Nicosia, Cyprus. Cyprus and Sweden on Friday signed a protocol updating their bilateral double taxation agreement, aligning the treaty with OECD international tax standards and strengthening cooperation on tax transparency and the exchange of information.
The protocol was signed by Finance Minister Makis Keravnos on behalf of the Republic of Cyprus and by Swedish Ambassador Martin Hagstrom on behalf of Sweden, according to a finance ministry statement.
Protocol updates 1988 tax convention
The finance ministry said the protocol amends the original 1988 Convention for the Avoidance of Double Taxation with respect to taxes on income.
It said the revised agreement incorporates the minimum standards of the OECD’s Base Erosion and Profit Shifting initiative, introduces provisions relating to bilateral tax treaties and includes mutually agreed wording governing the exchange of tax information.
Separate protocol agreed
According to the ministry, Sweden faced constitutional obstacles that complicated the implementation and entry into force of the Multilateral Instrument.
As a result, the two countries decided to conclude a separate protocol to introduce the relevant amendments.
The ministry said the objective of the Multilateral Instrument is to enable the automatic and rapid incorporation of internationally agreed BEPS measures into existing double taxation agreements.
Entry into force after ratification
The protocol will enter into force once both countries complete their respective domestic ratification procedures.
Government statement on impact
“The updating, maintenance and expansion of the existing network of double taxation avoidance agreements, which are of the highest economic and political importance, aims to further strengthen and attract foreign investment and promote Cyprus as an international business centre,” the finance ministry said in a statement.
It added that such agreements also help to “advance tax transparency, fairness and compliance in line with international standards”.