If we ask the question, ‘Why open a business or live in Cyprus’ we normally get back the usual list of benefits that include the location, the climate, low crime rate etc. etc., and in general, the lifestyle certainly is hard to beat. On top of all that, a recent ‘Value Penguin’ survey ranked Cyprus as the 5th safest country in the world.
Inevitably, any such paradise that attracts so many decent people will also mean that greed and corruption would find its way in, and in Cyprus this caused devastation that fell only a little short of absolute destruction.
Fortunately, Cyprus now has a President that looks to the future and is making huge progress in overhauling the system that created this almighty mess. He appears to have faced up to the facts and is going head to head against damaging politics, high-level corruption and a bureaucratic system that was, and still is in places, bordering on plain stupidity!
So we can now add to the positives that Cyprus is overhauling its Banking system, has changed the laws to create safety for those buying property and demonstrated that corruption will not be tolerated.
The government have also approved some strategic changes in the Tax laws that make Cyprus one of the best places in Europe to be in Business!
It is now possible for non-domiciled Cyprus residents to receive dividends without the payment of any tax, including the previously payable defence tax! Plus, under the current rules, if they structure things correctly, they can invest that money for their future and get tax-free growth followed up with an income that is free of taxes!
As an example, a Russian or Chinese national, resident in Cyprus for tax purposes can have a shareholding in a Cyprus company that pays dividends to their offshore bank account, the dividends are paid free from tax. They can then invest that money in a tax efficient contract that will allow them to receive tax-free growth and the same account can then be used to pay them a regular income free of income tax.
That gives Cyprus a lot of added tax benefits!
That might look like the Cyprus Government is favouring the foreigners, but consider the longer term impact of money circulating freely in the economy. It is a clever method of Quantitative Easing for the people! The Cyprus government gain taxes from the business and the local economy gets a direct boost from the added spending power.
In 2013 Cyprus may have died in a fire of its own making, but just like the Phoenix, it has risen from the ashes with new strength and vigour, and that might just secure its immortality in the business world.
So whilst ‘Transparency’ seems to be the word most used in finance these days, Cyprus certainly has a clear message to send out: