The income tax treaty between Cyprus and Ethiopia was signed 30 December 2015. The treaty is the first of its kind between the two countries.
The treaty covers Cypriot income tax, corporate income tax, special contribution for the Defense of the Republic, and capital gains tax. It covers Ethiopian tax on income and profit, and tax on income from mining, petroleum and agricultural activities.
Article 13 (Offshore Activities) includes the provision that a permanent establishment will be deemed constituted if an enterprise 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 days limit has been met, activities of an associated enterprise that are substantially the same will be considered.
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. A provision is also included for a tax sparing credit for tax that would otherwise be payable but has been reduced or exempted for a limited period of time in a Contracting State in accordance with the laws and regulations of that State aimed at promoting economic development.
The treaty will enter into force once the ratification instruments are exchanged. It will apply in Cyprus from 1 January of the year following its entry in to force, and in Ethiopia from 8 July next following the date of its entry into force.
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