Tax Incentives
A favourable tax framework was introduced for companies registered in Cyprus, especially those with foreign interest (non-resident shareholders):
- Corporation tax rate currently at only 12.5% on the taxable income of the business.
- No withholding tax on dividends distribution regarding ‘non-resident’ shareholders.
- No tax imposed on dividend income.
- No tax imposed on profits from the disposal of securities. Securities means shares, debentures, government bonds, founder’s shares or other shares of companies or legal entities, which have been incorporated in the Republic of Cyprus or abroad.
- Exemption from tax on interest income (other than interest income deriving in the ordinary course of business).
‘Non-resident’ individuals are taxed on the income which is received or derived from sources in the Republic of Cyprus only, and yet again with the following important exemptions:
- No tax imposed on dividend income.
- No tax imposed on profits from the disposal of securities.
- No tax on the whole of interest income (other than interest income deriving in the ordinary course of business).
An individual may be considered as ‘Resident in Cyprus’ only if he is present in the Republic for period which exceeds 183 days in total in a tax year