.

If after the date of signature of the Agreement the systemof taxation in Malaysia applicable • to the income and distributionsof companies is altered by the introduction of corporation tax(for which no credit is given to the shareholders) and a furtherdividend tax, then the Malaysian tax chargeable on dividends paidto a resident of Italy shall not exceed 10 per cent of the grossamount of the dividends.

Nothing in the foregoing paragraphs of this Article shallaffect the taxa t ion of the company in res pect of the profits outof which the dividends are paid.

6. The term "dividends" as used in this Article means incomefrom shares, "jouissance" shares 04 "jouissanca" rights, miningshares, founders' shares or other riy4nts, not being debt-claims,Part ici pating in profits or income, 35 well ao income from otherCor porate rights assimilated to income from shares by the taxationl aw of the Contrac t ing State of which the company making the.di stribution is a resident.

7 The provisions of paragraphs 1, 2, 3 and 4 of this ArticleShall. not apply if the recipient of the dividends, being aresident of a Contracting State, has in the other ContractingState, in which the company paying the dividends is resident, apermanent establishment with which the holding by virtue of whichthe d ividends are paid is .effectively connected. In such a case,the d ividends are taxable in that other State according to itsown law.

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B. Where a company which is a resident of a Contractiru; Statedel vos profits or income from the other Contracting State, thatother State shall not impose any tax on the dividends pain b y thecompeuv, except insofar as such dividends are paid to a residento r the other State or insofar as the holding in respect of whichthe dividends are paid is effectively connected with a permanent

• establishment situated in that other State, or subject the

com pany's undistributed profits to a tax on undistributed prcfits,

even it the dividends paid or the undistributed profits '-ors atwholl y or partly or profits or income arising in such other State.

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Article 11

Interest

Interest arising in a Contracting State and

i csIdent of the other Contracting State may be taxed in

t•tate.

at to aat other

2. However, such interest may be taxed in the Contracting Statein which it arises, and according to the law of that State, butif the reci p ient is the beneficial owner of the interest, the taxco charged shall not exceed 15 per cent of the gross amount ofthe interest.

A. Notwithstanding the provisions of paragraph 2 of this Article,interest paid to a resident of Italy shall be exem pt fromMalaysian f.tx if the loan or other indebtedness in respect ofwhich the interest is paid is an ap proved loan or a long-term loan.

4. Notwithstanding the provisions of paragra ph 2, interestarising in a Contracting State shall be exempt from tax in thatState if the interest is paid to the Government of the otherContracting State or local authority or any agency orinstrumentality (including a financial institution) in respectof :cans made in application of an agreement concluded betweenthe Governments of the Contracting States.

5, The term "interest" as used in this Article means income fromGovernment securities, bonds or debentures, whether or not securedby mortgage and whether or not carrying a right to participatein profits, and debt-claims of every kind as well as all other

ume assimilated to income from money lent by the taxation lawo: the State in which the income arises.

6. The provisions of paragraphs 1, 2 and 3 shall not apply ifth yrecipient of the interest, being a resident of a ContractingState, carries on in the other Contracting State in which theinterest arises a trade or business through a permanent establish-ment situated therein and the debt-claim in res pect of which the:ntorest Is paid is effectively connected with such permanentr3m bnishment. In such a case, the interest is taxable in thatiper Steer: iccording to its own law.

7, l'iteresA shall be deeMed to arise in a Contracting State when

payerthat State itself, a political or an administrativetuti-division, a local authority or statutory body thereof or are sident of that State. where, however, the person paying theint erest, whether he is a resident of a Contracting State or not,he in a Contracting State a permanent establishment in connectionwith which the indebtedness on which the interest is paid wasincurred, and such interest is borne by such permanent establish-Tent , then such in t erest shall be deemed to . arise in the State1n which the permanent establishment is situated.

