Cyprus gets 3 more tax treaties as of Jan­uary 1

Financial Mirror (Cyprus) - - FRONT PAGE -

tax­able in the coun­try of in­vest­ment (ex­cept gains re­lat­ing to im­mov­able prop­erty and gains from the alien­ation of mov­able prop­erty of a per­ma­nent es­tab­lish­ment). In par­tic­u­lar, any gains aris­ing from the sale of shares will only be taxed in the coun­try of res­i­dence of the seller of the shares. pro­vid­ing in­for­ma­tion re­quested by tax au­thor­i­ties un­der the tax­a­tion treaty.

Fol­low­ing the no­ti­fi­ca­tion, all pay­ments made to Cyprus at­tracted a 30% with­hold­ing tax and In­dian en­ti­ties re­ceiv­ing money from there were re­quired to dis­close the source of funds.

In­dia and Cyprus had en­tered into an agree­ment for avoid­ance of dou­ble tax­a­tion of in­come and preven­tion of fis­cal eva­sion in De­cem­ber 1994. Un­der the agree­ment, both coun­tries have a le­gal obli­ga­tion to ex­change such in­for­ma­tion.

In early De­cem­ber, Ukraine’s Prime Min­is­ter Arseniy Yat­se­niuk said that his coun­try was los­ing about $300 mln a year to tax-free in­vest­ments in Cyprus, an ar­gu­ment he used to jus­tify the abo­li­tion of the present dou­ble-tax­a­tion avoid­ance treaty. This fol­lowed Rus­sia’s Pres­i­dent Vladimir Putin’s in­tro­duc­tion of a bill that aims to repa­tri­ate Rus­sian-owned in­vest­ments on the is­land as of Jan­uary 1, 2015, within the con­text of the “de­off­sho­ri­sa­tion” plan. Ukraine’s Yat­se­niuk has had his sights on Cyprus for quite some time, al­leg­ing that cronies and rel­a­tives of ousted Pres­i­dent Vik­tor Yanukovych, as well as pro-Rus­sia oli­garchs had set up com­pa­nies on the is­land used for cap­i­tal flight.

Yat­se­niuk said that when this con­ven­tion was signed in 2012, it was meant to pro­tect the wealth­i­est part of the pop­u­la­tion, since it in­cluded a 0% tax rate on the sale of prop­erty.

“Since the prop­erty was sold via off­shore com­pa­nies, tax was paid nei­ther in Ukraine, nor in Cyprus. That’s why the gov­ern­ment is ad­dress­ing par­lia­ment to back the de­nun­ci­a­tion of this doc­u­ment,” he said.

How­ever, ton­ing down his rhetoric, Yat­se­niuk said that the Ukrainian gov­ern­ment wants to rene­go­ti­ate a new treaty with Cyprus, some­thing which gov­ern­ment of­fi­cials in Nicosia have con­firmed. The gov­ern­ment in Kiev said it will im­me­di­ately start ne­go­ti­a­tions with Cyprus on a new treaty that will com­ply with the stan­dards of the OECD, a bench­mark al­ready used by Cyprus for other treaties.

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