An amended Protocol on the Avoidance of Double Taxation and Prevention of Fiscal Evasion, with respect to taxes on both Income and Capital has been signed recently between Cyprus and South Africa.
The Protocol replaces Article 10 (Dividends) of the Double Tax Treaty. Pursuant to the Protocol signed, dividends paid by a company resident in one contracting State to a company resident in the other contracting State shall be taxed in the latter.
With regards to withholding tax (“WHT”) the maximum rate of tax for dividends will be 5% in the case where the beneficial owner of the dividend holds at least 10% of the capital in the dividend paying company and 10% WHT shall be effective on the gross amount of dividends in all other cases. Application of these limitations will be mutually agreed by the two contracting States.
Article 26 (Exchange of Information) of the Treaty is amended by the Protocol to further clarify the level of information that is expected to be exchanged between the two States. Paragraph 1 of Article 26 has been amended clarifying that the States “will exchange as much information as is foreseeably relevant for carrying out the provisions of the Agreement” as opposed to “as much information is necessary”.
This Protocol paves the way for growth and enhanced business opportunities between both countries and is welcomed by Cyprus.