23/09/2014 07:08
The negotiations between Cyprus and India for the revision of the double taxation avoidance agreement and the regulation of tax issues that emerged in the past year are still in progress, despite Cyprus’s ratification of the relative international convention on tax matters.
India and Cyprus had signed a double taxation avoidance agreement in 1994 but in November 2013 Indiaclassified Cyprus as a notified jurisdiction and suspended the tax benefits accruing from the agreement.
India claimed Cyprus’s failure to provide information requested by the tax authorities within the framework of the tax agreement.
According to Indian press reports, in recent months Cyprus has accepted a key condition put forward by India on effective exchange of information on tax avoiders.
According to the Cypriot High Commissioner to India Maria Michail, Cyprus informed New Delhi a few days ago that it ratified the Council of Europe-OECD (Organisation for Economic Cooperation and Development) Multilateral Convention on Administrative Assistance in Tax matters on 5 September.
“We have by now addressed all the Indian government’s conditions and concerns on the matter of effective exchange of information and we anticipate that the Indian government will now rescind the classification of Cyprus as a notified jurisdiction, with retrospective effect from November 1, 2013, as agreed,” Ms. Michail said.
She added that there was no response to an email sent to a representative of the Central Board of Direct Taxes on September 16.
A Finance Ministry officer told StockWatch that in late August they sent a letter to the Ministry of Finance of India stating the desire to resume talks and sign agreements to avoid double taxation, while it was stressed that Cyprus has signed an agreement to exchange information with the OECD.
The Indian press notes that there is probably another sticking point in the tax arrangement between the two countries. India and Cyprus are negotiating changes to their double taxation avoidance agreement (DTAA), with India insisting on the inclusion of a limitation of benefit (LOB) clause—an issue on which there has been no agreement so far.
Ms. Michail said the Cypriot government invited the Indian government a few months back to visit Cyprus for another round of talks for finalizing the DTAA.
“As far as the revision of the existing bilateral double taxation avoidance agreement is concerned, we are hopeful that the Indian government will soon send a delegation to Cyprus for another, and hopefully the final, round of talks to resolve the pending issues and finalize the revision, in a mutually beneficial way”, she said.
Cyprus, along with countries such as Mauritius, are among the countries that have signed an agreement with India, which allows capital gains arising from the sale of shares in India to be taxed in the country of residence of the shareholder.
India and Cyprus had signed a double taxation avoidance agreement in 1994 but in November 2013 Indiaclassified Cyprus as a notified jurisdiction and suspended the tax benefits accruing from the agreement.
India claimed Cyprus’s failure to provide information requested by the tax authorities within the framework of the tax agreement.
According to Indian press reports, in recent months Cyprus has accepted a key condition put forward by India on effective exchange of information on tax avoiders.
According to the Cypriot High Commissioner to India Maria Michail, Cyprus informed New Delhi a few days ago that it ratified the Council of Europe-OECD (Organisation for Economic Cooperation and Development) Multilateral Convention on Administrative Assistance in Tax matters on 5 September.
“We have by now addressed all the Indian government’s conditions and concerns on the matter of effective exchange of information and we anticipate that the Indian government will now rescind the classification of Cyprus as a notified jurisdiction, with retrospective effect from November 1, 2013, as agreed,” Ms. Michail said.
She added that there was no response to an email sent to a representative of the Central Board of Direct Taxes on September 16.
A Finance Ministry officer told StockWatch that in late August they sent a letter to the Ministry of Finance of India stating the desire to resume talks and sign agreements to avoid double taxation, while it was stressed that Cyprus has signed an agreement to exchange information with the OECD.
The Indian press notes that there is probably another sticking point in the tax arrangement between the two countries. India and Cyprus are negotiating changes to their double taxation avoidance agreement (DTAA), with India insisting on the inclusion of a limitation of benefit (LOB) clause—an issue on which there has been no agreement so far.
Ms. Michail said the Cypriot government invited the Indian government a few months back to visit Cyprus for another round of talks for finalizing the DTAA.
“As far as the revision of the existing bilateral double taxation avoidance agreement is concerned, we are hopeful that the Indian government will soon send a delegation to Cyprus for another, and hopefully the final, round of talks to resolve the pending issues and finalize the revision, in a mutually beneficial way”, she said.
Cyprus, along with countries such as Mauritius, are among the countries that have signed an agreement with India, which allows capital gains arising from the sale of shares in India to be taxed in the country of residence of the shareholder.
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