On 3 January 2018, the governments of Cyprus and Saudi Arabia signed an agreement for the Avoidance of Double Taxation (DTA). The DTA was signed during the official visit of the President of the Republic of Cyprus to Saudi Arabia and is based on the OECD Model Tax Convention.
Withholding tax rate on interest payments
- 0% withholding tax
Interest includes income from Debt-Claims arising in a Contracting State and paid to a resident of the other Contracting State.
Withholding tax rate on dividend payments
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 dividends and it holds at least 25% of the capital of the Saudi company. Otherwise, there will be a 5% Saudi withholding tax.
Withholding tax rate on royalties payments
Royalties paid from a Saudi company to a Cyprus company will be subject to the below Saudi withholding taxes, provided that the Cyprus company is the beneficial owner of the royalties:
- 5% in the case of royalties paid in relation to industrial, commercial or scientific equipment.
- 8% in all other case
The definition of the permanent establishment in the context of the double tax treaty is a fixed place of a business through which the business of an enterprise is wholly or partly carried on. Any building site or construction or installation project constitutes a permanent establishment only if it lasts more than 6 months.
Capital Gains Tax
Gains from the disposal of immovable property are taxed in the country where the immovable property is situated.
Gains from the alienation of substantial participation (at least 25%) in a company which is resident of a Contracting State may be taxed in that Contracting State.
Shipping and Air Transport
Profits from the operations of ships or aircraft in international traffic shall be taxed only in the Contracting State in which the place of effective management is situated.
Directors’ fees derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.