Cyprus is continuing its ongoing efforts to increase its global network of Double Tax Treaties and in this respect Cyprus and Kazakhstan have, on 15 May 2019, signed a Double Tax Treaty (the “DTT”) aiming to enhance the economic and trade relations between the two states, while bringing new opportunities and better protection for taxpayers in both states.
The DTT has been ratified by Cyprus on 24 May 2019 and it is expected to become effective on or after 1 January 2020.
The DTT is generally based on the OECD Model Double Tax Convention framework.
The main provisions of the DTT are briefly outlined below:
(a) There shall be a maximum of 5% withholding tax on dividend payments if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends.
(b) In all other cases, there shall be a maximum of 15% withholding tax.
(a) There shall be a maximum of 10% withholding tax on interest payments if the recipient of the interest is the beneficial owner of such income.
(b) There shall be 0% withholding tax on interest payments if the beneficial owner of the interest is the Government of the other contracting state, or a political subdivision, a central or local authority, the Central Bank or any other financial institution wholly owned by the Government of the other contracting state.
There shall be a maximum of 10% withholding tax on royalty payments, if the recipient of the royalties is the beneficial owner of such income.
With respect to capital gains, Cyprus retains the exclusive taxing right on the disposal of shares made by Cyprus tax residents, except in the following cases:
(a) Where the shares (other than shares listed on an approved stock exchange) derive more than 50% of their value directly or indirectly from immovable property situated in Kazakhstan; or
(b) Where the shares derive the greater part of their value from certain offshore rights and/or movable property relating to the exploration or exploitation of the seabed or subsoil or their natural resources located in Kazakhstan.