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26/01/2018

Cyprus and the Kingdom of Saudi Arabia enter into a Double Tax Tready

Cyprus and Saudi Arabia Double Tax Treaty ("DTT")

Main Provisions of the DTT:

  • 0% withholding tax on interest payments. Interests include income from debt claims arising in a contracting state and paid to a resident of other contracting state.
  • Dividends paid from a Saudi company to a Cyprus company will not be subject to any Saudi withholding tax, provided that the Cyprus company is the beneficial owner of the Saudi company and it is the holder of 25% of the capital of the Saudi company. In the absence of these requirements, there will be a 5% Saudi withholding tax.
  • Royalties paid from a Saudi company to a Cyprus company, (provided that the Cyprus company is the beneficial owner of the royalties) shall be subject to the following withholding taxes:

-       5% in the case of royalties paid in relation to industrial, commercial or    scientific equipment 

-    8% in  all other cases

  • The definition of Permanent Establishment is defined as a fixed place of business through which the business of an enterprise is carried on. Building sides, construction sides, or installation projects constitute permanent establishment if they have been in place for more than six months.
  • Capital gains from the disposal for immovable property are tax in the country where the immovable property is situated.
  • Profits from the operations of ships or aircrafts in international traffic shall be taxed in the contracting state where the management of the business takes place.
  • Directors' fees derived by a resident in a contracting state shall be taxed in the contracting state where the duties of director are performed.