Cyprus | January 2016 |
Cyprus is continuing to develop its network of Double Taxation Treaties through the signing of a new DTT with the Federal Democratic Republic of Ethiopia, on December 30th, 2015.
The treaty is based on the OECD Model Convention for the avoidance of Double Taxation on income and on capital, and it was published with the official Cyprus Government Gazette on January 18th, 2016.
The signing of this agreement also verifies the Cyprus Government efforts to strengthen trade and financial ties with the African continent, as another four DTTs are in force with African countries, these being South Africa, Mauritius, Seychelles and Egypt.
Main provisions of the Cyprus – Ethiopia DTT
Amongst the key provisions of the newly signed treaty are clauses specifying:
• For Royalties: The withholding tax on royalties will not be more than 5% of the gross royalties’ amount, if the recipient is the beneficial owner of the royalties.
• For Interest: The withholding tax on interest will not be more than 5% of the gross interest amount, if the recipient is the beneficial owner of the interest.
• For Dividends: The withholding tax on dividends will not be more than 5% of the gross dividends amount, if the recipient is the beneficial owner of the dividends.
Also, the Permanent Establishment (P.E.) definition within the treaty is referencing to a building site or construction or installation project being eligible to constitute a P.E. only if it lasts for more than 6 months.
Entry into force
The DTT will be enforceable when both countries exchange notifications confirming that their official ratification procedures have been concluded, and the treaty provisions will have effect:
• On or after January 1st, following the date the treaty enters into force – for Cyprus, and
• On or after July 8th, following the date the treaty enters into force – for the Federal Democratic Republic of Ethiopia.
Eurofast’s take
Conclusively, as Under-Saharan countries are indeed a magnet for new investment, being developing economies of unexplored potential, here at Eurofast our expert financiers can readily guide and assist you in identifying and assessing such opportunities.
Christiana Nicolaou
Tax Consultant
E. christiana.nicolaou@eurofast.eu