India To Sign Offshore TIEAs

by Mary Swire, Tax-News.com, Hong Kong

16 April 2010

The Indian government will proceed with negotiations towards tax information exchange agreements with nine low-tax jurisdictions.

The central government has approved the notification of the following areas as ‘specified territories’ for the purpose of the Income Tax Act 1961: Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Guernsey, the Isle of Man, Jersey, the Netherland Antilles, and Macau (a Special Administrative Region of the People’s Republic of China).

The notification of Hong Kong, also a Special Administrative Region of the People’s Republic of China, as a specified territory is also in process, according to an announcement by the Ministry of Finance.

These special territories could not enter into agreements with India until Section 90 of the Income Tax Act was amended by the Finance Act 2009. Prior to this India could only enter agreements with sovereign states. Explanation 2 of Section 90 provides for notification of such specified territories.

Currently, India is renegotiating its tax treaties with many countries, including Switzerland, to allow for exchange of tax information. Tax experts are especially awaiting developments on India's treaties with Mauritius and Cyprus, through which most foreign direct investment is routed.

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