On May 30th, 2018, the successful final round of negotiation within the conclusion of the negotiation of the Convention for the Avoidance of Double Taxation and the Prevention of Tax Evasion on Income Taxes between the Republic of Cyprus and the Republic of Kazakhstan, took place. The agreed text was the result of intensive negotiations lasted one year.
On 24 May 2019, Cyprus ratified the said double tax treaty which it had signed with Kazakhstan (the "DTT").
The DTT is 'in effect' as from January 2020.
We set out below an overview of selected provisions of the DTT:
A maximum 10% WHT rate on interest payments. For certain interest payments to the Government the DTT provides for a 0% WHT rate.
A maximum 5% withholding tax (WHT) rate applies on dividend payments where the recipient is a company (other than partnership) that directly holds at least 10% of the capital of the paying company. For other cases, the DTT provides for a maximum 15% WHT rate on dividends.
A maximum 10% WHT rate in the case of royalty payments. Royalty payments are in consideration for: the use of, or the right to use, any copyright of literary, artistic or scientific work, software, including cinematograph films, tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information (know how) concerning industrial, commercial or scientific experience and payments for the use of, or the right to use, industrial commercial or scientific equipment.
Royalty payments do not include payments for the use of, or the right to use, ships or aircrafts.
For capital gains Cyprus retains the exclusive taxing rights on disposals of shares made by Cyprus tax residents, except in the following cases:
- non-listed shares which derive more than 50% of their value, directly or indirectly, from immovable property situated in Kazakhstan, and,
- shares which derive the greater part of their value from certain offshore rights and/or movable property relating to exploration or exploitation of the seabed or subsoil or their natural resources located in Kazakhstan.
*We note that irrespective of 5% or 15% WHT rates provided for in the DTT applicable to dividend payments, 10% WHT applicable on interest payments and 10% WHT rate on royalty payment NO Cyprus WHT applies on interest payments, dividends and royalties (except in the case of royalty payments earned on rights used within Cyprus) to non-Cyprus tax residents.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.