Latest developments on the envisaged amendments to the Agreement between Cyprus and India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income and on capital.
Recent updates from the Indian press reveal that considerable attention is attributed towards the conclusion of a new revised and modernised Tax Treaty between the Republic of Cyprus and the Republic of India. This followed the announcement of the Ministry of Foreign Affairs of Cyprus that the two governments have come to an agreement to finalise the negotiations for the revision of the Treaty in the very near future.
India and Cyprus, as both ex-British colonies and currently members of the Commonwealth of Nations, have always been cooperating in subjects of trade and investments, with Cyprus being among the largest investors in India.
The existing DTT between India and Cyprus was concluded in 1994 and it is in force since then. The principal purpose of the amendments to the Treaty is said to be the incorporation of the provisions of Article 26 of the OECD’s model tax convention in relation to the exchange of information between the two countries.
The decision for the revision of the DTT has been taken in light of the last year’s declaration of Cyprus, by the Indian tax authorities, as a notified jurisdictional area under Section 94A of the Indian Income Tax Act of 1961. This unilateral movement has essentially increased reporting and disclosing requirements of the Indian taxpayers when claiming deductions on transactions with Cypriot entities, pursuant to the DTT between the two countries.
Both countries have agreed that upon signing the revised DTT this classification of Cyprus as a notified jurisdiction will be revoked with retroactive effect from 1 November 2013, when the notification was first issued.
It is expected that decisive steps are going to be taken now that the Indian Elections have been concluded.
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