The Government of the Kingdom of Bahrain and the Government of the Republic of Cyprus concluded an Agreement for the avoidance of double taxation with respect to taxes on income, based on the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital. The double taxation treaty between Cyprus and Bahrain will strengthen the economic and commercial relationships between the two countries.

The treaty was signed in Manama in March 2015 during the official visit of the President of the Republic of Cyprus, Nikos Anastasiades, to the Kingdom of Bahrain. The treaty entered into force on 26 April 2016 and it applies to individuals who are residents of Cyprus or Bahrain. The Agreement also applies to individuals who reside in both countries. According to article 2, of the Agreement, the Cyprus taxes include the income tax, the corporate income tax, the special contribution for the defence and the capital gains. The Bahrain tax includes ‘’The Oil Tax’’.

The treaty provides zero withholding tax on payments of dividends, interests and royalties. Regarding capital gains derived by a resident of a Contracting State from the alienation of immovable property and situated in the other Contracting State may be taxed in that other State. Additionally, gains from the alienation of movable property forming part of business assets of a permanent establishment which an entity of a Contracting State has in the other Contracting State, as well as, gains from the alienation of a permanent establishment, shall be taxed in that other State[1].

Cyprus is an international business and investment centre. The geographical location of Cyprus is ideal for establishing partnerships with business people based in Europe, Africa, Asia, Middle East and other regions. In addition, the well-established infrastructures urge business people to launch their investment projects in Cyprus. The team of Michael Chambers& Co. LLC is able to provide you with a professional legal support on tax planning. Our lawyers are committed to assisting you to achieve your business goals. If you wish to speak to one of our lawyers, then please contact us:

[1] Cyprus Tax Department, Agreement Between the Government of the Kingdom of Bahrain and the Government of the Republic of Cyprus for the Avoidance of Double Taxation with Respect to Taxes on Income,, retrieved on 5 June 2016.