A new Double Tax Treaty (DTT) was signed between Cyprus and Kazakhstan , which was previously ratified by Cyprus in May 2019. The DTT will have full effect on the 1st of January 2021.
The Treaty is based on the OECD Model Convention and thus incorporates the latest international standards with regards to exchange of information, mutual agreement procedure, and as well as a principal purpose test.
Along with many other aspects that affect trading and business between the two states, a summary of the main provisions and benefits of the Treaty is given below.
- Interest income: On Interest, a 10% withholding tax on gross interest will apply.
- Royalties: On royalties, a withholding tax of 10% on gross royalties will apply.
- Dividend income: Regarding dividends, a 5% Withholding tax on gross dividends applies if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends. A 15% Withholding tax on gross dividends will apply in all other cases.
- Capital Gains: On Capital Gains derived by a resident of a State from the disposal of shares or comparable interests in the capital of a company deriving more than 50% of their value directly or indirectly from immovable property situated in the other State, may be taxed in that other State. This does not apply to gains derived from the disposal of shares of companies listed on an approved stock exchange. Any other disposal of shares is taxed in the State of the person disposing of the shares.
- Gains derived from offshore activities by an enterprise of a State from the disposal of shares or comparable interest deriving their value or the greater part of their value directly or indirectly from exploration or exploitation rights and/or movable property situated in the other State and used in connection with offshore activities carried on in that other State may be taxed in that other State.
NOTE: As per the local Cyprus legislation, Cyprus does not withhold tax on outbound dividends or interest payments, and only withholds tax on royalty payments (10%) if the royalties are used within Cyprus.
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