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

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