Cyprus and Sweden both signed a new tax protocol on the third of July in Nicosia, which is amending the Double Taxation Convention on income taxes.
Makis Keravnos, the Minister of Finance, signed the new protocol on behalf of the Republic of Cyprus, while Martin Hagström, Sweden’s Ambassador to Cyprus, signed on behalf of Sweden.
The signed protocol amends the original Double Taxation Convention, which was signed in London on the 25th of October in 1988.
The new protocol incorporates the minimum requirements of the Base Erosion and Profit Shifting (BEPS) framework of the Organisation for Economic Cooperation and Development.
In addition to this, the agreement includes arrangements for bilateral tax treaties, with provisions for the exchange of tax information, agreed on by both parties.
Sweden’s constitutional issues, which made it difficult to implement the Multilateral Convention on the Application of BEPS Measures to Double Taxation Avoidance Agreements, proved the conclusion of the protocol necessary.
The agreement will come into play after the completion of the internal ratification procedures by both contracting parties.
The Ministry of Finance said that the updating and expansion of the network of double taxation avoidance agreements aims to enhance the attraction of foreign investment, and promote Cyprus as an international business hub, strengthening tax transparency and compliance with international standards.