As Cyprus is working toward joining the EU and is considered a front runner for membership, legislation and the tax system are undergoing reform. Cyprus was listed by the Financial Stability Forum as a 'group three' country (low quality of supervision of financial sector) but did not appear on the Financial Action Task Force's blacklist of jurisdictions deemed to be 'uncooperative' in preventing money laundering. Cyprus signed a letter of commitment with the OECD promising to implement exchange of information treaties in cases of civil and criminal tax evasion.
Cyprus' Companies Law (as amended) is similar to the UK's former Companies Act 1948. International business companies can be registered as a public or private company incorporated in Cyprus, as a branch of an overseas company, or as a general or limited partnership. Private companies may be registered as exempt or or non-exempt. An exempt private company must not have corporate members, must disclose beneficial owners, and must be owned by not more than 50 individuals. Exempt companies do not need to annex a financial statement to a copy of the annual report submitted to the Registrar of Companies, may give loans and guarantees to directors, and may appoint auditors that do not have statutory qualifications.
International business company registration is done through both the Central Bank of Cyprus and the Registrar of Companies. The names of beneficial owners must be disclosed to the central bank along with references. Additional qualifications must be met by international business companies engaged in banking, insurance or financial services business. The names of registered owners are kept as public records at the Registrar of Companies and the Official Receiver. Non-residents need permits from the Central Bank under the Exchange Control Law. International companies must belong exclusively to non-residents and must conduct business outside of Cyprus. Business must be conducted with foreign exchange. With the exception of exempt private companies, international business companies must submit an annual audited financial report to the Central Bank of Cyprus.
The Department of Merchant Shipping administers Cyprus' shipping register. To register a vessel under the Cyprus flag, non-Cypriot shipowners must first form a Cyprus shipping company as a private company with limited liability under the Companies Law.
The Central Bank of Cyprus is the supervisory authority for persons and entities offering money remittance services. In March 2002 a new money laundering guidance note was issued, defining who are to be considered principal beneficiary shareholders, requiring banks to identify the persons
who have ultimate control over a company's business and assets, regardless of the percentage they hold in the company, and introducing a new procedure for the identification and monitoring of accounts of politically connected clients.
Investors should note that independence from the UK was approved in 1960 with constitutional guarantees between the Greek Cypriot majority and the Turkish Cypriot minority. In 1974, a Greek-sponsored attempt to seize the government led to military intervention from Turkey, which took 40% of the island. The Turkish-held area declared itself the Turkish Republic of Northern Cyprus, a state recognized only by Turkey. Reunification talks resumed in December 1999 and are on-going. Further information on business registration is available at the Central Bank of Cyprus: Click here.
The corporate tax rate is 10% and 15% depending on the amount of a company's chargeable income. For the years of assessment 2003 and 2004, companies with a chargeable income over CY£1 million (about US$2 million) becomes subject to an additional 5% tax on the amount over CY£1 million. Every 'public corporate body' (a legal person of public law or any other public corporate body established by law) is subject to levy of special contribution for the Defence of the Republic Law (2002) at the rate of 3% on its chargeable income except on income from dividends, interest and rents and before the deduction of losses. Source: KPMG.
Under amended income tax legislation, Cyprus residents will be taxed on their worldwide income, while non-residents will be taxed on their Cyprus income. Residence for individuals will be assumed if the individual stays for more than 183 days in a calendar year. For legal entities residence in Cyprus will be assumed if management and control is carried out in Cyprus. The value added tax (VAT) rate was increased to 15% from January 2003.
The Cyprus Stock Exchange had 277 listed securities as at January 2002. The total market capitalization was CY£3,886 million (US$ 5,952 million) on 31 December 2001. The overall supervision of the stock exchange is assigned to the minister of finance and is exercised by the minister through the Securities and Exchange Commission.
International Business Department
Central Bank of Cyprus
80 Kennedy Avenue
Fax: (357) 2 378164
Latest available figures
Republic of Cyprus
Population (2001 census)
686,000 in the Republic of Cyprus. Ethnic composition: Greeks 85.1%, Turks 11.7%, Others 3.2%. The official languages are Greek and Turkish. English is spoken by a large sector of the population.
