Cyprus removed from blacklist with retrospective effect: tax department
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New Delhi: The Income Tax Department on Friday clarified that its decision last December to rescind a three-year-old order blacklisting Cyprus as a non-cooperating jurisdiction for allegedly refusing to share financial information had retrospective effect.
The clarification puts to rest doubts whether the 16 December 2016 decision rescinding the notification of Cyprus under the income tax provision to blacklist non-cooperating countries was applicable for the investments made in the interim.
The tax law allows levying a 30% withholding tax on all outbound payments—including to individuals, incorporated entities and to financial institutions—in a jurisdiction notified as non-cooperating.
The department said that it has noticed that in some cases, a view has been taken by the tax authorities that the rescission of the notification was not with retrospective effect. “For removal of doubts, it is clarified that the notification has been rescinded with effect from the date of issue, thereby removing Cyprus as a notified jurisdictional area with retrospective effect from 1 November, 2013,” it said in a circular late on Friday night.