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Cyprus Signs a Double Tax Treaty with Saudi Arabia

Cyprus Signs a Double Tax Treaty with Saudi Arabia
 
Cyprus signed a double tax treaty with Saudi Arabia. Provided the ratification procedures by the two countries are completed within 2018, the treaty will become effective as from 1 January 2019.
 
The new treaty is generally based on the OECD Model Tax Convention framework with some modifications.
 
The treaty applies to taxes on income as well as on gains from alienation of movable or immovable property.
 
In the case of Saudi Arabia, the treaty covers the Zakat and the income tax (including the natural gas investment tax), whereas in the case of Cyprus, it covers corporate and personal income tax, defense tax and capital gains tax.
 
The treaty provides for withholding taxes only on dividends at the following rates:
 
  • zero in case where there is at least 25% participation by a tax resident company
 
  • in all other cases the withholding tax is 5%

There is no withholding tax on interest, as long as the recipient of the interest is the beneficial owner of the income.
 
Royalties paid for the right to use industrial, commercial or scientific equipment are subject to 5% withholding tax and 8% withholding tax applies for all other types of royalties, as long as the recipient of the royalties is the beneficial owner of the income.
 
Gains from the sale of shares in companies are taxed in the country where the company is located, provided the participation is at least 25%.
 
For more information please contact our firm anthony@ashiotis.com.cy

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