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According to the Central Bank of the Russian Federation, there was a significant increase in investment into Russia from Cyprus during the first nine months of 2013, the latest period for which figures are available.

In the first three quarters of 2013 net inward investment from Cyprus to Russia amounted to US$ 12.9 billion, making Cyprus the second largest source of investment into Russia. The only country with a larger figure was the United Kingdom, which was boosted by the one-off TNK-BP transaction. There was a considerable gap between Cyprus and the next country, Luxembourg, with less than US$ 10 billion.

Cyprus’s investment of US$ 12.9 billion for the first three-quarters of the year is almost as large as the figure for the whole of 2011, which means that 2013 will almost certainly be a record year for investment into Russia via Cyprus since the onset of the global economic crisis in 2008.

These figures provide welcome reassurance that, despite the “bail-in” of March 2013, Cyprus continues to be the preferred route for investment into Russia.

It is reported in the Indian financial press that Cyprus and India will finalise the amendments to their double taxation avoidance agreement in the next few weeks. The Indian High Commissioner to Cyprus has said that a team from the Indian ministry of finance is expected to visit Cyprus in the next few days to carry forward the negotiations to finalise the revised DTAA, and that the matter is being followed at the highest level in the government of Cyprus. The existing DTAA between India and Cyprus was signed in 1994, and it is understood that the amendments will incorporate the provisions of Article 26 of the Organization of Economic Cooperation and Development’s model tax convention relating to exchange of information.

The conclusion of the agreement will resolve differences between the two countries’ tax authorities that led to Cyprus being declared a notified jurisdiction under Section 94A of the Indian Income Tax Act of 1961, making it more cumbersome for Indian taxpayers to claim deductions on transactions with entities based in Cyprus, and increasing reporting requirements. Both Cyprus and India have agreed that the classification of Cyprus as a notified jurisdictional area will be rescinded with retrospective effect from 1 November 2013, the date when the notification was first issued. The rescission will remove bureaucratic obstacles and reduce compliance costs.

According to Indian government estimates, Cyprus is the seventh largest investor in India with cumulative investments of US$7.2 billion between April 2000 and December 2013.