Permanent Establishment

Bahrain: The definition of “permanent establishment” also includes a building site or construction or installation project or any supervisory activities in connection with such site or project constitutes a permanent establishment only if it lasts more than 12 months (definition in compliance with OECD   model).

Ethiopia: The definition of “permanent establishment” also includes a building site or construction or installation project or any supervisory activities in connection with such site or project constitutes a permanent establishment only if it lasts more than 6 months (definition in compliance with OECD   model).

Dividends

Bahrain: The withholding tax rate on dividend payments is set at 0%.

Ethiopia: The withholding tax rate on dividend payments is set at 5%.

Interest

Bahrain: The withholding tax rate on interest is set at 0%.

Ethiopia: The withholding tax rate on dividend payments is set at 5%.

Royalties

Bahrain: The withholding tax rate on royalties is set at 0%.

Ethiopia: The withholding tax rate on dividend payments is set at 5%.

Gains

The DTAAs follow the OECD model in relation to gains arising from disposal of shares and other movable   or immovable properties. Capital gains derived by a resident of a Contracting State from the alienation of immovable property situated in the other Contracting State may be taxed in that other State. Other capital gains from the alienation of any other property are taxable only in the residence State.

Additional important notes for tax planning

1.    Cyprus unilaterally does not withhold taxes on outbound dividends and interest payments.
2.    The continuously expanded network of DTAAs Cyprus has signed off and ratified and the application of the EU Directives (Parent-Subsidiary and Interest – Royalties) increase international investors’ options for channeling investments in the most tax efficient way.
3.    The Double Tax Avoidance Agreement between Cyprus and Switzerland which was signed on 25 July 2014 was entered into force on 1January 2016 following the ratification of the bilateral agreement by the two countries.
4.    Cyprus has concluded and signed Protocol amending the Double Taxation Agreement (DTA) with Ukraine on 11 December 2015 and was published in the Official Gazette of the Republic on 23 December 2015. The provisions of the signed protocol will come into effect as of 1st January 2019 on the date when the existing Convention will expire.