Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: ACCOUNTING STANDARDS :: due date for vat payment :: articles on VAT and GST in India :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: form 3cd :: cpt :: Central Excise rule to resale the machines to a new company :: TDS :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4%
 
 
« General »
 India's tax department signs 3 advance pricing agreements
 Income Tax Dept to probe deeper into suspicious bank accounts
 Modi may lower taxes to spur demand in his budget sops
 Tax breather for foreign investors: All you need to know
 What the increase in tax collections does not tell us about Indian economy post demonetisation
 India’s crazy retrospective tax on foreign funds will tarnish country’s reputation
 How tax related, PAN grievances can be resolved through E-Nivaran
 Tackling income tax exemptions for equities and agriculture
 Amfi wants tax benefits for retirement plans
 Top five factors which could chart market direction in the coming week
 Tax rate hikes boost shadow economy

Investments via Cyprus to attract capital gains tax
August, 25th 2016

The Union cabinet on Wednesday approved the revised double taxation avoidance agreement (DTAA) with Cyprus which will help close gaps and enable Indian authorities to tax capital gains in the country for investments originating in the Mediterranean island nation.

The move follows the recent amendment of DTAA with Mauritius. As in case of Mauritius, the treaty with Cyprus had provided for residence-based taxation of capital gains.

"With the revision of the treaty now approved by the cabinet, capital gains will be taxed in India for entities resident in Cyprus, subject to double tax relief. In other words, India will have the right to tax capital gains arising in India," according to a government statement.

Since assuming power in May 2014, the NDA government has taken several steps to clamp down on tax evasion, round-tripping of funds and had reworked the treaty with Mauritius, which had been pending for nearly two decades. The statement said the provisions in the earlier treaty for residence-based taxation were leading to distortion of financial and real investment flows by artificial diversion of various investments from their actual countries of origin, for avoiding tax. "As in the case of Mauritius, this amendment will deter such activities. Negotiations with Singapore are also under way for similar changes," the statement said. Talks are on to revise the India-Singapore tax treaty.

India had put Cyprus on a blacklist for failing to share information on tax evasion. With the revision of the treaty, India is expected to remove Cyprus from that list, which will provide relief to investors from that country who had seen increase in compliance costs, tax consultants said.

"This is the best possible solution for those who have made investments through Cyprus as well as balancing the need to have similar DTAA provisions with other countries," said S P Singh, senior director at consultancy firm Deloitte Haskins and Sells.

Tax authorities now need to revise a similar treaty with Netherlands to ensure that all gaps are closed and companies pay tax at least in one jurisdiction. In the case of the Netherlands, if an asset is sold to a foreign buyer, the tax treaty allows for capital gains tax exemption.

Being a European country, several entities prefer to route funds through the Netherlands given the DTAA and the legal and tax framework, tax consultants say.

The proposed DTAA with Cyprus will align the applicable provisions with the policy followed by India and the revised international standards.

It will also prevent the abuse of beneficial provisions of the DTAA that can distort financial and real investment flows and create challenges for tax collection.

The proposed DTAA provides for source based taxation of capital gains on transfer of shares, instead of residence based taxation as provided in the existing DTAA.

Indian tax authorities will be able to levy capital gains tax on sale of shares by firms based in Cyprus after April 1, 2017, as there is a grand fathering provision in the agreement.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multi-level Marketing MLM India Affiliate Marketing Affiliate Marketing Software MLM Software MLM Solutions Multi level marketing solutions MLM Servi

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions