The new agreement was signed by Finance Minister Harris Georgiades and British High Commission Matthew Kidd in Nicosia, Cyprus.
The new agreement will replace the existing double tax treaty between the two countries which was signed in June 1974 and entered into force in March 1975. The new tax treaty is waiting for ratification and is expected to enter into force as from 1st of January 2019.
The new treaty will contribute to further develop the economic relationship and to enhance the cooperation in tax matters between the two countries.
It based on the OECD Model Tax Convention framework and it applies to taxes on income and on gains from sale of movable or immovable property.
The Treaty covers the following areas in each of the two countries:
The new treaty provides the following:
Under the new treaty there is a limitation of benefits provision, which provides that no benefit will be granted in respect of an item of income or capital gain if it is reasonable to conclude that obtaining that benefit was the main purpose of the business that resulted directly or indirectly that benefit.
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