Double Taxation Avoidance Agreement With Cyprus

September 18, 2021

In addition, the withholding tax rate on royalties has been reduced from 15% to 10%. In addition, the definition of “permanent establishment” has been expanded and the article on exchange of information has been updated to meet the latest international standards. The new Cyprus India Double Taxation Avoidance Agreement (DBAA) and the fact that Cyprus has been removed from India`s blacklist provide a solid regulatory basis for Indian companies and investors to benefit from Cyprus` jurisdiction as part of their global tax planning and investment structuring. A revision of the double taxation convention between Cyprus and India entered into force on 1 April 2017. The revised text, signed on 18 November 2016, allows the withholding of capital gains on the sale or disposal of shares. Investments made before the entry into force of the revision are not subject to their principles. In April 2016, Ukraine and Cyprus announced the two countries` changes to their current double taxation agreements. This amendment fills a gap that real estate income in Ukraine has not been taxed in Ukraine. From now on, income received by Cypriots from the sale of shares or other business rights will be taxable in Ukraine if more than 50% of the value is related to real estate in Ukraine. As everywhere in the world, India has begun to question aggressive tax planning based on profit shifting to companies in countries with lower taxes, but these companies have neither economic activity nor substance. The new double taxation convention between Cyprus and India focuses on the need for the substance. In addition, both India and Cyprus have signed the provisions of the Base Erosion and Profit Sharing Initiative (BEPS) and have begun to implement them.

The provisions of Article 27 (recovery assistance) shall take effect only when Cyprus has confirmed through diplomatic channels that it is in a position to provide such assistance under its domestic law, following which (and to the extent permitted by that right) the provisions shall take effect without taking into account the tax period to which the right to revenue relates. . . .

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