Cyprus – Kazakhstan Double Tax Treaty

Cyprus – Kazakhstan Double Tax Treaty

The government of the Republic of Cyprus and the Government of the Republic of Kazakhstan have signed an agreement on 15^th May 2019, effective as from 1st January 2020, for the avoidance of Cyprus – Kazakhstan double taxation and the prevention of fiscal evasion with respect to taxes on income.

Taxes Covered

In case of Cyprus – ‘’Cyprus Tax’’

1. The income tax
2. Corporate tax
3. Defence tax
4. Capital gains tax

In case of Kazakhstan – ‘’ Kazakhstan Tax’’

1. The Corporate tax
2. The individual income tax

Resident (Article 4)

1. Resident of a contracting state means any person who, under the law of that state, is liable to taxation therein by reason of his domicile, place of registration or incorporation, residence, place of management or any other criterion of a similar nature and also include that State and any political subdivision or local authorities.

If an individual is a resident of both contracting states, then his status shall be determined by his permanent home or where his personal and economic relations are closer or the habitual abode or where he is a national.

Where a person other than individual is a resident of both contracting states, then it shall be deemed to be a resident of the contracting state in which its place of effective management is situated.

Permanent Establishment (Article 5)

The term ‘’permanent establishment’’ means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

The term “permanent establishment” includes specifically:

1. a) place of management;
2. b) branch;
3. c) office;
4. d) factory;
5. e) workshop;
6. f) any place for extracting natural resources.
7. g) a building or construction site that exists for more than 6 months.
8. h) the furnishing of services through employees or other personnel engaged by the resident for such purpose, but only where activities of that nature continue for a period or periods aggregating more than 183 days within any 12- month period

Main sources of Income

Immovable Property Tax (Article 6)

Income from immovable property may be taxed in the State in which such property is situated.

Applies to income derived from the direct use, letting, or use in any other form of immovable property.

Applies to income from immovable property of an enterprise.

Business Profits (Article 7)

The profits of an enterprise of a contracting state shall be taxable only in that state unless the enterprise carries on business in that other contracting state through a permanent establishment situated therein.

If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxes in the other state but only so much of them as is attributable to that permanent establishment.

Shipping and Air Transport (Article 8)

Profits from the operation of ships and aircrafts in international traffic shall be taxable only in the State in which the place of effective management is situated.

Dividends (Article 10)

Dividends paid by a company which is a resident of a contracting state to a resident of the other contracting state may taxed in that other state.

However, such dividends may also be taxed in the state of which the company paying the dividends is a resident and according to the laws of that state at a rate not exceeding 5% on gross amount if the UBO is a company which holds directly at least 10% of the capital of the company paying the dividends and 15% in any other case.

Interest (Article 11)

Interest arising in a contracting state and paid to a resident of the other contracting state shall be taxed only in the other contracting state.

However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that Contracting State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed: – 10 % of the gross amount of interest.

Royalties (Article 12)

Royalties arising in a contracting state and paid to a resident of the other contracting state shall be taxable only in that other state.

However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that Contracting State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed: 10 % of the gross amount of such royalties.

Capital Gains (Article 13)

Gains earned by a resident of a Contracting State from the sale of Immovable property situated in the other State may be taxed in the other state.

Director fees (Article 15)

Director fees and other similar payments derived by a resident of a contracting state in his capacity as a member of the board of directors of a company which is a resident of the other contracting state may be taxed in that other state.

Artistes and Sportsmen (Article 16)

Income derived by public entertainers from their personal activities as such may be taxed in the contacting State in which these activities are exercised.

Pension (Article 17)

Pensions and annuities received by a resident of a Contracting State from the other State shall only be taxable in the first mentioned State.

Mutual Agreement Procedure (Article 25)

Where a person considers that the actions of one or both of the contracting states result or will result for him in taxation not with the provisions of this convention, he may, irrespective of the remedies provided by the domestic law of those states, present his case to the competent authority the contracting state which he is a resident.