The Finance Ministry of India has issued a release in which Cyprus is identified as a “notified jurisdictional area” with respect to transactions entered into by any Indian taxpayer with a person located in Cyprus. A transaction with a person in Cyprus would therefore give rise to the application of India’s transfer pricing rules.
According to the notification, all parties to a transaction with a person located in Cyprus will be treated as “associated enterprises” and the transactions will be treated as international transactions that invoke the application of India’s transfer pricing regulations. The taxpayer would therefore need to adhere to the requirement to maintain documents, perform benchmarking analysis, etc.
