It is to be noted that the Indian Government had recently invoked Section 94A by suspending tax benefits pact with Cyprus, talking a stringent measure. Pursuant to which, the Cyprus Government has released a press release stating that Cyprus is ready to renegotiate the tax treaty with India .
The full text of the said press release is as below :Â
MINISTRY OF FINANCE – PRESS RELEASE – CONCERNING THE DOUBLE TAX TREATY BETWEEN CYPRUS AND INDIA
The Ministry of Finance of the Republic of Cyprus wishes to state that:Â â€œThe Ministry of Finance of the Republic of India has issued a press release on November 1st, 2013 stating that it has taken the decision to notify Cyprus as a notified
jurisdictional area under section 94A of the Income-tax Act, 1961. The Ministry of Finance of the Republic of India has taken the above unilateral measure, considering that in their view the information provided by the competentÂ authorities of the Republic of Cyprus, under the existing double tax treaty between Cyprus and India
did not adequately address the inquiries of the relevant authorities of the Republic of India. It is important to clarify that the double tax treaty between the two countries has not been terminated.
Given the fact that Cyprus attaches primary importance to the implementation of its contractual obligations stemming from Bilateral and International Agreements, and paying due respect to the excellent level of its political relations with the Government of India, the Cypriot Government is in direct contact with the Indian Government and
is exerting every effort to clarify and resolve the situation that has been created and has directly affected the business communities in both countries.
It is the position of the Cypriot Government that any discrepancies and points that need clarification can only be resolved through direct consultations between the concerned competent authorities, which have been agreed to take place within November 2013.Â The Government of the Republic of Cyprus reiterates its commitment for holding direct negotiations with the Government of the Republic of India with the aim of finalizing the long pending review of the double tax treaty between Cyprus and India.â€