A treaty for avoidance of double taxation (the “Treaty”) between Cyprus and Oman was signed on 8 December 2024 and was published in the Official Gazette on 13 December 2024. Its provisions will enter into effect on 1 January of the year following the year in which the ratification process is completed by both countries.
The Treaty is based on the latest version of the OECD Model Convention for the avoidance of double taxation and incorporates all the minimum standards of the Base Erosion and Profit Shifting (BEPS) action plan, including exchange of information, mutual agreement procedure, and principal purpose test.
The Treaty provides for withholding tax at the following rates:
- Dividends: 0%
- Interest: 0%
- Royalties: 8%
NOTE: According to the domestic Cypriot legislation, no withholding tax is levied on payments of interest or dividends made to non-Cypriot resident physical or corporate persons, regardless of the existence or provisions of any double tax treaties. Furthermore, no withholding tax is levied on royalties arising from sources outside Cyprus.
It is worth mentioning that gains derived by a resident of one of the two countries from the alienation of shares in property-rich entities (deriving more than 50% of their value directly from immovable property situated in the other country) shall be subject to tax only in the country of which the alienator is tax resident.
The Treaty is expected to further strengthen and develop the economic and commercial relationships between Cyprus and Oman, and to enhance their cooperation in tax matters.
