Few international business centres can offer tax advantages similar to those available from the Cyprus taxation regime, making Cyprus one of the most attractive onshore tax jurisdictions in the world. With its accession to the European Union (EU) in 2004, Cyprus has evolved from an offshore tax haven, to one of the world’s foremost financial centres. With it’s privileged geographic location, and with the combination of favourable business taxation incentives and an extensive network of double tax treaties, Cyprus has become the world’s bridge between East and West, North and South.
In a recent KPMG survey of more than 400 tax professionals from companies across Europe, Cyprus was rated as the most attractive tax regime (with a net attractiveness score of 90 percent), followed by Ireland, Switzerland and Malta. The net attractiveness score for Estonia was 71 percent and for Finland, rated number six, the net score was 66 percent. “As can be seen from the final ranking, smaller countries tend to have more attractive tax environments. In those countries, the state is more motivated to create a simple and efficiently managed tax system to attract investors”, commented Joel Zernask, Tax Manager at KPMG Baltics AS.
Cyprus, being a full member of the EU, participates in the EU’s internal market where there is free movement of goods, services and capital, and citizens are able to conduct business, travel to, and live in Cyprus with no legal restrictions. The offshore tax haven regime which existed until 2005 is no longer in place, and was replaced by a new EU-compliant tax regime offering one of the lowest rate of business taxation in the EU, being 12,5%.
Cyprus is also a full member of the Eurozone since 1 January 2008, further confirming the country’s macro-economic stability and its commitment to low inflation, low interest rates and high growth. Due to its attractive personal and business taxation regimes, Cyprus is a highly favourable tax planning jurisdiction.