The first income tax treaty between Cyprus and Vietnam entered into force on 1 June 2026, introducing withholding tax rates on dividends, interest, and royalties, with provisions applying from 1 January 2027.
The income tax treaty between Cyprus and Vietnam will enter into force on 1 June 2026.
Signed on 15 December 2025, it is the first such treaty between the two countries. The Agreement is intended to enhance and expand trade and economic cooperation between the two countries by ensuring equitable tax treatment and reducing opportunities for tax evasion and avoidance. It also provides a clear framework for the taxation of cross-border transactions, offering greater certainty and stability for investors.
The treaty covers a range of taxes in each jurisdiction. On the Cyprus side, these include income tax, corporate income tax, the special contribution for the Defence of the Republic, and capital gains tax. In Vietnam, the treaty covers personal income tax, business income tax, and the surcharge on petroleum income tax.
Under the treaty, dividends are subject to a withholding tax rate of 5% where the beneficial owner is a company that directly owns at least 70% of the paying company’s capital or has invested at least USD 10 million in the other contracting state. A 10% rate applies in all other cases. Withholding tax on both interest and royalties is set at 10%.
The provisions of the tax treaty apply from 1 January 2027.
