Cyprus – Kazakhstan Double Tax Treaty
By: P. Constantinou & Co Ltd
At the end of December 2019, the Cyprus – Kazakhstan Double Tax Treaty was signed by the President of Kazakhstan, which was previously ratified by Cyprus in May 2019. The Treaty will have full effect on the 1st of January 2021.
Along with many other aspects that affect trading and business between the two states, a summary of the main provisions and benefits of the Treaty is given below.
- On Interest, a 10% withholding tax on gross interest will apply.
- On royalties, a withholding tax of 10% on gross royalties will apply.
- Regarding dividends, a 5% Withholding tax on gross dividends applies 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. A 15% Withholding tax on gross dividends will apply in all other cases.
- On Capital Gains derived by a resident of a State from the disposal of shares or comparable interests in the capital of a company deriving more than 50% of their value directly or indirectly from immovable property situated in the other State, may be taxed in that other State. This does not apply to gains derived from the disposal of shares of companies listed on an approved stock exchange. Any other disposal of shares is taxed in the State of the person disposing of the shares.
- Gains derived from offshore activities by an enterprise of a State from the disposal of shares or comparable interest deriving their value or the greater part of their value directly or indirectly from exploration or exploitation rights and/or movable property situated in the other State and used in connection with offshore activities carried on in that other State may be taxed in that other State.
Kazakhstan is the biggest landlocked country in the world with a total area of 2.7 million sq. kilometers, a population of 18. 5 million citizens and a nominal GDP of around 164 billion USD. Its booming economy relies mainly on oil, gas and mineral exploration and trading and is considered the dominant economic player in the Central Asia region.