Indo-Cyprus tax treaty to boost economic ties: Arjun Meghwal
The Dollar Business Bureau
Minister of State for Finance, Arjun Ram Meghwal shared that the long-pending issue of a notified jurisdiction area between India and Cyprus had been revised with the revisions within the double taxation avoidance agreement. The minister of state referred to India and Cyprus’ double tax avoidance agreement that was signed in 2016, while addressing industry heads at the India-Cyprus business session in New Delhi.
The agreement paved way for additional investment from Cyprus into India in the areas of manufacturing and other sectors. The World Bank has classified Cyprus as a high-income economy, and was included by the IMF in its list of advanced economies in 2001. The country that has adopted Euro as its official currency, is 8th largest in terms of FDI inflows into India.
The Cyprus President Nicos Anastasiades who shared the dais with the minister pitched that Cyprus is a fast growing economy and investors were welcome in various sectors. The President is anticipated to sign bilateral agreements in his 5-day official trip.
The revised tax treaty covers taxes on income, and levy of taxes on capital has been removed. Among the general definition, the agreement mentions the term company to mean any entity that is treated as a body for corporates. The earlier agreement between India and Cyprus in 1994 provided the countries to exchange information for the prevention of fraud and evasion of taxes. The treaty looked into streams of income that were taxed at a Nil or a concessional rate in India.
But the Cabinet approved a revision within the treaty on August 2016. Capital gains would be taxed in India for entities residing in Cyprus to allow for a double taxation relief. It was also agreed that India would have the right to tax capital gains arising in India. The Central Bureau of Direct Taxes had listed out a detailed list of the revisions through a press release.
The Cyprus tax agreement was one among the four that India either signed or revised in 2016. The other three were signed with South Korea, Mauritius and Singapore.