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S. Where, owing to a special relationship between the payer and

n i t, recipient or between both of them and some other person, theamount of the interest paid, having regard to the debt-claim for

wh i ch it is paid, exceeds the amount which would have been agreedupon by the payer and the recipient in the absence of suchrelation s hip , the provisions of this Article shall apply only tothe last-mentioned amount. In that case, the excess part of the

p a yments shall remain taxable according to the law of eachhontractin g State, due regard beAng had to The other provisionsof this Agreement.

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Article 2

Royalties

Royalties arising in a Contracting State and paid to ares i dent of the other Contracting State may be taxed in that otherState.

However, such royalties may be taxed in the Contracting Statein which they arise, and according to the law of that State, butif the recipient is the beneficial owner of the royalties, thetax so charged shall not exceed 15 per cent of the gross amountof the royalties.

3. Notwithstanding the provisions of paragraph 2, approvedindustrial royalties derived from Malaysia by a resident of Italywho is the beneficial owner thereof shall be exempt from Malaysian!Mx.

4, The term "royalties" as used in this Article means paymentsof any kind received as a consideration for the use of, or theright to use, any copyright of literary, artistic or scientificwork, patent, trade mark, design or model, plan, secret formulaor process, or for the use of, or the right to use, industrial,commercial or scientific equipment, or for information concerningindustrial, commercial or scientific ex perience. The term,however, does not include any royalty or other amount paid inrespect of motion picture films or of tapes for radio ortelevision broadcasting.

S. The provisions of paragraphs 1, 2 and 3 of this Article shallnot apply if the recipient of the royalties, being a resident ofa Contracting State, has in the other Contracting State in whichthe royalties arise a permanent establishment with which the rightor property giving rise to the royalties is effectively connect4d.in such a case, the royalties are taxable in that other Stateaccording to its own law.

6. Royalties shall be deemed to arise in a Contracting Statewhen the payer is that S t ate itself, a political or an administra-tive subdivision, a local authority or statutory body thereof ora resident of t hat State. Where, however, the person paying thertiyaltie, wh g ther he is a resident of a Contracting State or not,hz:s in a Contracting Sta te a permanent establishment in connectionwith which the liabilfty to pay the royalties was incurred, andsuch royalties are borne by such permanent establishment, thensuch royalties shall be deemed to arise in the State in which thePermanent establishment is situated.

Where, owing to a special relationship between the payer andthe recipient or between both of them and some other person, theamount of the royalties paid, having regard to the use, right orinformation for which they are pai-d, exceeds the amount whichMould have been agreed upon by the payer and the recipient in theabsence of such relationship, the provisions of this Article shall4PPly only to the last-mentioned amount. In that case, the excessPart of the payments shall remain taxable according to the lawor each Contracting State, due regard being had to the otherProvisions of this A2reemenr.

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Article 13

Capital gains

Gains from the alienation of immovable property, as definedin paragraph 2 of Article 6, may be taxed in the ContractingState in which such property is situated.

9 Gains from the alienation of movable property forming partof the business property of a permanent establishment which anenterprise of a Contracting State has in the other ContractingState including such gains from the alienation of such apermanent establishment (alone or together with the wholeenterprise) may be taxed in the other State. However, gainsfrom the alienation of ships or aircraft operated in inter-national traffic or movable property pertaining to the operationof such ships or aircraft shall be taxable only in theContracting State in which the place of effective managementof the enterprise is situated.

3. Gains from the alienation of any property other than thosementioned in paragraphs 1 and 2, shall be taxable only in theContracting State of which the alineator is a resident.

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Article 14

Personal Services

1. Subject to the provisions of Article 15, 17, 18, 19 and 20,salaries, wages and other similar remuneration or income inrespect of personal (including professional) services derived byan individual who is a resident of a Contracting State, shall betaxable only in that State unless the services are performed inthe other Contracting State. If the services are so performed,such remuneration or income as is derived therefrom may be taxedin that other State.

