After changing the Mauritius tax treaty, the Indian government is all set to fix the loopholes in the similar treaty that it has with Cyprus.
As per a senior government official, talks for this purpose are at an advanced stage, and both countries are expected to soon exchange formal proposals.
"Talks are on...With Mauritius tax treaty done, Cyprus talks would move swiftly now," the official told ET. The talks are expected to be serious especially because India had declared the island state to be a non-cooperative jurisdiction in November 2013.
The island country in the Eastern Mediterranean Sea currently ranks seventh in terms of FDI flows into India, and has a 20-year-old treaty offering several benefits like capital gains tax exemption and zero withholding tax on dividends to residents.
Not only this, it also offers a lower tax rate of 10% on income from interest, royalties and fees for technical services.
Efforts from the Indian government to renegotiate the treaty have been on for several years now, but Cyprus has always cited capital gains tax exemption in the treaties that India has with Mauritius and Singapore.
Now that the Mauritius treaty has being tightened, India has better chances of renegotiations with Cyprus, especially after Singapore treaty is also needs to be amended.
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