A new tax treaty signed among Egypt and Cyprus on 8th of October 2019 and published on 25th of October 2019. Once becomes effective the pre-existing tax treaty which has been in effect since 1996 will be replaced.
Currently, under the Egyptian tax law, Egypt levies withholding tax (WHT) at a rate of 10% on dividends and 20% on interest and royalties.
The provision of the new tax treaty are that qualifying Cyprus tax residents who earn income sourced from Egypt will enjoy reduced WHT rates as detailed below:
- Dividends: WHT of 5% if the beneficial owner is a company which holds directly 20% of the issued share capital of the company which paying the dividends for a continues period of 365 days. The date of the payment of the dividends is included. For all other cases a WHT of 10% is applicable.
- Interest: WHT of 10% if the beneficial owner is the recipient of such interest.
- Royalties: WHT of 10% if the beneficial owner is the recipient of such royalties