Notwithstanding the orovisions of para graph 1, remunerationor income derived by an individual who is a resident of aContracting State in respect of personal (including professional)services performed in the other Contracting State shall be taxableonly in the first-mentioned State if:

ia)

the reci p ient is present in the other State for a period orperiods not exceeding in the aggregate 183 days in a calendaryear, and

{b)

the remuneration or income is paid by, or on behalf of, aperson who is not a resident of the other State, and

ic)

the remuneration or income is not borne by a permanentestablishment which that person has in the other State.

3. Notwithstanding the preceding prOvisions of this Article,remuneration in res pect of an employment exercised aboard a shinor aircraft o perated in international traffic, shall be taxed onlyin the Contracting State in which the place of effectivemanagement of the enterprise is situated.

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Article 15

Directors' fees

Notwithstandin g the provisions of Article 14, directors' feesand similar payments derived by a resident of a Contracting Statein his capacity as a member of the board of directors of a companywhich is a resident of the other Contracting State may be taxedin that other State.

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Article 16

Artistes and athletes

1 Notwithstanding the provisions of Article 14, income derived

h g entertainers, such as theatre, motion picture, radio or

television artistes, and musicians, and by athletes, from theirpersonal activities as such may be taxed in the Contracting Statein which these activities are exercised.

2. Where income in respect of personal activities as such ofan entertainer or athlete accrues not to that entertainer orathlete himself but to another person that income may, notwith-standing the provisions of Articles 7 and 14, be taxed in theContracting State in which the activities of the entertainer orathlete are exercised.

The provisions of paragraphs 1 and 2 shall not apply toremuneration of profits derived from activities exercised in aContracting State if the visit to that State is directly orindirectly supported wholly or substantially from the public fundscf the other Contracting State, a political or an administrativesubdivision, a local authority or staturoty bod y thereof.

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Article 17

Pensions

Subject to the provisions of paragraph 2 of Article 18,

pens i ons and other similar remuneration paid to a resident of a

Contracti ng State in consideration of past employment shall betaxable only in that State.

Article lo

Governmental function

Remuneration, other than a pension, paid by a Contract-ing State or a political or an administrative out—division or a local authority thereof to any individualin respect of services rendered to that State or sub-division or local authority thereof shall be taxableonly in that State.

(b) However, such remuneration shall be taxable only in theother Contracting State if the services are renderedin that State and the recipient is a resident of thatother State who:

is a national of that State; or

did not become a resident of that State solelyfor the purpose of performing the services.

Any pension paid by, or out of funds created by, a ContractingState or a political or an administrative sub-division or a localauthority thereof to any individual in respect of servicesrendered to that State or sub-division or local authority thereofshall be taxable only in that State unless the individual is anational of, and a resident of the other Contracting State.

The p rovisions of Article 14, 15 and 17 shall ap ply toremuneration or pensions in respect of services rendered inconnection with any trade or business carried on by a ContractingState or a Political or an administrative sub-division or a localauthority thereof.

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Article 19

Professors and teachers

An individual who, at the invitation of a university, college,

i choo l or other similar recognised educations' institution in aUontracfing State, visits that State for a period not exceeding

two y ears solely for the purpose of teaching or conducting

resear ch or both at such educational institution and who is, orc immediately before that visit, a resident of the other

contracting State shall be exempt from tax in the first-mentionedstate on any remuneration for such teaching or research in respectof which he is subject to tax in the other State.

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Article 20

Students and business apprentices

An individual who is a resident in a Contracting State andtemporarily present in the other Contracting State solely:

a! as a student at a university, college. or school in the otherState,

as a business or technical apprentice, or

as the recipient of a grant, allowance or award for theprimary purpose of study or research from a religious,charitable, scientific or educational organisation

shall not be taxed in the other Contracting State in respect ofremittances from abroad for the purposes of his maintenance,education or training or in respect of a scholarship grant. Thewine shall apply to any amount representing remuneration forservices rendered in that other State, provided that such servicesnre in connection with his studies or practical training or arenecessary for the purpose of his maintenance for a period of timewhich is reasonably required to conclude his training or studiesIn that other State.

