A Protocol amending the Double Tax Treaty between Cyprus and South Africa was signed on 1 April 2015 amending the 1997 double tax treaty between the two countries. The protocol was ratified on 18 September 2015 by South Africa. The Double Tax Treaty is based on the OECD Model Convention for the Avoidance of Double Taxation on income and on Capital.
Following the new amendments of the updated protocol, a 5% withholding tax on dividends has been introduced, which is paid, if the beneficial owner of the dividends is a company holding at least 10% of the capital of the company which is paying the dividend. In all other cases, the rate is 10%. The new provisions apply retrospectively as from 1 April 2012 when South Africa introduced the taxation of dividends in the hands of the shareholders.
The ratification of the DTT is providing a favorable tax framework for investors, enhances the exchange of information between the two countries, and is expected to strengthen the commercial relations between the two countries.
Click here to download the Protocol.