Cyprus has added Iran on its list of double taxation agreements at the beginning of August. The new treaty for the avoidance of double taxation follows the Organization of Economic Co-operation and Development Model and is meant to increase the economic collaboration between Cyprus and Iran. Our Cypriot lawyers can provide you with more information about the country’s double taxation treaties.
Foreign companies operating in Cyprus are expected to boost the country’s economy in the following years, according to the Cyprus International Business Association. On the same page with the International Business Community in the country, the UK Cyprus Enterprise Council announced the organization of a seminar in London meant to promote Cyprus as an international center.
After announcing major tax reforms in order to attract foreign investors to Cyprus, the Government has approved a set of five tax packages. The new Cypriot tax reforms are dedicated to foreign citizens and contain provisions about the simplification of property taxes and encourage local authorities to provide more tax breaks for foreign investors. The International Monetary Fund (IMF) also considers the measures sustainable and supports the Cypriot Government with their implementation.
The Cypriot private RCB Bank plans to support investments on the island by providing more corporate loans. The bank wants to expand its presence in the country by setting up local offices thus ensuring easier access to Cypriot companies interested in obtaining loans. RCB is currently one of the largest private banking institutions in Cyprus.
The Ministry of Finance has recently released an announcement according to which Cyprus has signed a double taxation agreement with Georgia. The Finance Minister, Harris Georgiades, stated that the agreement should enhance cooperation between the two countries but should also lead to more foreign investments in Cyprus and Georgia.
President Nicos Anastasiades declared the Government will soon announce new tax breaks for foreign investors coming to Cyprus. The President also announced that the Ministry of Finance in collaboration with key players in the private sector will present a plan that would improve the Cypriot taxation framework. The cooperation between the two parties has the same goal of attracting more foreign investments.
A while back the Government promised to consolidate several Cypriot taxes and is now keeping that promise. At the beginning of May, the Government announced it is preparing a bill that will integrate the Cypriot immovable property tax and other municipal taxes and send it for debate to the Parliament before the summer vacation.
At the end of March, the credit rating agency Standard and Poor’s (S&PS) changed Cyprus’ economy outlook from ‘stable’ to ‘positive’ maintaining the “B+/B” rating based on the swifter reduction of the general government debt. Other credit rating agencies like Fitch, Capital Intelligence and Moody’s have also upgraded their ratings for Cypriot banks.
The European Bank for Reconstruction and Development (EBRD), the European Union’s development bank, announced a 200 million euros investment in Cyprus. The investment would concentrate on the financial and energy sectors, but also on small and medium sized companies in Cyprus. The plan is part of the 600 million euros program that will be invested in Cyprus by the end of 2020.
According to Eurostat, the unemployment rate in Cyprus registered a slight decrease at the beginning of 2015. According to the adjustments made by the European statistical office adjusted the EU unemployment rate slowly decreased from 11.3% in December 2014 to 11.2% in January 2015. Compared to the same period of 2014, the EU unemployment rate registered a 0.6% decrease at the beginning of this year. It is also the lowest rate registered in the European Union since April 2012.
At the beginning of February, investors, business leaders and developers have met in Limassol for the Cyprus Investors Summit 2015. This year’s Investors Summit is planning to attract funding for 18 large projects that would surpass the last two years’ 3.2 billion euros in foreign direct investments. Over 60 institutional investors from all over the world will be joining the Summit.
Prices on properties in Cyprus have continued to decrease in the last quarter of 2014, according to the RICS Cyprus Property Price Index. The price fall is due to the economic stability of the island, stability provided by the tourism industry’s performance. The RICS Cyprus Property Price survey showed decreases in almost all Cypriot cities and all types of properties.
Cyprus is planning to become a regional maritime transport network by building bridges that connect the island to the rest of the European countries. In order to achieve that, the Cypriot government wants to privatize its two largest commercial ports. The Communications and Works Minister in Cyprus declared the transports sector plays a key-role in the European economy and the island must participate in the development and completion of the trans-European transport network.
The Hellenic Bank announced new lower interest rates on loans for Cypriot companies. The lowest interest rate would be 3%, according to Bert Pijls, CEO of Hellenic Bank. He also announced the bank would provide more credit facilities which would lead to twice the number of new loans contracted by companies in Cyprus compared to last year. The CEO declared these new facilities come as a response to the need of reviving Cyprus’ economy and the help comes from the European Investment Bank that allocated 70 million euros for new loans.
At the beginning of December 2014 Cyprus signed an intergovernmental agreement with the United States of America. The agreement targets the implementation of tax compliance between the two countries and was drafted by the U.S. Congress in 2010. The agreement was signed by the Cypriot Minister of Finance and the U.S. Ambassador in Cyprus.
In 2013 India blacklisted Cyprus for not wanting to release information about suspected tax evaders. The beginning of this year, however, brings to our attention the consideration of Cyprus’ removal from India’s blacklist. At the time, the Indian Minister of Finance considered Cyprus a warned jurisdictional area because it would not provide information required by the Indian tax authorities.
Starting January 2015 Cyprus has extended its double taxation agreements network with other three countries. The new taxation agreements Cyprus will enforce starting the 1st of January are with Spain, Norway and Lithuania and are very benefic for the island’s services sectors. In 2014 Cyprus has signed three more treaties with Switzerland, Iceland and Guernsey but those are waiting to be ratified. According to Ernst & Young, all double tax treaties Cyprus enforced in the last period are based on the OCED (Organization for Co-operation and Economic Development) model and they all contain provision on the exchange of information.
The Cypriot Council of Ministers approved and sent to the parliament a draft bill that would regulate the opening, functioning and supervision of casino resorts in the island. The bill was created as a measure of increasing the tourist inflow in Cyprus. It is a well-known fact that Cyprus mainly “lives” from tourism and it seems the establishment of casinos is the next natural step for attracting more tourists but also foreign investors, not to mention the positive impact the measure will have on the economy.
The Cypriot Supreme Court just rejected four out of the six bills on foreclosure. The ground for rejection was the violation of the principle of separation of powers. As a result, Cyprus can now receive the next tranche of the 436 million euros funds from its international lenders. Prior to this decision, lenders said they would wait for the court’s decision before releasing the money.