**NICOSIA** – In a move poised to significantly bolster economic and political relations, Cyprus and Vietnam have formally cemented an agreement designed to prevent the imposition of taxes twice on the same income and to thwart tax evasion. The accord, signed on Monday at the Cypriot Ministry of Finance, was hailed by officials from both nations as a crucial step towards fostering greater cross-border trade, investment, and a more predictable business environment.
The signing ceremony saw the participation of Makis Keravnos, Cyprus's Minister of Finance, and Cao Anh Tuan, Vietnam's Deputy Minister of Finance. This pivotal agreement arrives at a noteworthy juncture, as 2025 is set to commemorate five decades of established diplomatic relations between the two countries. The pact's primary objective is to provide a clear and stable legal framework for individuals and entities conducting business or holding assets across the two jurisdictions. As Minister Keravnos articulated, the agreement furnishes companies, organisations, and individuals with "clear rules on how their income and capital gains will be taxed," thereby mitigating uncertainty and fostering confidence.
The impetus behind this accord stems from a mutual desire to deepen existing economic ties. Bilateral trade between Cyprus and Vietnam has already demonstrated a robust trajectory, reaching $111.6 million. Furthermore, Cyprus has established a significant presence in the Vietnamese market, boasting 28 investment projects with a cumulative registered capital approaching $470 million. These Cypriot investments are predominantly channelled into key sectors such as real estate, manufacturing, and agriculture, underscoring the strategic importance of Vietnam as an investment destination. While Vietnamese investment in Cyprus is presently on a gradual ascent, the new tax agreement is anticipated to accelerate this trend.
Vietnam, which has proactively pursued similar agreements globally, has now entered into 81 such accords. Its participation in 19 free trade agreements, including the comprehensive EU-Vietnam Free Trade Agreement, further illustrates its commitment to integrating into the global economy and providing a conducive environment for international commerce. The newly signed double taxation agreement with Cyprus aligns perfectly with this strategy, establishing a transparent and stable legal framework that adheres to international standards, as affirmed by Deputy Minister Tuan.
The implications of this agreement are far-reaching. By eliminating the prospect of double taxation, it effectively reduces the financial burden and complexity for businesses operating between Cyprus and Vietnam. This clarity is expected to act as a significant catalyst, encouraging a greater volume of trade and stimulating increased investment flows in both directions. Moreover, the pact signifies a deepening of cooperation on tax matters, paving the way for enhanced information exchange and mutual assistance between the fiscal authorities of both nations. Ultimately, the agreement is designed to create a more secure and attractive landscape for businesses, thereby strengthening the overall economic partnership between Cyprus and Vietnam and laying a more solid foundation for future collaboration.