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Indian firms' subsidiaries in Cyprus face bank tax hit

Network18 Group has $260,000 in island-nation

Malini Bhupta  |  Mumbai 

The crisis unfolding in the Mediterreanean island nation of might also affect that set up investment entities there to take advantage of the country’s loose banking regulations.

Several Indian in the infrastructure and real estate sectors set up in as it is by far the most beneficial location in terms of Double Treaty Comparison, as there is no dividend withholding on payments from to and from to Cyprus, according to and laws. An Indian company has to pay a dividend distribution but a company based in receiving dividends is tax-free. Also, there is no interest withholding on payments made from to


However, with the Cypriot government recently considering the imposition of a on bank deposits, most Indian claim they might have to pull out, as a country intending to be a haven cannot do this.

Today, shares of Network18 Media and Investments fell 4.5 per cent and TV18 Broadcast fell seven per cent, as the group has four based in The four include: Indian Films Company Cyrpus, TV18 HSN Holdings Limited (Cyprus), E18 Limited (Cyprus) and Namono Investments.

Together, these hold $260,000 in and if the Cypriot parliament decides to impose a on deposits, the group will have to pay on this amount.

“The impact of this is minimal on the group, as the quantum of money in bank accounts is limited. If the proposal goes through, it will impact investment firms located there,” Ramandeep Singh Bawa, CFO, Network18 Group told Business Standard.

of Indian in can do little till Wednesday as banks will be shut till a decision is taken on the by Parliament.

The crisis in has been triggered after large amounts lent to Greek private and public sector firms turned bad. High write-offs have resulted in the banking system in being under-capitalised. 

Several Indian in the infrastructure and real estate sectors set up in as it is “by far the most beneficial location in terms of 'Double Treaty Comparaison' as there is no dividend withholding on payments from to and from to Cyprus", according to the 20-year-old treaty between and

An Indian company has to pay a dividend distribution but based in receiving dividends is free. Also there is no interest withholding on payments made from to

However, after the recent development, most claim that the they may have to pull out of as any country intending to be a haven be permitted to pass such a

First Published: Wed, March 20 2013. 00:48 IST
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