India increases withholding, reporting and disclosure requirements for transactions involving Cyprus

November 2013

Overview

As an anti-avoidance measure, the Indian government amended its domestic tax law in 2011 with respect to transactions with taxpayers located in certain tax jurisdictions.

The Indian revenue authorities on November 1 issued guidance specifying that it will add Cyprus to the list of jurisdictions covered by these regulations. The regulations prescribe the application of 30% (or higher) withholding tax for payments from India to Cyprus. The regulations also provide that an Indian entity will be subject to tax on any funds received from Cyprus unless the Indian taxpayer can explain the Cypriot person’s source of those funds (including beneficial ownership).

This newsalert summarizes the new guidance and the impact on foreign investors doing business with India through an entity located in Cyprus.

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Tim Anson
ITS Co-leader
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Rob DeGaudenzi
International Tax Desk Leader
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