Tuesday, 12 July, 2016

Cyprus and India Successfully Amend Double Tax Treaty

On 29 June 2016, the governments of Cyprus and India finalised amendments to the double tax treaty between the two countries.

Once the new treaty comes into force, India will remove Cyprus from its list of ‘notified jurisdictional areas’, countries which do not exchange information effectively with India. The Indian authorities have agreed to backdate Cyprus’s new status to 1 November 2013, benefitting Cyprus residents affected by the treaty since this date.

Along with information sharing, a key provision of the amended treaty is source-based taxation on gains from the disposal of shares. This is due to come into force on 1 April 2017, applying to all investments made after this date. Any investments made before 1 April will be subject to the previous version of the treaty and taxed according to the seller’s residence.

Cyprus and India have long enjoyed close relations, both politically and economically. Cyprus is one of the largest foreign investors in India, mainly through the real estate and construction sectors. Meanwhile, Indian exports to Cyprus are valued at around US$50 million each year (Ministry of Commerce & Industry, Government of India). The success of this latest negotiation aims to build on existing ties between Cyprus and India, while further developing their global financial positions.

 

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