By: Soteris Pittas LLC
The Minister of Finance of India decided on 14 June 2021, the inclusion of Cyprus in the first category of foreign investment funds.
Cyprus has been classified as a ‘Category I’ country, being an approved jurisdiction where funds regulated in Cyprus can be used for the purposes of investing into Indian securities and this fact provides significant advantages for the Cypriot investment funds which will be able to invest more easily and efficiently in India. The Category I FPI includes entities from Financial Action Task Force (FATF) member countries or from any country specified by the Indian government by an order or by way of an agreement or treaty that are:
- Appropriately regulated funds.
- Unregulated funds whose investment manager is appropriately regulated and registered as a Category I FPI.
- University-related endowments of such universities that have been in existence for more than five years.
Cyprus is not directly an FATF member country but following this order from the Indian government, Cyprus-based funds are now able to be registered as Foreign Portfolio Investors (FPIs).
Category I FPIs benefit from the following advantages as well:
- Exemption from the applicability of ‘Indirect Transfer’ provisions under the Indian Income-tax Act.
- Subject to lower ‘Know Your Customer’ (KYC) requirements and enhanced trading limits.
- Eligible to invest in offshore derivative instruments (ODIs).
Such an initiative offers great potential for cooperation between the two countries and creates new opportunities for expanding the Cyprus fund industry.
For further information on this topic please contact
Mrs. Maria Pitta ( mariapitta@pittaslegal.com) at SOTERIS PITTAS & CO LLC,
By telephone (+357 25 028460) or by fax (+357 25 028461)
