Cyprus and Saudi Arabia have concluded and signed a Double Taxation Avoidance Agreement (DTTA). The treaty will be confirmed and finalized within 2018 and will be effective from the 1st of January 2019.

The treaty is based on the OECD Model Tax Convention framework with some modifications. Regarding Saudi Arabia, the treaty covers the Zakat (religious obligation of Muslims) and the income tax (including the natural gas investment tax) and for Cyprus, it covers corporate and personal income tax, defence tax and capital gains tax.

Dividends

The withholding tax rate on dividends is set at 0%, as long as there is at least 25% participation by a tax resident company. In any other case the withholding tax rate on dividends is set at 5%.

Interest

The withholding tax rate on interest is set at 0%, as long as the recipient of the interest is the beneficial owner of the income.

Royalties

The withholding tax rate on royalties is set at 5% in relation to royalties paid for the right to use industrial, commercial or scientific equipment. For any other royalties the withholding tax rate is set at 8%, as long as the recipient of the royalties is the beneficial owner of the income.

Capital gains

Gains from the sale of shares in companies are taxed in the country where the company is located, as long as the participation is at least 25%.