Cyprus has secured the funds needed and has agreed to implement reforms that, despite the pain, will ultimately strengthen the economy. The lifting of capital controls for international banks was a step back to normality. The lifting of capital controls for all banks, the completion of the restructuring of the pillar local bank and the diligent implementation of the MOU will help restore the credibility of the country and regain the trust of the markets.
The main drivers of the development of Cyprus as a business centre, which have been the tax, legal and regulatory frameworks and the quality of professional services, have remained fundamentally unchanged. Furthermore, the strategic geographic location as a European gateway to the East and the excellent living conditions were beyond reach of the MOU agreement.
The country retains a business friendly tax environment, fully compliant with the EU Code of Conduct and the OECD Harmful Tax Practices and working under double taxation treaties with 47 countries. It has a robust common law based legal system, which is easily understood by international businesses and an EU compliant regulatory environment.
According to the final round evaluation report by MONEYVAL, Cyprus ranks higher in FATF-compliance than many other EU countries and is on the OECD "white list". Per the MOU Cyprus has agreed to further improve AML implementation to make Cyprus best of class in the EU, on the basis of an audit by MONEYVAL and an independent auditor.
In shipping, the island is the only EU approved “Open Register” with one of the most competitive and wide ranging taxation systems covering ship owning, ship management and chartering, offering a secure, legally transparent and attractive basis of operation.
The country enjoys a highly-qualified and multilingual workforce, with 33.6% of Cypriots between the ages of 15-64 having a tertiary education compared to the EU27 of 23.6%. The professional services sector is dominated by UK qualified accountants and lawyers with deep expertise and experience. For all these reasons Cyprus will not relinquish its unique advantages as an international business hub. The underlying strength in professional services and the non-financial sectors of the economy such as shipping, technology, education and tourism and on the horizon, the commercialisation of natural gas reserves will support economic recovery.
An EU member for nine years, Cyprus is committed to both the Union and the common currency. Operating within its legal and regulatory frameworks, and capturing the advantages that membership brings, the country will focus on recovery so as to further evolve as a reliable and quality international business hub.
Evgenios C. Evgeniou
CEO of PwC Cyprus
