The Cypriot Ministry of Finance has submitted two tax bills to Parliament proposing anti-tax abuse measures in line with recent EU Country-Specific Recommendations for Cyprus and the EU guidelines for defensive tax measures to be adopted by EU Member States towards EU blacklisted jurisdictions.
They propose:
- the introduction (or expansion) of withholding tax on payments of passive interest, royalties and dividends to companies in EU blacklist jurisdictions; and
- the introduction of an incorporation test for tax residence for companies that are not tax resident elsewhere in the world.
These measures are proposed to take effect on 1 July 2021, but both bills need follow the legislative process and may therefore change before they enter into force.
