• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 11/8/2013

India - Transactions with Cyprus subject to transfer pricing rules 

November 8: India’s Ministry of Finance issued a release identifying Cyprus as a “notified jurisdictional area” with respect to transactions entered into by any Indian taxpayer with a person located in Cyprus—thus, invoking application of India’s transfer pricing rules.

The Ministry of Finance’s identification of Cyprus as a “notified jurisdictional area” is made pursuant to an anti-avoidance measure introduced into Indian tax law by the Finance Act, 2011.

Transfer pricing implications

With this notification, all parties to a transaction with a person located in Cyprus will be treated as “associated enterprises” (i.e., related parties) and the transactions will be treated as international transactions that invoke the application of India’s transfer pricing regulations—including the requirement to maintain documents, perform benchmarking analysis, etc.

This action by the Finance Ministry also has implications for claimed deductions of expenses related to transactions with a Cypriot entity, as well as the deemed income rules and tax withholding provisions.

Read a November 2013 report [PDF 402 KB] prepared by the KPMG member firm in India: Indian Government designates Cyprus as a notified jurisdictional area on account of lack of effective exchange of information

Contact a tax professional with KPMG's Global Transfer Pricing Services.

©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Share this

Share this


Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)

Already a Subscriber? Login

Not a member? Subscribe now