Global

Details

  • 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.




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