Legal Update: Terms of Cyprus & Kazakhstan Double Taxation Agreement

Earlier this year, the Convention for the Avoidance of Double Taxation & the Prevention of Fiscal Evasion was assended into national law, in Nur-Sultan, between the Government of Cyprus and the Government of Kazakhstan.

The signing marks the 65th agreement Cyprus has pledged to work with to avoid double taxation in many other financial centres around the world.

The Convention is based on the new OECD Model Convention for the Avoidance of Double Taxation on Income and capital with respect to Taxes on Income is anticipated to further contribute to the development of economic and trading relations between Cyprus and Kazakhstan, as well as bringing new opportunities and better safeguards for taxpayers in both countries.

Kazakhstan is located on the European and Asian border and acts as a bridge between the East and West. Economists have acknowledged that this will further encourage investment between Europe and America using Cyprus as an intermediary. The Convention is also expected to regulate banking and financial exchange in accordance with Article 26 of the OECD Model Convention.

Below is a summary of the withholding taxes, as set out in the DTT:

  1. Dividends

There is a maximum of 5% withholding tax applied to dividend payments where the recipient is a company that directly holds at least 10% of the capital of the paying company, otherwise, the DTT provides for a maximum 15% withholding tax rate on dividends. No withholding tax applies on dividend payments to non-Cyprus residents.

  1.  Interest

There is a maximum of 10% WHT applied to interest payments, however, there is a 0% withholding tax rate on interest payments to non-Cyprus tax residents interest payments to the Government.

  1.  Capital gains tax

Cyprus retains the exclusive taxing rights on the disposal of shares made by Cyprus tax residents, except in the following cases:

a. Whereby non-listed shares derive more than 50% of their value, directly or indirectly, from immovable property situated in Kazakhstan; and

b. Whereby shares derive more than 50% of their value from any offshore property regarding the exploration or exploitation of the seabed and its soil of their natural resources from Kazakhstan.

Growing Cyprus’ network of double taxation conventions is of high economic and political importance and aims to further strengthen Cyprus as an international business centre.


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