As reported recently, a Double Tax Treaty (DTT) was signed between Cyprus and Kazakhstan on 15 May 2019. The details of the DTT have since become available and are summarized below.
The treaty provides for the following Withholding Tax (WHT) rates on dividends, interest and royalty payments:
· Dividends: 5% if the beneficial owner is a company which holds directly at least 10% of the capital of the company paying the dividends and 15% in all other cases
· Interest: 10% provided that the recipient is the beneficial owner of such interest. No WHT is imposed on interest payments where the beneficial owner of the interest is the Government of the other Contracting States, a political subdivision, a central or local authority, the Central Bank or any other financial institution wholly owned by the Government of the other Contracting State.
· Royalties: 10% provided that the recipient is the beneficial owner of such royalties.
Under Cyprus legislation there is no WHT on dividends, interests and royalties (for rights used outside Cyprus) paid to non-residents of Cyprus. Under Kazakhstan law a WHT tax of 15% is imposed on dividends, interest and royalties.
As per the treat gains derived by a resident of a Contracting State from the alienation of shares or comparable interests in the capital of a company deriving more than 50% of its value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other Contracting State, with the exception of gains derived from the alienation of shares listed on an approved stock exchange. All other gains are taxes in the country of the alienator.
The DTT will enter into force when Cyprus and Kazakhstan exchange notifications that their formal ratification procedures have been completed. The provisions of the treaty with respect to taxes will have effect as from 1 January of the year following the year in which the treaty enters into force.