Gold Magazine June - July 2013, Issue 27 | Page 50

After
The
Tsunami

Cyprus will survive but it needs to play by the

How has the professional services sector reacted to the latest economic
developments in Cyprus and what will its future be? Theo Parperis, the
outgoing President of the Institute of Certified Public Accountants of
Cyprus (ICPAC) talks to Gold about this and more.
By Kyproula Papachristodoulou

Gold: Two months after the Eurogroup’s
decision on Cyprus, what is your assessment
of the situation? How have firms providing professional services and their clients
adapted?
Theo Parperis: I would say that, two months
after the tsunami, we are still above water. The
first shock has passed and it is now clear that
the Cyprus package – which has always been
competitive, despite some reputation problems
– remains attractive to international businesses.
This is something that makes us hopeful for
the future. The vast majority of foreign companies that use Cyprus as a base for their corporate structures have kept their business on the
island and, as far as we know, are not planning
to change their minds. It is all about trust now,
as it has always been. We need to restore and
rebuild trust in Cyprus.
Gold: Do you think that companies and
investors who lost money as a result of the
resolution of Cyprus Popular Bank and the
restructuring of Bank of Cyprus will maintain their business on the island?
T.P.: Yes, a considerable number of them. On
the other hand, some of these companies have
told us that, while Cyprus remains the most
appropriate jurisdiction for their business, they

have taken the decision to leave as a matter of
principle. They are not willing to accept the
way Cyprus – because of its eurozone partners
– has treated them. Their decision is not only
to leave Cyprus but also the euro area. I’m not
only referring to Russians or Ukrainians but
also to High Net Worth Individuals from the
US and Canada, for example, who now have a
total lack of trust not just in Cyprus but in the
eurozone as a whole.
Gold: How does the professional services
sector intend to deal with the flow of business away from Cyprus?
T.P.: In a nutshell, what we are doing now is
adjusting our models in order to accommodate
structures in Cyprus with more substance. We
expect that from now on they will have to have
real substance in the country, in other words
offices and operations in Cyprus – which will
be a very positive development. They might
continue carrying out their transaction banking from Cyprus but, as they see it, there is
no need to keep huge deposits or indeed any
deposits of significance in Cyprus until the
situation is clarified.
Gold: How will we convince international
companies to create more business sub-

48 Gold the international investment, finance & professional servic es magazine of cyprus

stance on the island now if they haven’t
been doing so in the past?
T.P.: Up to now we were concentrating on
volume. Companies did not carry out activities in Cyprus and we did not insist that
they should. It was cheaper and easier for a
company to operate without any real business
activities. We should gradually change our approach. There are places like Singapore where
you cannot have a company without substance. It is now time to adopt such models.
This will not only improve Cyprus’ reputation
but, in the context of the new international
and European environment, it will work for
the benefit of businesses. It is going to be easier
for companies to explain to their home regulators and their home countries the reason why
they have decided to establish and maintain a
Cyprus company.
Gold: You referred earlier to the ‘Cyprus
Package’. What does it contain?
T.P.: Basically a mixture of elements that
are convenient and suitable for international
business: a tax-friendly environment, a legalfriendly environment based on the AngloSaxon system, high standard professional
services (accountants and lawyers, all UK
educated). Our package is very good quality

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