Double Tax Treaty between Cyprus and Saudi Arabia enters into force
On 1 March 2019, the Cyprus-Saudia Arabia Income Tax Treaty (2018) (hereafter the Treaty) will enter into force. The Treaty generally applies from 1 January 2020.
The maximum rates of withholding tax in the Treaty will be as follows:
- royalties; 5% in cases where the royalties are paid for the use of, or the right to use, industrial, commercial or scientific equipment. In all other cases the withholding tax is 8%.
- 0% on interest, and;
- there is no withholding tax on dividends in cases where there is at least 25% participation by a company that is tax resident in the receiving jurisdiction. In all other cases the dividend withholding tax is 5%.
The Treaty provides that gains arising from the disposal of shares of a substantial participation in the capital of a company which is resident of a Contracting State may be taxed in the latter State. A person is considered to have a substantial participation when this participation is at least 25% of the capital of that company, at any time within 12 months prior to disposal.