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Article 21

Other Income

Item of income of a resident of a Contracting State which

sre no t expressly mentioned in '_he foregoing Articles of thisAa:I-cement may be taxed in both Contracting State.

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Article 22

Method for elimination of double taxation

1, it is agreed that double taxation shall be avoided in

accorda nce with the following paragraphs of this Article.

if a resident of Italy owns items of income which are taxable

in Malaysia, Italy, in determining its income taxes specified inArticle 2 of this Agreement, may include in the basis upon whichsuch taxes are imposed the said items of income, unless specificprovisions of this Agreement otherwise provide.

In such a case, Italy shall deduct from the taxes socalculated the Malaysian tax on income, but in an amount notexceeding that Pro portion of the aforesaid Italian tax which suchitems of income bear to the entire income.

On the contrary, no deduction shall be granted if the itemof income is subjected in Italy to a final withholding tax byrequest of the recipient of the said income in accordance withthe Italian law.

in the case of Malaysia, subject to the provisions of thelaw of Malaysia regarding the allowance as a credit againstMalaysian tax of tax payable in any country other than Malaysia,the amount of Italian tax payable under the law of Italy and inaccordance with the provisions of this Agreement, by a residentof Malaysia in respect of income from sources within Italy shallbe allowed as a credit against Malaysian tax payable in respectof such income, but in an amount not exceeding that proportionof Malaysian tax which such income bears to the entire incomechargeable to Malaysian tax.

6. For the purposes of paragraphs 2 and 3 of this Article, wheretax in relation to dividends, interest or royalties arising ina Contracting State is exempted or reduced for a limited periodin accordance with the laws of that Contractin g State, such taxwhich has been exempted or reduced shall be deemed to have beenpaid at an amount not exceeding:

10 per cent of the gross amount of the dividends referredto in Article 10;

15 per cent of the gross amount of the interest referred toin Article 11; and

(C) 15 per cent of the gross amount of the royalties referredto in Article 12.

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Article 23

Limitation of relief

Where this Agreement provides with or without othercmIditions) that income from sources in a Contracting State shallht exemp t from tax, or taxed at a reduced rate in that State andunder the laws in force in the other Contracting State the saidincome i s subject to tax by reference to the amount thereof whichis remitted to or received in that other State and not byreference to the full amount thereof, then the exem p tion orreduction of tax to be allowed under this Agreement in the first-mentioned State shall a pply to so much of the income as isremitted to or received in that other State.

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Article 24

Non-discrimination

ahe nationals of a Contracting State Mall not be subjectedthe other Contracting State to any taxation or any requirement

connected therewith which is other or more burdensome than the!.;fixation and connected requirements to which nationals of thatother State in the same circumstances are or may be subjected.

2. The taxation on a permanent establishment which an enterpriseof a Contracting State has in the other Contracting State shallflat he less favourably levied in that other State than thetaxation levied on enterprises of that other State carrying onthe same activities.

Except where the provisions of Article 9, paragraph 8 ofArticle 11, or paragraph 7 of Article 12, apply, interest,ro yalties and other disbursements paid by an enterprise of aContracting State to a resident of the other Contractin g Stateshall, for the purpose of determining the taxable profits of suchearerprise, he deductible under the same codition as if they had:!Ictin paid to a resident of the first-mentioned State.

Enterprises of a Contracting State, the capital of which is:0Nao1'v or partly owned or controlled, directly or indirectly, byone or more residents of the other Contracting State, shall notht subjected in the first-mentioned State to any taxation or anyrequirement connected therewith which is other or more burdensomethan the taxation and connected requirements to which othersimilar enterprises of that first-mentioned State are or may besubjected.

Nothing contained in this Article shall be construed asobliging a Contracting State to grant to individuals not residentin that State any of the personal allowances, reliefs andreductions for tux purposes which are granted to individuals soresident.

