1 Introduction
On 3 January 2018, Cyprus and Saudi Arabia signed a Double Tax Treaty (the “Treaty”) which is expected to come into force on 1 January 2019. The Treaty is based on the OECD Model Convention on the Avoidance of Double Taxation on Income and it also provides for the introduction of exchange of bank information and data in line with the relevant provisions of the Treaty.
2 Main Provisions of the Treaty
- Interest: Interest paid to a person who is resident in one of the two countries to the Treaty by a company which is resident in the other country is subject to 0% withholding tax.
- Royalties: Royalties (only in connection to industrial, scientific or commercial equipment) arising in one of the two countries to the Treaty and paid to a person who is resident in the other country is subject to 5% withholding tax. In all other cases royalties will be subject to 8% withholding tax.
- Dividends: Dividends paid by a company which is resident in one of the two countries to the Treaty to a person who is resident in the other country is subject to 0% withholding tax as long as that person owns at least 25% of the share capital of that company (in all other instances dividends will be subject to 5% withholding tax).
- Capital Gains Tax: Gains from the disposal of immovable property are taxed in the country where the immovable property is located (for the purposes of the Treaty, “immovable property” is given the meaning that it has under the laws of the country where the immovable property is situated).
- Directors’ Fees and Other Payments: Directors’ fees and other payments which are paid to a director who is resident in one of the two countries to the Treaty by a company which is resident in the other country may be taxed but that other country.
Key Contacts
For further information, please contact:
Pavlos Kaimakliotis
Partner
Tel: +357 24 01 01 01
pavlos.kaimakliotis@kaimakliotis.com
Alex Apostolatos
Legal Advisor
Tel: +357 24 01 01 06
alex.apostolatos@kaimakliotis.com