Cyprus falling behind in its competitiveness

I am writing to draw attention to an email forwarded to me recently, promoting Hungary as an international finance centre, particularly for tax planning.

I was concerned that the first sentence of the memorandum attached to the email reads: “The purpose of this memorandum is to show that Hungary could successfully replace Cyprus in international tax planning.” This is the first time I have seen Cyprus so specifically and explicitly targeted.

The memorandum goes on to outline the main benefits of the Hungarian tax regime, which include a low tax rate, tax exemption for dividends received, absence of withholding tax, a wide network of double tax agreements and a streamlined and effective corporate registration system.

The email was sent by the Budapest office of one of the largest and most respected law firms in Austria and Central and South East Europe, which has offices in some of the key locations for which Cyprus is currently a principal investment portal, including the Czech Republic and Ukraine. It was sent to senior partners at most of the commercial law firms in Greece. It should therefore be taken very seriously as a clear indication of the severe and increasing threat to Cyprus’s position in the market.

In a free market there is nothing we can do to prevent other countries from promoting themselves as international finance centres. The only way to secure our future is to ensure Cyprus remains competitive compared with alternative jurisdictions and promotes itself effectively. Any measures reducing the island’s competitiveness, like additional taxes and levies and excessive bureaucratic burdens, jeopardise a sector which employs thousands of people and brings in substantial export revenue.

 

Andreas Neocleous & Co LLC,

Limassol

 

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.