MAJOR TAX UPDATE 2015
CYPRUS TAX NEWS
Double Tax Treaty – Cyprus & Georgia
On 2 April 2015, a Double Tax Treaty (DTT) has been signed between Cyprus and Georgia. The agreement will come into force as from 1 January 2016 when both countries are expected to complete the ratifications procedures. The Treaty applies to taxes on income as well as on gains from alienations of immovable property. In the case of Georgia, income tax, property tax and profits tax are covered by the Treaty while in the case of Cyprus, personal income tax, defence tax, capital gains tax and immovable property are covered. Double Tax Treaty between the countries provides for zero withholding tax on dividends, interest and royalty payments.
Double Tax Treaty between Cyprus and South Africa –Amending Protocol
A Protocol amending the Double Tax Treaty between Cyprus and South Africa was signed on 1 April 2015. The Double tax treaty is based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital.
This updated protocol introduces new amendments such as the introduction of withholding tax on dividends paid. Under the existing treaty there was no withholding tax on dividends paid by a South African company to a Cyprus tax resident company or individual. Under this amendment, a 5% withholding tax on dividends has been introduced, which is paid if the beneficial owner of the dividends is a company holding at least 10% of the capital of the company which is paying the dividend. In all other cases the rate is 10% and works retroactively to 1 April 2012, when South Africa introduced the taxation of dividends in the hands of the shareholders.
The amending protocol, apart from providing a favorable tax framework for investors, enhances the exchange of information between the two countries. This update of the DTT is expected to further enhance the growth of commercial relations between the two countries.
Double Tax Treaty between Cyprus and Bahrain signed
On 9 March, 2015 Cyprus and Bahrain signed a Double Tax Treaty agreement during an official visit of the Cypriot President, Nicos Anastassiades, to the Arab Kingdom. The agreement is expected to contribute to the further development of the trade and economic relations between Cyprus and the Government of Kingdom of Bahrain, as well as with other countries. The double taxation avoidance agreement updates an existing protocol and expands the network of similar deals based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital, in order to help boost foreign direct investments to Cyprus.
Besides the treaty on the avoidance of double taxation, a series of other agreements were also signed on issues such as terrorism, crime, aviation services and health.
New double taxation treaty between Cyprus and Iceland takes effect from 1st of January 2015
The new double taxation treaty between Cyprus and Iceland, which was signed on the 13th of November 2014, entered into force on the 22nd of December 2014.
The provisions of the treaty will apply for taxation withheld at source , on income paid or credited on or after the 1st of January 2015 and for other taxation on income, in respect of income of any financial year beginning on or after the 1st of January 2015. The agreement is based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital.
Find out details about Cyprus Tax by downloading our annual publication Tax Facts 2015.
Important note: This article has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice from a qualified accountant.