Cyprus finance Ministry to hold talks with India over tax treaty

In an attempt to restore normality, the Cyprus’ ministry of finance, in the wake of the Indian government unilaterally notifying Cyprus as a 'notified jurisdictional area' (NJA) on November 1, has issued formal release clarifying that the tax treaty between the two countries has not been terminated. The finance Ministry seeking to allay fears of those investing in India via the Mediterranean island nation, has issued this release and has also committed itself to finalizing the 'long pending review' of the India-Cyprus tax treaty. Following the Indian government’s notification, all payments made to Cyprus will attract 30% withholding tax and will include higher disclosure requirements and applicability of transfer pricing provisions among other things.

Nevertheless, Cyprus’ finance ministry as a damage control measure in its formal press release has underlined the excellent level of political relations it shares with India and its commitment to uphold the implementation of its international agreements. Further, the release also underscores that consultations between competent authorities of the two countries will take place in November itself.

Cyprus ranks seventh on the list of countries investing in India. From April 2000 to August 2013, Cyrus has nearly invested Rs 33,836 crore in India. However, India exercising its legislative powers for promoting transparency and preventing harmful tax competition took a tough stance of notifying Cyprus as a non-cooperative tax jurisdiction with immediate effect.