The tax reform act of 2002 was inevitable in order to harmonize Cyprus’ laws and practices with the European Union laws and directives, the Code of Conduct and the Organization for Economic Cooperation and Development.
The end result of this exercise was the abolition of the offshore regime, the introduction of uniform taxation and operational scheme applicable to all companies and the introduction of the lowest taxation rate in the EU.
This new regime opened significant opportunities for tax planning. The purpose of this letter is to provide you with some basic ideas on the advantages that Cyprus has to offer.
- Cyprus is not considered as a “tax haven” country but a tax incentive country and at the same time has acquired the European “stamp of respectability”.
- Corporation tax at 12.5% on net profits arrived at after deducting all business expenditure incurred. Annual capital allowances and all expenses incurred for earning of income are allowed as deductions for tax purposes.
- No exchange control restrictions for the companies and their foreign employees, therefore, free movement of profits derived from operations on non-resident investments. Profits may be transferred to any account worldwide.
- Trading companies engaged in global trading may be established with 0% taxation in all respects provided their management and control are exercised outside Cyprus.
- Easily obtained residence and work permits for expatriate personnel and their dependents.
- Full capital gains tax exemption on capital gains, except on the sale of immovable property situated in Cyprus.
- Maximum 2.5% tax on royalties
- An extensive network of double tax treaties offering tremendous possibilities for international tax planning.
- No withholding tax on dividends, royalties or interest paid to nonresidents.
- There is a wide network of air-routes connecting Cyprus with Europe, Africa, and Asia by sea and air via frequent daily connections.
- Highly qualified professionals and well educated, competent labor force.
- Free zone and bonded warehouse facilities.
- Low set up and running costs of a company.
- Complete anonymity of shareholders.
- Nominee/trustee services are available.
- Excellent modern telecommunication facilities – direct dialing to over 200 countries.
- Modern and efficient legal, accounting and banking services.
- Pleasant Mediterranean climate.