Amendments to the Cyprus tax law to prevent tax abuse from black-listed jurisdictions

On 21 December 2021, amendments to the Income Tax Law and Special Defence Contribution Law were published for the introduction of legislative defensive tax measures that will apply in Cyprus in relation to jurisdictions included on the EU list of non-cooperative jurisdictions for tax purposes (commonly referred to as EU black-listed jurisdictions).

In accordance with the Law amendments, Cyprus will apply withholding tax on certain outbound payments of dividends, interest and royalties, if the recipient is a company in an EU black-listed jurisdiction, as follows:

• Dividends at the rate of 17% - The withholding tax does not apply in the case of dividend payments on shares listed on a recognised stock exchange.
• Interest at the rate of 30% - The withholding tax does not apply in the case of interest payments on securities listed on a recognised stock exchange or interest payments made by individuals.
• Royalties at the rate of 10% - The withholding tax does not apply in the case of royalty payments made by individuals.

The Law amendment will enter into force on 31 December 2022.