The income tax treaty between Barbados and Cyprus was signed on 3 May 2017. The treaty is the first of its kind between the two countries.
The treaty covers Barbados income tax and corporation tax, and covers Cyprus income tax, corporate income tax, the special contribution for the defense of the Republic, and capital gains tax.
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.
Article 20 (Offshore Activities) provides that a permanent establishment will be deemed constituted if a resident of one Contracting State carries on offshore activities in connection with the exploration or exploitation of the seabed or subsoil or their natural resources situated in the other State, if such activities continue for a period or periods aggregating more than 30 days in any 12-month period. In determining if the 30-day period has been exceeded, activities of an associated enterprise that are substantially the same will be included.
Article 20 also provides that gains derived by a resident of one Contracting State may be taxed by the other State if derived from the alienation of exploration or exploitation rights, property situated in the other State used in connection with exploration or exploitation, and shares deriving the greater part of their value directly or indirectly from such rights or property.
Both jurisdictions apply the credit method for the elimination of double taxation.
The treaty will enter into force once the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.
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