As part of India’s approach to restrict offshore tax evasion and promote foreign investment, the Finance Ministry has recently opened seven new Income Tax Overseas Units (ITOUs) in seven countries, including France, Germany, Japan, Netherlands, UAE, UK and USA, after receiving approval from the Prime Minister’s Office and the External Affairs Ministry.
An Indian Revenue Service (IRS) officer has not been placed in the Indian embassy in Cyprus yet. Since November, the island has been classified as a notified jurisdictional area by India and suspended tax benefits, after the country was not providing information requested by Indian tax authorities under the Double Taxation Avoidance Agreement in place between the two countries since 1994.
The Indian government had decided to set up the ITOUs in these countries in the past as part of its plan to obstruct black money and streamline investment flows from these states into India.
Taking into consideration the positive results from the already existing ITOUs in Mauritius and Singapore the Indian Finance Ministry and CBDT decided to increase the number of such overseas I-T offices.
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The Cyprus ITOU will remain vacant until the two countries finalize their discussions and reach a solution.