In this Article the term "taxation" means taxes which aresubject of this Agreement.

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Article 25

Mutual Agreement Procedure

Where a resident of a Contracting State considers that the:_ctions of one or both of the Cont r actin g, States result or will,,suit for him in taxation not in accordance with this Agreement,

may, notwithstanding the remedies provided by the taxation lawsc‘f [hose States, oresent his case to the competent authorit y ofthe Contracting State of which he is a resident or, if his casecomes under paragraph 1 of Article 24, to that of the ContractingStates of which he is a national.

The competent authority shall endeavour, if the objectionsa ppear to it to be justified and if it is not itself able toarrive at an appropriate solution, to resolve the case by mutualagreement with the competent authority of the other ContractingMate, with a view to the avoidance of taxation not in accordancewith the Agreement.

3. The competent authorities of the Contracting States shallendeavour to resolve by mutual agreement any difficulties ordoubts arising as to the interpretation or application of theAgreement.

The competent authorities of the Contracting States maycommunicate with each other directly for the purpose of reaching

t , agreement in the sense of the preceding paragraphs.

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Article 26

Exchange of information

The competent authorities of the Contracting States shall,

,eittorequest, exchange such information as is necessary for

tarrying out the provisions of this Agreement or for thepnrvention of fraud or fiscal evasion in relation to the taxes

n;h,ch are the subject of this Agreement. Any information so

exchang e d shall be treated as secret and shall not be disclosedto any persons or authorities other than those, including a courtor administrative body, concerned with the assessment, collection,enforcement or prosecution in respect of those taxes or thedrtermination of appeals in relations thereto.

2. In no case shall the provisions of paragraph 1 of thisArticle be construed so as to impose on a Contracting State theobligation:

la) CO carry out administrative measures at variance with thelaws or the administrative practice of that or of the otherCcetractint, State;

to su pply particulars which are not obtainable under the lawsor in the normal course of the administration of that or ofthe other Contracting State;

to sup p ly information which would disclose any trade, business,industrial, commercial or professional secret or tradeprocess, or information the disclosure of which would becontrary to public policy (ordre public).

- 32 -

Article 27

Diplomatic and Consular Officials

Nothing in this Agreement shall affect the fiscal privilegesdiplomatic or consular officials under the general rules of

internationa l law or under the provisions of special agreements.

- 33 -

Article 28

Refunds

Taxes withheld at the source in a Contracting State shallhe refunded by request of the taxpayer if the right to collectthe said taxes is affected by the provisions of this Agreement.

Claims for refund, which shall be presented within the timelimit fixed by the law of the Contracting State which is obligedto make the refund, shall be accompanied by an officialcertificate of the Contracting State of which the taxpayer is aresident certifying the existence of the conditions required tohe entitled to the a pplication of the allowances provided for bythis Agreement.

3. The competent authorities of the Contracting States shallby mutual agreement settle the mode of application of this Article,in accordance with the provisions of the Article 25 of thisAgreement.

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Article 29

Entry into force

Each of the Contracting States shall notify to the other thecompletion of the procedure required by its laws for the bringinginto force of this Agreement. This A greement shall enter intoforce on the date of the latter of these notifications and shallthereupon have effect:

in Italy:in respect of income assessable for the taxableperiod commencing on or after the 1st January, 1977 andsubsequent taxable periods;

in Malaysia:in respect of income for the year 1977 or accounting yearending not later than the 31st December, 1977 and assessablefor the year of assessment commencing on the 1st January,1978 and subsequent years of assessment.

