The income tax treaty between Cyprus and Jordan entered into force on 11 April 2022. The treaty, signed 17 December 2021, is the first of its kind between the two countries.
The treaty covers Cyprus income tax, corporate income tax, the special contribution for the Defence of the Republic, and capital gains tax. It covers Jordanian income tax.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 6 months within any 12-month period.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Article 22 (Activities in the Exclusive Economic Zone or on the Continental Shelf) provides that a permanent establishment will be deemed constituted when an enterprise of a Contracting State carries on activities in the exclusive economic zone or on the continental shelf in the other Contracting State in connection with the exploration or exploitation of the seabed or subsoil or their natural resources situated in that other State, if such activities are carried on for a period exceeding 30 days in the aggregate in any 12-month period. Substantially similar activities carried on by an associated enterprise in a Contracting State are considered in determining if the 30-day threshold is exceeded.
Article 22 also provides that gains derived by a resident of a Contracting State may be taxed by the other State if derived from the alienation of:
Both countries apply the credit method for the elimination of double taxation.
Article 29 (Entitlement to Benefits) provides that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty.
The treaty applies from 1 January 2023.