Cyprus is trying hard to attract foreign companies since the services sector is one of the economy’s main pillars, Phileleftheros reports.
The recent announcement by the EU that Panama, Seychelles, Cayman Islands and Palau have been placed on its black list of tax havens could pave the way for Cyprus to benefit as companies active in those jurisdictions will now be looking for alternative destinations.
However, local authorities believe there will be no immediate benefit from this development since both the state and private sector have succeeded over the recent past years to shed the stigma of Cyprus being a tax haven.
And the new, more stringent directive on shell companies by the Central Bank of Cyprus, along with the mass exodus of Russian depositors, has turned around the Mediterranean island’s image within the international business world.
Cyprus Fiduciary Association (CYFA) President Christoforos Koutouroushis told Phileleftheros that he did not expect much of a benefit from the recent EU black listing.
“I do not consider blacklisted jurisdictions to be comparable to Cyprus, so I do not expect any particular benefit. Some companies may opt to relocate to avoid complications, but I believe these will only be a handful of cases,” Koutouroushis also said.
“As a member of the European Union, Cyprus has obligations that those jurisdictions do not have, concerning transparency, information exchange and compliance,” he added.
At the same time, Cyprus has made significant progress over the last five years in many areas of services provision and has solid ground to further improve its image as an international business centre,he also said.
“The coordination of all parties involved – private businesses and professional bodies – under the supervision and guidance of the State is essential in efforts to achieve the desired results and remain a reliable destination for foreign investors,” he added.
Head of the Cyprus Bar Association Doros Ioannides said Cyprus has all that is needed to attract companies from various destinations and not exclusively from blacklisted ones.
“There is a rigorous scrutiny of companies by The Institute of Public Accountants of Cyprus (CIPA), the Cyprus Bar Association and the Cyprus Securities and Exchange Commission. Cyprus is not a land of opportunity or a tax haven,” he also said.
“Cyprus has become extremely careful with what companies it attracts. Therefore, it is not a matter of Cyprus being preferred by foreign companies, but rather Cyprus choosing the right ones.”
According to CIPA President Dimitris Vakis, Cyprus is not in competition with destinations such as Panama, but with jurisdictions which attract solid companies. “A non-shell company will choose a reliable, more stable destination, such as Cyprus,” Vakis also said.
The EU black list, which was compiled in 2017 following revelations of widespread tax evasion, now includes 12 tax jurisdictions.
When a country is black-listed its image is tarnished, financial transactions are subject to increased scrutiny and the risk of losing EU funds is there.