Double Tax Treaties 4

Double Tax Treaties

Tax sparing credits

The Cyprus treaties contains the following tax sparing credit provisions:

a) Canada

There are tax sparing credit provisions in Canada in respect of Cyprus tax that would have been payable or deductible in Cyprus on profits or interest but for certain tax incentive exemptions or relief in Cyprus.

b) Czechoslovakia

In Czechoslovakia there are tax sparing credit provisions in respect of Cyprus tax which would have been payable on profits and interest in Cyprus but for tax incentive exemption or relief in Cyprus in respect of Cyprus tax which would have been deductible from any dividend paid out of profits granted such incentive exemption or relief in Cyprus but for such tax incentive exemption or relief.

c) Denmark

In Denmark, there are available tax sparing credits of 15% for dividends and 10% for interest from Cyprus. If for purposes of promoting the economic development of Cyprus there is an exemption from or reduction or tax below the above percentages.

d) Egypt

There are tax-sparing provisions in respect of tax that would have been payable but reduced or waived under the legal provision of either contracting state for tax incentives.

e) Germany

In Germany tax sparing credits of 15% for dividends and 10% for interest are available, if there is an exemption from or reduction of tax below the above percentages as a result of incentives for promoting economic development in Cyprus.

f) Greece

In both countries, tax sparing credits are available for the whole of any tax which would be payable in respect of any profits or interest for which relief or exemption from tax is allowed as a tax incentive, and in respect of any tax which would be withheld from any dividends paid out of profits for which relief or exemption from tax is allowed as a tax incentive.

g) India

In both countries tax sparing credits are available for the whole of any tax which would be payable but for incentive relief designed to promote economic development. Withholding tax shall be deemed to have been paid on the gross amount for dividends at 10% or 15% as the case may be, interest at 10%, royalties and fees for included services at 15% and technical fees at 10%.

h) Ireland

In both countries tax sparing credits are available for profits, interest and dividends which are exempt from tax at reduced rates due to tax incentive provisions of each State. In addition in Ireland there are tax-sparing provisions in respect of profits form the operation of ships under the Cyprus flag.

i) Italy

Tax wholly relieved or reduced for a limited period of time under the laws of either contracting State shall be deemed to have been paid for tax credit purposes in the other State. In the case of Italy, these would include the full tax exemption in the case of operation of ships under the Cyprus flag and Cyprus offshore companies.

j) Malta

In both countries tax sparing credits are available for the whole of any tax which would be payable but for incentive relief. Withholding tax shall be deemed to have been paid on the gross amount of dividends at %, interest and royalties at 10%.

k) Poland

l) Romania

In Romania there are tax sparing credit provisions in respect of Cyprus tax which would have been payable in Cyprus on profits or interest but for tax incentive exemption or relief in Cyprus and in respect of Cyprus tax which would have been deductible from any dividend paid out of profits granted tax incentive exemption or relief in Cyprus but for such tax incentive exemption or relief.

m) United Kingdom

In both countries tax sparing credits are available for the whole or any tax which would be payable but for incentive relief. Withholding tax shall be deemed to have been paid on the gross amount of dividends and royalties at 15% and interest at 10%. In the UK tax sparing credits are available in respect of tax saved as a result of tax incentives given in Cyprus on interest paid, provided the loan was made for the purpose of promoting development and in respect of investment allowances on capital expenditure for specific types of investments.

n) Yugoslavia

There are tax sparing credit provisions in respect of tax that would have been payable not reduced or waived under the legal provisions of either contracting State for tax incentives.