After Mauritius, India enters into Double Taxation Agreement with Cyprus
Last month, a senior Indian government official said India hopes to revise tax treaty with Cyprus in line with Mauritius by the year-end.
India and Cyprus have successfully completed the negotiation on the Double Taxation Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income, said Cyprus Ministry of Finance in an official statement.
The negotiation terms said that both Cyprus and India will contribute towards the development of trade and strengthen economic links among them as well as with other countries.
As per the agreement, Indian authorities will proceed with retrospectively rescinding the classification of Cyprus in the 'Notified Jurisdictional Area' as from 1st of November 2013.
"The agreement reached provides for source based taxation for gains from the alienation of shares; investments undertaken prior to April 1st 2017 are grandfathered with the view that taxation of disposal of such shares at any future date remains with the contracting state of residence of the seller", said the official statement.
As per a PTI report, earlier this month, Cyprus had said it is "very close" to revising the bilateral tax treaty with India as the island nation has accepted "in principle" proposals made by the Indian side on taxing capital gains.
"Upgrading and expanding the network of Double Tax Conventions, is of high economic and political importance and aims to further strengthen and attract foreign investment in Cyprus as its standing an international business center is elevated", the ministry said.
As part of larger efforts to curb illicit fund flows, Indian government has been working on revising tax treaties with various countries, including Cyprus and Singapore. Last month, India announced revising taxation agreement with Mauritius -- a major source of FDI -- that would allow levy of capital gains tax on investments coming from that nation.
Further, as per the data available with the Department of Industrial Policy and Promotion, from April 2000 till March 2016, India has received foreign direct investment worth Rs 42,680 crore from Cyprus.
Last month, a senior Indian government official said India hopes to revise tax treaty with Cyprus in line with Mauritius by the year-end.
(With PTI inputs)
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