Cyprus Bets on Modi Government, Tourism to Boost Bilateral Ties
New Delhi: Keen to further boost bilateral ties with India under the incoming government led by Narendra Modi, Cyprus is looking to bolster tourism activities as well as make the island nation a shooting destination for Indian film makers.
Cyprus, the seventh largest source of FDI (foreign direct investment) into the country, is also pinning hopes on the new Indian regime to sort out tax issues which has created “immense obstacles” for investment activities between the two sides.
Striking an optimistic note, a Cyprus Foreign Ministry spokesperson said that a visit to India by the country’s President Nicos Anastasiades would help in creating a new atmosphere.
Emphasising that Cyprus and India have traditionally had close ties, the official said the island nation was looking forward to the new government in New Delhi so that bilateral ties can be further enhanced and strengthened.
“The areas of trade, investments and commerce remain of primary importance, while at the same time we are looking to boost tourism in both directions,” the spokesperson told PTI.
“In addition, Cyprus being a ‘natural studio’ is trying to establish itself as a shooting destination for Indian film productions, which in itself will enhance tourism and cultural relations.”
Many Indian films have been shot in Cyprus, known for its scenic beaches and natural beauty.
“… a visit by the President of the Republic of Cyprus, Nicos Anastasiades, to India, can do a lot to create a new atmosphere, which will be conducive in the promotion of our relations and the opening of new areas and avenues of fruitful co-operation,” the spokesperson said.
India received FDI worth $557 million from Cyprus in the 2013-14 period, according to latest official figures. The same stood at $490 million during financial year 2012-13.
However, late last year Indian government had put the investments coming from Cyprus under tax lens, a move which the island nation said was creating immense obstacles for investment activities between them.
The move was a part of efforts to curb possible tax evasion by entities through Cyprus.
Discussions have taken place between the two sides on the issues while Cyprus expects to sort out the matter by closely co-operating with the new Indian government.
Narendra Modi is to set oath as Prime Minister on May 26.
In November 2013, the Finance Ministry had announced classifying Cyprus as a notified jurisdictional area since the island nation has not been providing information requested by tax authorities under exchange of information provisions of the double taxation avoidance pact.
With the notification, all payments made to Cyprus would attract 30 per cent withholding tax and Indian entities receiving money from there will be required to disclose the source of funds. The transactions may also be covered by transfer pricing regulations.
“There are no grounds whatsoever to maintain the notification of Cyprus, which has created immense obstacles and uncertainty in relation to investments and business exchanges for both our countries, and undeniably has cast a shadow over the historically excellent state of our bilateral relations,” the Cyprus Foreign Ministry spokesperson said.
As per Cyprus, an agreement has been reached on “nearly all the provisions of a revised Double Taxation Avoidance Agreement (DTAA)” with India.
“The Cypriot side has extended an invitation to the Indian side to have another round of consultations in Cyprus, aimed at finalising the revised text and ensuring that the revised treaty will be in line with international standards and mutually beneficial,” the spokesperson noted.
“We do hope that once the new government takes over in New Delhi, the date for a new round of consultations will be set.”
India and Cyprus had entered into an agreement for avoidance of double taxation of income and prevention of fiscal evasion which is in force since December 1994.
Noting that the notification was a “unilateral decision” of the Indian government, the official said since then there have been fruitful meetings between the two sides.
“The much needed dialogue between the respective authorities has been re-established, the Indian authorities have already conveyed clarifications on their pending requests to the Cypriot authorities, and the Cypriot authorities have replied to these pending requests,” the spokesperson said.