Cyprus and Iceland have signed a double taxation agreement based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital, the Cypriot Finance Ministry said in a statement on Friday. By signing this agreement both countries aim to strengthen their trade and economic relations. Double taxation treaties are credited the world over as being vital to making a jurisdiction more attractive, more accessible, and more transparent; none can refute the paramount place DTTs hold in encouraging investment and collaboration between two states
“Updating, maintaining existing and signing new double taxation treaties is part of the drive to enhance and attract foreign investments, as well as of promoting Cyprus as an international business hub,” the statement also said. According to the agreement, the deduction method (credit method) is applied in order to avoid double taxation. Among others, the Treaty’s main highlights are twofold. Dividend Payments and Royalty payments will be taxed both at 5%. Furthermore, a withholding tax shall be applied.
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