The Ministry of Finance of the Republic of Cyprus has announced that on the 30th of December 2015, the Republic of Cyprus and the Federal Democratic Republic of Ethiopia signed an agreement for the avoidance of double taxation.

This agreement  is based on the Model Tax Convention for the Avoidance of Double Taxation and provides, among others, for the following:

• Dividends
  • Withholding tax rate: 5%
• Interest
  • Withholding tax rate: 5%
• Royalties
  • Withholding tax rate: 5%
• Capital gains
  • Capital gains derived from the disposal of immovable assets are taxable only in the country they are located. Gains derived from the disposal of shares are taxable in the country where the seller resides.

Cyprus continues to extend its double tax treaties network, providing thereby further incentives to foreign investors to choose Cyprus to establish their companies and business operations. As a reminder the objective of DTTs is not just limited to the elimination of double taxation. For instance, it provides guidelines that assist in the resolution of disputes that may arise, while it establishes the mechanisms enabling information to be exchanged between the tax authorities.

For more specific information regarding the provisions of the double tax treaty between Cyprus & Ethiopia , please get in touch with our tax consultants.