Cyprus and India closer to resolving double-tax dispute
NICOSIA and New Delhi are inching closer to putting their double taxation avoidance agreement (DTAA) back on track, financial sources said yesterday.
The sources, familiar with the subject but speaking on condition of anonymity, played down reports from India that Cyprus was unlikely to get off the ‘blacklist’ any time soon.
The Indian Express website yesterday quoted a government official there as saying: “Cyprus has been requesting to be put off the notified jurisdictional area list on the grounds that it has started sharing information with India now. Though the information on specific requests by Indian tax authorities has started flowing in, a decision on taking it off the list would happen only when there is a specific commitment from them,”
The two countries signed a DTAA in 1994, but in November last year the Asian nation classified Cyprus as a notified jurisdictional area and suspended the tax benefits.
Following the notification, all payments made to Cyprus attracted a 30 per cent withholding tax and Indian entities receiving money from here were required to disclose the source of funds.
India said it took the decision because Cyprus was not providing information requested by tax authorities under the agreement.
The government in Nicosia scrambled to put out the fires, dispatching a delegation to New Delhi later that same month in a bid to begin smoothing out the differences.
According to India’s department of industrial policy and promotion, Cyprus is the seventh largest source of foreign direct investment in India, pumping $557m in 2013-2014 while $7.44bn was transferred between April 2000 and March 2014.
The Cyprus Mail’s source said that, to his knowledge, Cyprus has provided all the tax information and documents requested.
He said the Cypriot side has asked for a follow-up meeting with Indian officials to hammer out the final details of a new tax agreement.
The meeting could take place either in Nicosia or New Delhi; the Cypriots are now waiting for the Indian side to set a date, the source added.
He attributed any delays to the recent change in government in India.
