India-Cyprus Current Affairs

India Cyprus inks four agreements

India and Cyprus have signed four agreements following delegation-level talks between Prime Minister Narendra Modi and Cypriot President Nicos Anastasiades in New Delhi. The two sides discussed various bilateral and regional issues and agreed on the need on the part of all countries to act decisively against those countries that shelter and sustain violence factories in their regions. The two sides also called for the need for early reforms of the United Nations Security Council. Cyprus reiterated its support to India’s bid for inclusion a permanent member in the UNSC.

Cyprus will also award its highest civilian honour, the Grand Collar of the Order of Makarios III, on President Pranab Mukherjee.

Agreements

Both the countries signed:

  • An executive programme on culture, education and scientific cooperation for the years 2017 to 2020.
  • A work plan under a programme of cooperation in agriculture for the period 2017-2018.
  • Agreement on cooperation in the area of merchant shipping.
  • Agreement to boost air services between the two countries.

India-Cyprus ties

Cyprus is the eighth largest foreign investor in India with a cumulative foreign direct investment of about $9 billion in areas such as financial leasing, stock exchange, auto manufacture, manufacturing industries, real estate, cargo handling, construction, shipping and logistics. The Double Taxation Avoidance Agreement (DTAA) between both the countries was revised in 2016.

Diplomatic ties between India and Cyprus were established in 1962. Cyprus got the support of India during its struggle for independence from British colonial rule. Bilateral trade between both the countries stood at EUR 76.5 million in 2015. The major commodities exported by India to Cyprus are organic chemicals, vehicles & accessories and iron & steel. India’s main imports are aluminium and its products, wood pulp, machinery, boilers, engines, and plastic.

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India and Cyprus ink Revised DTAA

India and Cyprus have inked a revised Agreement for Avoidance of Double Taxation and Prevention of Fiscal evasion (DTAA) with respect to taxes on income, along with its Protocol.

It will replace the existing DTAA that was signed by two countries in June 1994. The provisions of new DTAA will enter into force after completion of necessary internal procedures in both countries.

Key provisions of new DTAA

  • Provides source based taxation of capital gains arising from alienation of shares, instead of residence based taxation provided under the existing DTAA.
  • Provides for Assistance between the two countries for collection of taxes. Updates the provisions related to Exchange of Information to accepted international standards.
  • Enables exchange of banking information and allow the use of such information for purposes other than taxation with the prior approval of the Competent Authorities.
  • Expands the scope of ‘permanent establishment’ and reduces the tax rate on royalty in the country from which payments are made to 10% from the existing rate of 15%.
  • Updates the text of other provisions in accordance with the international standards and consistent policy of India in respect of tax treaties.

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