IN a
major policy decision, India had recently notified Cyprus
as uncooperative tax jurisdiction. Although India and Cyprus had entered
into a DTAA, which is in force since December 21, 1994, and there is
a legal obligation for both the contracting states to exchange tax information
on request to prevent tax frauds, as per the CBDT, Cyprus has not been
providing the information sought by the Indian taxmen. This forced India
to notify Cyprus under Sec 94A.
Now,
Cyprus has reacted: The Ministry of Finance of the Republic of Cyprus wishes
to state that:
"The
Ministry of Finance of the Republic of India has issued a press release
on November 1st, 2013 stating that it has taken the decision to notify
Cyprus as a notified jurisdictional area under section 94A of the Income-tax
Act, 1961. The Ministry of Finance of the Republic of India has taken
the above unilateral measure, considering that in their view the information
provided by the competent authorities of the Republic of Cyprus, under
the existing Double Tax Treaty between Cyprus and India did not adequately
address the inquiries of the relevant authorities of the Republic of
India. It is important to clarify that the Double Tax Treaty between
the two countries has not been terminated.
Given
the fact that Cyprus attaches primary importance to the implementation
of its contractual obligations stemming from Bilateral and International
Agreements, and paying due respect to the excellent level of its political
relations with the Government of India, the Cyprus Government is in direct
contact with the Indian Government and is exerting every effort to clarify
and resolve the situation that has been created and has directly affected
the business communities in both countries.
It
is the position of the Cyprus Government that any discrepancies and points
that need clarification can only be resolved through direct consultations
between the concerned competent authorities, which have been agreed to
take place within November 2013.
The
Government of the Republic of Cyprus reiterates its commitment to hold
direct negotiations with the Government of the Republic of India with
the aim of finalising the long pending review of the Double Tax Treaty
between Cyprus and India."
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