Union Cabinet approves revised India-Cyprus Double Tax Avoidance Agreement

Posted on:25 Aug 2016 18:29:11

Union Cabinet approves revised India-Cyprus Double Tax Avoidance Agreement
25 August 2016 Current Affairs: The Union Cabinet approved a revised Double Tax Avoidance Agreement (DTAA) and the Prevention of Fiscal Evasion with respect to Taxes on Income between India and Cyprus. 

The revised DTAA provides for source-based taxation of capital gains on transfer of shares instead of one based on residence.

 Thus, it is considered as a major step in the fight against tax evasion, round tripping and base erosion/profit shifting. It also allows India to have the right to tax capital gains arising in India.

 It further removes distortion caused by the provisions in the earlier treaty for residence-based taxation for the sake of avoiding tax.

India and Cyprus had signed DTAA in 1994. Cyprus is a major source of foreign funds flows in India. From April 2000 till March 2016, India received foreign direct investment (FDI) to the tune of Rs 42,680.76 crore from Cyprus. Cyprus is considered a major haven for money laundering, round-tripping, and profit-shifting. The revised DTAA assumes significance coming soon after the signing of the revised pact with Mauritius.

Double Taxation Avoidance Agreement (DTAA) :  A DTAA is a bilateral economic agreement between two nations that aims to avoid or eliminate double taxation of the same income in two countries. It is also referred to as a Tax Treaty.


Subscribe to Current Affairs

Enter your email to get daily current affairs

Current Affairs August 2017

19 AUGUST
NEWS
18 AUGUST
NEWS
17 AUGUST
NEWS
16 AUGUST
NEWS

Current Affairs July 2017

31 JULY
NEWS
29 JULY
NEWS
28 JULY
NEWS
27 JULY
NEWS

Current Affairs June 2017

30 JUNE
NEWS
29 JUNE
NEWS
28 JUNE
NEWS
27 JUNE
NEWS