2. Claims for refund or credits arising in accordance with thisAgreeme- P' in respect of any tax payable before the entry intoforce of this Agreement by residents of either of the ContractingStates shall be lodged within two years from the date of entry

1.10e6 force of this Agreement or from the date the tax was chargedweer is later. Nothing herein contained shall reduce anyUnit time limit available to such resident for this purpose:AMOK the law of the Contracting..State of which he is a resident.

era

- 35 -

Article 30

Termination

This Agreement shall remain in force indefinitely but eitherof the Contractin g States may terminate the Agreement, throughdiplomati c channels, by giving to the other Contracting State,notice of termination not later than the 30th June of any calendar

Year from the third year from the year in which the Agreemont

entere d into force. In such event, the Agreement shall cease tohave effect:

(a)

in Italy:in respect of income assessable for the taxable periodscommencing on or after the lsc January in the calendar yearfollowing that in which the notice of termination is given;

;6)

in Malaysia:in respect of income assessable for the year of assessmentcommencing on the 1st January in the second calendar yearfollowing that in which the notice of termination is givenand subsequent years of assessment.

In WITNESS WHEREOF the undersigned, duly authorized theretoby their respective Governments, have signed the present Agreement.

Done duplicate at 11 .-4 ,k. Z this Jernday of \..0AAAAAavy 19%.) each in the Italian, Bahasa Malaysia andEnglish languages the three texts being equally authoritative andin case there is any divergence of interpretation, the Englishtext shall prevail.

On behalf of the Governmentof the Republic of Italy

On behalf of the Governmentof Malaysia

- 36 -

Protocol

At rte time ofof Malaysia and theavoidance of doublewith respect to Laxethe followin g proviagreement.

signing the Agreement between the GovernmentGovernment of the Republic of Italy for thetaxation and the prevention of fiscal evasions on income, the undersigned have agreed thatsions shall form an Intei,ral part of the

It is understood that:

with reference to Article 2, paragraph Us), the expres-sion "withholding taxes at the source" means the finalwithholding taxes;

with reference to Article 7, paragraph 3, the expression"expenses which are incurred for the purposes of thepermanent establishment" means the ex penses directlyconnected with the activity of the permanent establish-ment:

(c) with reference Le Article 8, an enterprise of aContracting State deriving income from the operationof ships or rcraft in international traffic shall riotbe subject to any local income tax imposed in the otherContracting Siefe;

with . reference co article 10, in accordance with thelaw of Malaysia dividends paid by a company which isresident of Malaysia shall include dividends paid bya cowpony which is a resident of Singapore which forpurpose of chose dividends has declared itself to bea resident of Malaysia, but shall not include dividends

i4 by At company which is a resident of Malaysia whichthe purpose of those dividends has declared itself

c be a resident of Singapore;

with reference to Article 11, paragraph 3, the expres-sion "approved loan" or "long-term loan" shall have themeaning. that it has under Section 2(1) of the incomeTax Act, 1967 of Malaysia (as amended);

(f) with reference to article 12, paragraph 3, the term"approved industrial royalties" means royalties asdefined in paragraph 4 which are a pproved and aertifiedby the competent authority of Malaysia as payable forthe purpose of promoting industrial development inMalaysia and which are payable by an enterprise whichis wholly or mainly engaged in activities falling withinone of the following classes:

(a) manufacturing, assembling, or processing;

(6) construction, civil engineering or shipbuilding; or

(c) electricity, hydraulic power, gas or water supply;

with reference to Article 20, the espression "servicesrendered'' in the case of a student means any part-timeemployment;

with reference to Article 22, paragraph 4, interestwhich is exempted from tax by Malaysia in res pect ofan approved loan or a long-term loan in accordance withArticle 11, paragraph 3, shall be regarded as exemptedfor a limited period during the period of sLclh loon;

with reference to Article 24, nothing contained thereinshall be construed as obliging a Contracting State togrant to nationals of the other Contracting State notresident in the first-mentioned State those personalallowances, reliefs and deductions for tax purposeswhich are by law available only to nationals of thefirst-mentioned State or to such other persons specifiedtherein who are not resident in that State;

with reference to Article 24, paragraph 3, nothingcon t ained therein shall be construed as preventing

