PROTOCOL TO THE AGREEMENT BETWEEN THE FEDERAL REPUBLIC OF GERMANY AND MALAYSIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED ON 23 FEBRUARY 2010
On signing the Agreement between the Federal Republic of Germany and Malaysia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income the signatories being duly authorized thereto, have in addition agreed on the following provisions which shall form an integral part of the said Agreement:
- (1) With reference to Articles 3, 4, 8, 13 and 15:
- It is understood that the "place of effective management" is the place where a company is actually managed and controlled or the place where the decision making at the highest level on the important policies essential for the management of a company takes place.
- (2) With reference to Article 4:
- The term "statutory body" means a body constituted by statute of a Contracting State or a political subdivision thereof and in the case of the Federal Republic of Germany by a land and performing functions which would otherwise be performed by that Contracting State or political subdivision thereof or land.
- The competent authority of a Contracting State shall upon request confirm to the competent authority of the other Contracting State whether a particular entity is a statutory body of the first-mentioned Contracting State.
- (3) With reference to Articles 6 to 23:
- Where, under any provision of this Agreement, income derived from a Contracting State, except interest to which paragraph (3) of Article 11 applies, is relieved from tax in that State and, under the law in force in the other Contracting State, such income is subject to tax by reference to the amount thereof which is remitted to or received in that other State and not by reference to the full amount thereof, then the relief is to be allowed under this Agreement in the first-mentioned State shall apply only to so much of the income as is remitted to or received in the other State:
- Provided that where:
- (a) in accordance with the foregoing provisions, relief has not been allowed in the first instance in the first-mentioned State in respect of an amount of income, and
- (b) that amount of income has subsequently been remitted to or received in that other State and is thereby subject to tax in that other State, the competent authority of the first-mentioned State shall, subject to any laws thereof for the time being in force limiting the time and setting out the method for the making of a refund of tax, allow relief in respect of that amount of income in accordance with the appropriate provisions of this Agreement.
- (4) With reference to Article 7:
- (a) Where an enterprise of a Contracting State sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received therefore by the enterprise but only on the basis of the amount which is attributable to the actual activity of the permanent establishment for such sales or business.
- (b) In the case of contracts, in particular for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, where the enterprise has a permanent establishment in the other Contracting State, the profits of such permanent establishment shall not be determined on the basis of the total amount of the contract, but only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the Contracting State in which it is situated. Profits derived from the supply of goods to that permanent establishment or profits related to the part of the contract which is carried out in the Contracting State in which the head office of the enterprise is situated shall be taxable only in that State.
- (5) With reference to Articles 10 and 11:
- Notwithstanding the provisions of Articles 10 and 11 of this Agreement, dividends and interest may be taxed in the Contracting States in which they arise, and according to the law of that State:
- (a) if they are derived from rights or debt-claims carrying a right to participate in profits, including income derived by a silent partner ("stiller Gesellschafter") from his participation as such, or from a loan with an interest rate linked to borrower's profit ("partiarisches Darlehen") or from profit-sharing bonds ("Gewinnobligationen") within the meaning of the tax law of the Federal Republic of Germany and
- (b) under the condition that they are deductible in the determination of profits of the debtor of such income.
- (6) With reference to Article 11
- The competent authority of Malaysia will consider favourably applications for exemption from taxes on interest arising in Malaysia and paid in consideration of a loan guaranteed by the Federal Republic of Germany in respect of export or foreign direct investment, subject to the prevailing policy on interest exemptions.
- (7) With reference to paragraph (5) of Article 19:
- It is understood that the remuneration according to paragraph (5) of Article 19 is paid out of public funds.
- (8) With reference to paragraph (1) of Article 23:
- (a) Insofar as the Federal Republic of Germany does not avoid double taxation by allowing tax credit according to sub-sub-paragraph (e)(bb) of paragraph (1) of Article 23 it is understood that Malaysian income exempted under Section 133A of the Income Tax Act 1967 and Sections 22, 23, 29, 29A to 29H, 31E, 32, 33 and 41B of the Promotion of Investments Act 1986 of Malaysia and Section 45 of that Act to the extent that it relates to Sections 21, 22 and 26 of the Investment Incentives Act 1968 so far as the Sections were in force on or before, and have not been modified since, the date of signature of this Agreement or have been modified only in minor respects so as not to affect their general character is fully entitled to the exemptions provided for in sub-paragraph (a) of paragraph (1) of Article 23.
- (b) It is understood that the Federal Republic of Germany shall not invoke sub- sub-paragraph (e)(bb) of paragraph (1) of Article 23 before 31 December 2010.
- (9) With reference to Article 26:
- If in accordance with domestic law personal data are exchanged under this Agreement, the following additional provisions shall apply subject to the legal provisions in effect in each Contracting State:
- (a) The receiving agency may use such data only for the stated purpose and shall be subject to the conditions prescribed by the supplying agency.
- (b) The receiving agency shall on a written request inform the supplying agency regarding the use of any data supplied.
- (c) Personal data may be supplied only to the persons or authorities specified in Article 26. The supply of any personal data to any other agencies may be effected only with the prior approval of the supplying agency.
- (d) The supplying agency shall be obliged to ensure that the data to be supplied are accurate and necessary for and proportionate to the purpose for which they are supplied. Any prohibition and restriction on the supply of data prescribed under the applicable domestic law shall be complied with. If it emerges that inaccurate data or data which should not have been supplied have been supplied, the receiving agency shall be informed of this without undue delay and it shall be obliged to correct or erase such data from its record forthwith.
- (e) Upon application the person concerned shall be informed of any data supplied relating to him and of the use to which such data are to be put. There shall be no obligation to furnish this information if on balance the public interest in withholding it outweighs the interest of the person concerned in receiving it. In all other respects, the right of the person concerned to be informed of any data relating to him shall be governed by the domestic law of the Contracting State in whose sovereign territory the application for the information is made.
- (f) The receiving agency shall be responsible and shall be liable in accordance with its domestic laws to any person who suffers any damage or loss as a result of the supply of any data concerning that person pursuant to this Agreement. The receiving agency shall not be discharged from its responsibility and liability by pleading that the damage or loss had been caused by the supplying agency.
- (g) If the domestic law of the supplying agency provided for special provisions for the erasure or cancellation of any personal data supplied, that agency shall inform the receiving agency accordingly. Irrespective of such domestic law, any personal data supplied shall be erased once they are no longer required for the purpose for which they were supplied.
- (h) The supplying and the receiving agencies shall be obliged to keep and maintain official records of all personal data supplied and or received under this Agreement.
- (i) The supplying and the receiving agencies shall be obliged to take effective measures to protect the personal data supplied and or received against any unauthorized access, unauthorized alteration or unauthorized disclosure.
- (10) With reference to Article 27:
- (a) Persons who are entitled to tax benefits according to the Labuan Offshore Business Activity Tax Act 1990 (as amended) are not entitled to benefits from this Agreement; however the competent authority of Malaysia will provide information regarding these persons according to Article 26.
- (b) The provisions of this Agreement shall apply to an offshore company that has made an irrevocable election to be charged to tax in accordance with the Income Tax Act 1967 (as amended).
IN WITNESS WHEREOF, the undersigned, duly authorized thereto, have signed this Protocol.
DONE at Putrajaya, this twenty-third day of February 2010, in duplicate in the German, Malaysian and English languages, all three texts being authentic. In the case of divergent interpretation of the German and the Malaysian texts, the English text shall prevail.
FOR THE FEDERAL REPUBLIC OF GERMANY:
AWANG ADEK HUSSEIN