Gold Magazine June - July 2013, Issue 27 | Page 37

OPINION Cyprus will survive as an international financial centre The country has faced crises before, emerged stronger from them, and will do so again. T he eurozone crisis interrupted more than three decades of growth for Cyprus as an international business hub. The consequences have been harsh for the country, with the banking sector bearing the brunt of a financial assistance package which will see one bank wound down and another recapitalised through a depositors’ bail-in. The signed Memorandum of Understanding (MoU) sets out measures for restoring the soundness of the banking sector, controlling public finances and ensuring sustainable growth. Cyprus has secured the funds needed and has agreed to implement reforms that, despite the pain, will ultimately strengthen the economy. Following its restructuring, the key Cypriot bank will find itself on a stronger capital footing, enabling it to focus on serving the needs of businesses and individuals in Cyprus, while unaffected local and international banks may identify new opportunities. Lifting of capital controls and diligent implementation of the MoU will be necessary to restore the country’s credibility and to regain the trust of the markets. The main pillars of the development of Cyprus as a business centre, which have been the tax, legal and regulatory frameworks and the quality of professional services, have remained fundamentally unchanged. Furthermore, the strategic geographic location as a European gateway to the East and the excellent living conditions were beyond reach in the context of the MoU agreement. The country retains one of the most competitive tax environments in the EU, fully compliant with the EU Code of Conduct and OECD Harmful Tax Practices, working under double taxation treaties with 47 countries. It has a robust common law linked legal system (based on English law), easily understood by international businesses. Cyprus continues to have an excellent EUcompliant regulatory environment and recognised central administration, companies providing operational support and reporting solutions to a Cyprus will not relinquish its unique advantages as an international business hub By Evgenios C. Evgeniou wide variety of holding and financing companies, funds and investment management firms. According to the final round evaluation report by Moneyval, Cyprus ranks higher in FATF compliance than most other EU countries and is on the OECD ‘white list’. Per the MoU, Cyprus has agreed to further improve anti-money laundering implementation, on the basis of an audit by Moneyval and an independent auditor, to make Cyprus “best of class” in the EU. In shipping, the island is the only EU-approved ‘Open Register’ with one of the most competitive and wide ranging taxation systems covering ship owning, ship management and chartering, offering a secure, legally transparent and attractive basis of operation. The World Economic Forum identified Cyprus as one of 35 innovation-driven economies in 2011-12. The country enjoys a highly-qualified and multilingual workforce and the professional services sector is dominated by UK-qualified accountants and lawyers with deep expertise and collective experience. Cyprus will not relinquish its unique advantages as an international business hub. The underlying strength in professional services and non-financial sectors of the economy will be important to Cyprus’ long-term economic recovery. The active maritime, technology, education and tourism industries continue to require a stable financial services sector to support their activities. On the horizon, the commercialisation of natural gas reserves will augment this requirement and necessitate the provision of new and specialist services.  An EU member for nine years, Cyprus is committed to both the Union and the common currency. Operating within its legal and regulatory frameworks, the country will focus on developing key, vibrant industries with an emphasis on innovation to further evolve as a competitive and reliable international business hub. Cyprus has faced crises before, emerged stronger from them, and will do so again. info: Evgenios C. Evgeniou is CEO of PwC Cyprus. This article first appeared on the Professional Wealth Management website. THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES opinions_hokmark&evgeniou.indd 35 Gold 35 10/06/2013 18:05