TAXATION ISSUES

Double tax treaties
Cyprus has concluded double tax treaties with the following countries: Austria, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, Slovakia, Sweden, Syria, United Kingdom, United States, Yugoslavia.

All countries comprising the Commonwealth of Independent States are expected to honor the old Cyprus/USSR treaty. However, at present only Russia has officially announced its adoption of the treaty. Furthermore, the status of the treaty with Yugoslavia is uncertain.

Treaties with Thailand, Singapore and Belgium are at various stages of negotiations. The old Cyprus/USSR treaty is being re-negotiated with Russia.

The main purpose of these treaties is the avoidance of double taxation of income earned in any of these countries. Under these agreements, a credit is usually allowed against the tax levied by the country in which the taxpayer resides for taxes levied in the other treaty country and as a result the taxpayer pays no more than the higher of the two rates.

Cyprus International Business entities and the tax treaties
The Cyprus International Business entity qualifies for treaty protection under all treaties except for the treaty with Canada, France, UK and USA. Even under these four treaties, the limitations are such that they affect only flows of income from these countries to Cyprus and not income flows from Cyprus to the other countries.