Double Tax Treaty between Cyprus and Iran

PUBLICATIONS / Articles / 2017 / Double Tax Treaty between Cyprus and Iran
On the 4th August 2015, Cyprus and the Islamic Republic of Iran signed a Double Taxation Treaty (DTT). The provisions of the treaty follow the OECD Model Tax Convention, which paved the way for increased trade and investment between the two countries.

The ratification procedures were completed early in 2017 and as a result the DTT entered into force in March 2017 and will come into effect from the 1st January 2018.
Taxes covered:
In the case of the Islamic Republic of Iran, the double tax treaty will apply to income tax, whilst for the case of Cyprus it will apply to income tax, corporate income tax, special contribution for defense and capital gains tax.
A 5% withholding tax on dividends paid is applicable if the beneficial owner of the dividend is a company (other than a partnership) holding a minimum of 25% of the capital of the dividend-paying company. In all other cases, 10% withholding tax on dividends is to be paid.

Capital Gains:
Gains of a resident of one state arising from the disposal of immovable property situated in the other state may be taxed in that other state (where the property is located).
The withholding tax rate on interest is not to exceed 5% of the gross amount, provided that the recipient is the beneficial owner of the interest. It should be noted that Cyprus does not levy withholding tax on interest currently.
The treaty provides for a 6% withholding tax rate on the gross amount of royalties, again on the grounds that the recipient is the beneficial owner of the royalties.


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