It is reported in the Indian financial press that Cyprus and
India will finalise the amendments to their double taxation
avoidance agreement in the next few weeks. The Indian High
Commissioner to Cyprus has said that a team from the Indian
ministry of finance is expected to visit Cyprus in the next few
days to carry forward the negotiations to finalise the revised
DTAA, and that the matter is being followed at the highest level in
the government of Cyprus. The existing DTAA between India and
Cyprus was signed in 1994, and it is understood that the amendments
will incorporate the provisions of Article 26 of the Organization
of Economic Cooperation and Development's model tax convention
relating to exchange of information.
The conclusion of the agreement will resolve differences between
the two countries' tax authorities that led to Cyprus being
declared a notified jurisdiction under Section 94A of the Indian
Income Tax Act of 1961, making it more cumbersome for Indian
taxpayers to claim deductions on transactions with entities based
in Cyprus, and increasing reporting requirements. Both Cyprus and
India have agreed that the classification of Cyprus as a notified
jurisdictional area will be rescinded with retrospective effect
from 1 November 2013, the date when the notification was first
issued. The rescission will remove bureaucratic obstacles and
reduce compliance costs.
According to Indian government estimates, Cyprus is the seventh
largest investor in India with cumulative investments of US$7.2
billion between April 2000 and December 2013.
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