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Corporate tax on international business companies

The following outline the main provisions of the Cyprus tax legislation and practice with regards to international business companies:

  • Any entity, including Cyprus international business companies, which is effectively managed and controlled in Cyprus, is subject to tax at the rate of 12.5 per cent on its worldwide taxable profits, provided that its beneficial owners are non-Cypriot-resident. Entities, including Cyprus registered companies, which are not effectively managed and controlled in Cyprus are not normally subject to taxation in Cyprus.
  • Ship owning companies with ships flying the Cyprus flag and operating in international waters are totally tax exempt.
  • All international business and shipping entities are not subject to any capital gains tax except on profit on the disposal of immovable property held in Cyprus.
  • Financial statements of companies, branches and partnerships are prepared following the principles set out in the international accounting standards.
  • Expenses deductible from income are expenses incurred wholly and exclusively for the production of the income.
  • Profits from sale of titles (including shares) are not taxable under Cyprus income tax.
  • Dividend income from share participations outside Cyprus, are in certain cases exempt from tax.
  • Royalty income is taxed at an effective tax rate of 2.5%.