On 5th March 2018, Cyprus published Notice no. 4237/18 in the Official Gazette, announcing the new double tax treaty with Saudi Arabia. In the case of Saudi Arabia, the treaty covers the Zakat and the income tax (including the natural gas investment tax), whereas in the case of Cyprus, it covers corporate and personal income tax, defense tax and capital gains tax.
The Treaty introduces the following principles and rates:
Withholding Tax Rates
• 0% - of the gross amount of the dividends if the beneficial owner is a company directly or indirectly holding at least 25% of the capital of the Company paying the dividends
• 5% of the gross amount in all other instances
• 0% of the gross amount of the interest
• 5% of the gross amount of royalties which are paid for the use of, or the right to use, industrial, commercial or scientific equipment
• 8% of the gross amount of such royalties in all other cases
Gains from the disposal of immovable property are taxed in the country where the immovable property is situated.
The Treaty is concluded in Greek, English and Arabic languages. In the case of any divergence of interpretation, the English text prevails.
We advise Cypriot companies with business ties in Saudi Arabia to careful consider the impact the Treaty may have on their operations. Considerably, this Treaty creates favorable conditions towards enhancing the economic relations between the two contracting states and the consultants in our Cyprus office are ready to provide necessary guidance for successful enactment of new projects connecting the two countries.