The Double Tax Treaty (DDT) between The Republic of Cyprus and the Kingdom of Bahrain entered into force in January 2017. The DTT is based on the OECD Model Convention for the Avoidance of Double Taxation on Income and Capital with the aim to help attract foreign direct investment to Cyprus.
Cyprus as an attractive location for foreign Investment
The aim of the agreement was to enhance and increase the trading aspect and attract foreign investment for Cyprus to be promoted as an international business center which will provide further growth.
Cyprus and Brahrain Taxes
Cyprus taxes include:
- Income tax.
- Corporate Income Tax.
- Special contribution of defence.
- Capital Gain Tax.
Bahrain tax includes:
Provisions of the Treaty
The important provisions of the treaty are:
- No withholding taxes on payments of dividends.
- No withholding taxes on payment of interest.
- No withholding taxes on payment of royalties.
- For capital gain tax, the profits will be taxed in the country that the property is situated.
- If a project is concluded in more than 12 months (a project being a building site/ construction/ installation of a project or any other related project) then this will be considered as a permanent establishment.
- Business profits will be taxable in the country that the Company resides.
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