India's Notification of Cyprus as uncooperative tax jurisdiction - Cyprus Reacts
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."