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 June 2017

23 JUNE
NEWS
22 JUNE
NEWS
21 JUNE
NEWS
20 JUNE
NEWS

Current Affairs May 2017

31 MAY
NEWS
30 MAY
NEWS
29 MAY
NEWS
27 MAY
NEWS

Current Affairs April 2017

29 APRIL
NEWS
28 APRIL
NEWS
27 APRIL
NEWS
26 APRIL
NEWS