In October 2019, Cyprus and Egypt signed a new Double Tax Treaty (DTT) in order to replace the existing treaty.

The new DTT will enter into force once the Contracting States complete their formal ratification procedures. The provisions of the treaty with respect to taxes will have become effective as from 1 January of the year following the year in which the treaty enters into force.

Find below the new Withholding Tax (WHT) rates:

• Dividends: 5% WHT if the beneficial owner (BO) is a company holding at least 20% of the capital of the company paying the dividends throughout a period of 365 days, that includes the day of payment of the dividend and 10% in all other cases.
• Interest: 10% WHT, provided that the recipient is the BO of such interest.
• Royalties: 10% WHT, provided that the recipient is the BO of such royalties.

According to the capital gains provisions of the treaty, the country of residence of the seller has the exclusive right to tax gains arising from the disposals of shares. However, gains derived by a resident of a contracting state from the alienation of shares or interest in the capital of a company which derives more than 50% of their value directly or indirectly from immovable property situated in that other contracting state, maybe taxed in that other contracting state.

Gains on disposal of shares listed in a recognized stock exchange are exempt from the above provisions.

The treaty also provides guidance for the avoidance of double taxation with regards to cross border offshore activities (e.g. exploration and exploitation of natural resources).

You can contact Globalserve for more information and clarification needed.