On 17 December 2021 Cyprus and Jordan signed a
Double Tax Treaty (DTT).
The treaty is based on the new OECD Model Tax Convention
and includes all the minimum standards of the OECD Base Erosion and Profit
Shifting (BEPS) project related to bilateral agreements.
The DTT provides for the following Withholding
Tax (WHT) rates:
In all other cases, the treaty provides for a maximum 10% WHT.
Nil for interest payments for which the beneficial owner is the government, a political subdivision, a local authority or the national bank of the other contracting state.
It is reminded that payments
of dividends, interest and royalties (the latter when earned outside the
country) from Cyprus to non-resident persons are fee from any Withholding Tax,
irrespective of their destination (as long as they are not paid to EU blacklisted
jurisdictions – please refer to our relevant newsfeed)
and on whether they are physical or legal persons.
The DTT includes a
Limitation of Benefits clause providing that the Tax Authorities of the
contracting states are entitled to deny the application of treaty benefits if
the obtainment of such benefit was one of the principal purposes of the
relevant arrangement/transaction, unless the granting of such benefit would be
in accordance with the object and purpose of the treaty.
The treaty will enter into force after the
necessary ratification procedures are completed. Once it enters into force, the
treaty will have effect in both contracting states on or after 1 January
following the date the treaty enters into force.