The income tax treaty between Bahrain and Cyprus entered into force on 26 April 2016. The treaty, signed 9 March 2015, is the first of its kind between the two countries.
The treaty covers Bahrain income tax, and Cypriot income tax, corporate income tax, the special contribution for the defence of the republic, and capital gains tax.
The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise of one Contracting State is directly engaged in the exploration for or production of crude oil or other natural hydrocarbons from the ground in the other State, or when refining crude oil in its facilities in the other State.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
The treaty applies from 1 January 2017.
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