Tax ex­emp­tion on world­wide in­come re­in­forces Cyprus as re­gional base for pro­fes­sional ser­vices

An in­creas­ingly fa­vor­able tax regime that has broad­ened eli­gi­bil­ity for ex­emp­tions is im­prov­ing the in­vest­ment ap­peal of Cyprus's’ ser­vice sec­tor­driven econ­omy as the pre­ferred gate­way to Europe and the Near East.

Global Times – Metro Beijing - - SPECIAL - by Justin Calderon Justin@the-busi­ness­re­

As the back­bone of the Cypriot econ­omy, pro­fes­sional ser­vices have been a cru­cial in­gre­di­ent to adding cred­i­bil­ity to the re­cov­ery. Now, Cyprus has taken ad­di­tional mea­sures to en­sure that the ser­vice sec­tor, which to­gether with tourism rep­re­sents about 80 per­cent of eco­nomic out­put, main­tains its com­pet­i­tive­ness by leg­is­lat­ing a tax ex­emp­tion on world­wide in­come. By broad­en­ing eli­gi­bil­ity for ex­emp­tions, the new law al­lows “non-domi­ciled” per­sons to be ex­empt from a va­ri­ety of taxes, pri­mar­ily the Spe­cial De­fense Con­tri­bu­tion (17 per­cent on div­i­dends, 30 per­cent on interest earned, and ap­prox. 2.25 per­cent on rental in­come). The ini­tia­tive, launched in 2015, adds to nu­mer­ous al­lures for for­eign in­vestors, the is­land’s top le­gal ad­vi­sors at­test. “Cyprus presents the op­por­tu­nity for global in­vestors to es­tab­lish their re­gional (Euro­pean and Near East) head­quar­ters in Cyprus due to its sta­ble le­gal sys­tem based on UK law, at­trac­tive per­sonal and cor­po­rate tax regime (12,5 per­cent on profit, 0 per­cent tax on div­i­dend in­come, no with­hold­ing taxes, no CGT on dis­posal of se­cu­ri­ties), while ben­e­fit­ing from ex­ten­sive bi­lat­eral tax and in­vest­ment treaty pro­tec­tion. With these ad­van­tages, it makes sense for in­vest­ments to be struc­tured here,” said Kyriacos Scordis, man­ag­ing part­ner of Scordis, Pa­pa­petrou & Co., one of the old­est LLCs (Lawyer’s Limited Li­a­bil­ity Com­pa­nies) on the is­land. For­eign in­vestors come to Cyprus not just for its tax ser­vices, but also to lever­age its geostrate­gic po­ten­tial along one of the busiest global trade routes. “The re­siliency of the pri­vate sec­tor since the re­ces­sion is some­thing to be val­ued,” Scordis said when asked why Chi­nese in­vestors are continuing to ar­rive in Cyprus. “Look­ing at the Belt and Road ini­tia­tive from the Mar­itime Silk Road per­spec­tive,” he con­tin­ued, “Cyprus is closely po­si­tioned to the Suez Canal and the first stop along the way to Europe, pre­sent­ing the per­fect des­ti­na­tion for re­gional head­quar­ters and spread­ing business ac­tiv­i­ties through the region.” He added: “Cyprus is the ideal lo­ca­tion from a ge­o­graph­i­cal, le­gal and fi­nan­cial per­spec­tive to struc­ture in­vest­ments not only in the EU, but also in Eastern Europe to fully con­nect the Silk Road Eco­nomic Belt, such as Russia, Ukraine and the CIS­coun­tries.” Al­ready, there are thousands of busi­nesses re­lated to these coun­tries op­er­at­ing in and out of Cyprus em­ploy­ing both local per­son­nel as well as per­sons from their home coun­tries, Scordis ob­served. Rather than rest­ing on their lau­rels, Cypri­ots are get­ting proac­tive. “China’s role in global in­vest­ment has pro­vided us the im­pe­tus to set up our China desk,” said Scordis, who also has of­fices in Moscow, Malta and Athens. “We have al­ready fa­cil­i­tated Chi­nese busi­nesses and in­vest­ments to and be­yond Cyprus.”

The re­siliency of the pri­vate sec­tor since the re­ces­sion is some­thing to be val­ued. KYRIACOS SCORDIS Man­ag­ing Part­ner of Scordis, Pa­pa­petrou & Co. LLC

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