On 30 of December 2015, the Republic of Cyprus and the Federal Democratic Republic of Ethiopia signed a tax treaty for the avoidance of double taxation.
The treaty is based on the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention framework and has been concluded as a means to contribute to the expansion of trade and economic relations between the two countries.
According to the provisions of the treaty, the following withholding taxes apply:
Dividend payments: 5%
Interest payments: 5%
Royalty payments: 5%
Capital Gains tax:
Gains emerging from the disposal of immovable property are taxable in the country where the immovable property is situated.
Gains from the disposal of shares are taxable in the country of which the seller is located.
Additionally, a Permanent Establishment definition is included in the treaty, in line with the meaning provided in the OECD Model Tax convention. A building site, construction, installation projects, any supervisory activities in connection with such site of projects shall be acknowledged as a permanent establishment only if it exceeds 6 months.
The treaty will enter into force upon ratification. The provisions of the treaty will apply, in the case of Cyprus, from the 1
st of January following the date upon which the Convention enters into force, and for Ethiopia on or after the 8
th of July following the date upon which the Convention enters into force.
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