CYPRUS- SAUDI ARABIA DOUBLE TAX TREATY

Cyprus and Saudi Arabia signed a double tax treaty for the avoidance of double taxation between the two countries. The treaty was signed on 3rd of January 2018 and it is expected to enter into force on 1st January 2019.

The agreement was signed by Ioannis Kasoulides, Minister of Foreign Affairs of the Republic of Cyprus and Mohammad Abdullah Al-Jadaan, Minister of Finance of the Kingdom of Saudi Arabia, within the framework of the official visit of the President of Cyprus to Saudi Arabia.

The new treaty is based on the Organisation for Economic Co-operation and Development (OECD) Model Convention for the Avoidance of Double Taxation on Income and on Capital, including the exchange of finance and other information in accordance with the relevant Article of the Model Convention.

APPLICATION:

The treaty applies to taxes on income, as well as, on gains from alienation of movable or immovable property.

Have in mind that:

  • In the case of Cyprus, the agreement covers corporate and personal income tax, special contribution for defence and capital gains tax.
  • In the case of Saudi Arabia, the agreements cover the Zakat and the income tax, including the natural gas and investment tax.

MAIN PROVISIONS:

Dividends

There is no withholding tax on dividends, provided that there is at least 25% participation by a company that is tax resident in the receiving jurisdiction. In all the other cases, the withholding tax on dividends is 5%.

Interest

There is no withholding tax on interest, as long as the recipient of the interest is the beneficial owner of the income. That is to say, interest paid by a Company that is resident in a contracting state to a resident of the other contracting state will be subject to zero withholding tax.

Royalties

As long as the recipient is the beneficial owner of the income, the withholding tax on royalties is:

  • 5% in cases where the royalties are paid for the use, or the right to use, industrial, commercial or scientific equipment;
  • 8% in all the other cases;

Capital Gains:

According to the treaty, gains arising from the disposal of shares of a substantial participation in the capital of the company which is resident of the Contracting State may be taxed in that Contracting State. A person is considered to have a substantial participation when this participation is at least 25% of the capital of that company, at any time within one year before the disposal of the shares.

 

CONTACT OUR TAX PLANNING TEAM:

The multilingual tax planning team of Rah Legal aims at offering the best possible solutions in order to contribute to your business success. We are able to provide you with the necessary legal and administrative support so that to assist you in developing your business projects effectively and efficiently. Our services are available in English, Greek, Arabic and Hebrew.

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