Malaysia from not giving any deduction in res pect ofany interest, royalties and other disbursements incurredby an enterprise if the a ppropriate tax has not beenwithheld according to the taxation laws of Malaysia;

with reference to Article 25, paragra ph 1, theexpresSion "notwithstanding the remedies provided byShe taxation laws" means that the mutual agreementprocedure is not an alternative to the proceedings ofeither Contracting State which shall have been initiatedwi t hin the time limit of the respective national laws;

(1) the provisions of paragraph 3 of Article 28 shall notprevent the competent authorities of the ContractingStates from carrying out, by mutual agreemen t , other

procedures for the deductions of taxes provided for in

this Agreement.

c 24,Done in duplicate a t Cf‘-‘-12-41`‘..1.1/4.-P4/1 this 6 d

day of jcim...a. 1914 each" in the Italian, Bahasa Malay0aand English langua g es the three texts being equhlly authoritativeand in case there is any divergence of interpretn' i m the English

eYt shall prevai l.'

On behalf of the Government ofthe Republic of Italy

On behalf of the Governmentof Malaysia

Exchange of notes

Excellency,

I have the honour to refer to the Agreement signed todaybetween Malaysia and Italy for the avoidance of double taxationand to propose on behalf of the Government of the Republic ofItaly that:

(a; the film-hire duty imposed by Malaysia under thecinematograph Film-Hire Duty Act 1965 (which in thiscontext is deemed to be a tax on cinematograph filmroyalties) shall not exceed 15% of the gross amountof the film rental;

(h) if the Government of Malaysia in any Agreementconcluded with other OECD countries limits the rateof tax on cinematograph films or tapes for televisionor broadcasting to a rate less than fifteen per centof the gross amount of the film rental, the twoGovernments shall consult each other with a view tomodifying the rate of tax in order to extend the sametreatment on a reciprocal basis. The Government ofMalaysia shall inform the Government of Italy aboutany new Agreement with OECD countries which has a rateor tax which is less than fifteen per cent on suchroyalties, as soon as possible.

1 have further the honour to propose that the present Note; and Yeer Exellency's reply confirming the acceptance by thelovernment of Malaysia of the above proposal shall be regarded.is constituting an Agreemint that shall form an integral part')f the Agreement for the avoidance of double taxation.

I avail myself of this opportunity to extend to Your:xcellency the assurance of my highest consideration.

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Excellency,

I have the honour to acknowledge the receipt of Yourexcellency's Note of this date which reads as follows:

"I have the honour to refer to the Agreement signed today

between Malaysia and Italy for the avoidance of double taxationand to propose on behalf of the Government of the Reoublic ofItaly that:

the film-hire duty imposed by Malaysia under the Cinema-tograph Film-Hire Duty Act 1965 (which in this contextis deemed to be a tax on cinematograph film royalties)shall not exceed 15% of the gross amount of the filmrental;

if the Government of Malaysia in any Agreement concludedwith other OECD countries limits the rate of tax oncinematograph films or tapes for television or broad-casting to a rate less than fifteen per cent of thegross amount of the film rental, the two Governmentsshall consult each other with a view to modifying therate of tax in order to extend the same treatment ona reciprocal basis. The Government of Malaysia shallinform the Government of Italy about any new Agreementwith OECD countries which has a rate of tax which isless than fifteen per cent on such royalties, as soonas possible.

I have further the honour to propose that the present Noteand Your Excellency's reply confirming the acceptance by theGovernment of Malaysia of the above pro posal shall be regardedas constituting an Agreement that shall form an integral partof the Agreement for the avoidance of double taxation.

avail myself of this opp ortunit y to extend to YourExcellency the assurance of my highest consideration".

I have further the honour to confirm that the Government ofMalaysia acce pts the proposal contained in Your Excellency's Note,and a rsrcesthat the same and the present re p ly shall be regardedas constituting an Agreement between the two Governments.

avail myself of this opportunity to extend to YourExcellency the assurance of my highest consideration.