On 9 March 2015, officials from Bahrain and Cyprus signed an income tax treaty. The treaty 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 Defense 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.
Both countries 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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