Cyprus pound. US$1 = C£0.48 Cyprus pound (March 2004)
Minor offences are heard in District Court while more serious crimes are heard in Assize Courts. All appeals are heard by the Supreme Court, which is also the final court of appeal.
Multi-party system of democracy based on proportional representation. The head of state is the president who is elected by universal suffrage for a five-year term of office. The Council of Ministers, who are appointed by the president, forms the executive. Legislative power lies with the House of Representatives whose members are elected for a term of five years. The House of Representatives has 80 members, of which 56 are elected for a five-year term by proportional representation and three represent the Maronite, Roman-Catholic and Goumenian minorities. Of the seats 24 are allocated to the Turkish minority.
President: Tassos Papadopoulos
Agriculture, natural resources and environment: Efthymios Efthymiou
Commerce, industry and tourism: Yiorgos Lillikas
Communications and works: Kyriakos Kazamias
Defence: Kyriakos Mavronicolas
Education and culture: Pefkios Georgiades
Finance: Markos Kyprianou
Foreign affairs: Georgios Iacovou
Health: Costandia Akkelidou
Interior: Andreas Christou
Justice and public order: Doros Theodorou
Labour and social insurance: Iacovos Keravnos
Progressive Party of the Working People (AKEL); Democratic Rally (DISY); Democratic Party (DIKO); Movement of Social Democrats (KISOS); New Horizons (NEO); United Democrats (EDI); Fighting Democratic Movement (ADIK); Ecological Environmental Movement.
Presidential elections were last held on 16 February 2003 with 10 candidates for the position. Opposition candidate Tassos Papadopoulos won the presidency from incumbent Glafcos Clerides (DISY). Papadopoulos received 51.51% of the vote while Clerides received 38.8% of the vote. In the 27 May 2001 parliamentary elections AKEL won 34.7% of the vote and 20 seats, DISY won 34% of the vote and 19 seats, DIKO won 14.9% of the vote and 9 seats, KISOS won 6.5% of the vote and 4 seats. The ADIK, the EDI, the Ecological Environmental Movement, and NEO parties won one seat each.
Tourism and financial services are the main pillars of the economy. In 2001, the services sector accounted for 76% of GDP. Of the US$4,5 billion annual gross foreign exchange earnings, 38% originates from tourism, 22% from exports, 9% from transportation and over 9% from international business and shipping companies.
Gross domestic product (2003 estimated)
2% growth in real terms.
Exports of goods US$802.05 million; imports of goods: US$3,391.61 million; service receipts: US$3,784.13 million; service expenditures: US$1,630 million; current account balance of payments: - US$435.27 million. See Key Figures from Cyprus Census and Statistics Department.
International Reserves (2000)
Total: US$6,130.09 million
Agriculture 6.3%, industry 22.4%, services 71.3%
Inflation rate (CPI) (July 2002)
Labour force (2003)
Government accounts (2001 budget estimates)
Revenues: CY£1.57 billion (US$2.41 billion), total expenditures CY£2.4 billion (US$3.7 billion) of which CY£293.5 million is capital spending. Total deficit CY£844.6 million (US$1,294.01 million).
Public holidays (2004)
1 January (New Year), 6 January (Epiphany), 23 February (Clean Monday, start of Lent), 25 March (Greek Independence Day), 1 April (EOKA day), 1 May (May Day), 9 April (Good Friday), 12 April (Easter Monday), 13 April (Easter Tuesday), 31 May (Holy Ghost), 15 August (Assumption), 1 October (Cyprus Independence), 28 October (Ochi Day), 25-26 December (Christmas)
GMT plus 2 hours. The clock goes forward 1 hour at 1:00 on the last Sunday in March and back one hour at 1:00 on the last Sunday in October.
Central Bank of Cyprus
Government of Cyprus
Department of Statistics and Research
Cyprus and EU Accession Negotiations
International Monetary Fund (Cyprus page)
US State Department (Background Notes: Last updated October 1998)
Elections Around the World
CIA Fact Book