Gold Magazine November - December 2013, Issue 32 | Page 48

ADMINISTRATIVE SERVICES

minimal. And of course the greater the extent
of presence (or substance) of an organisation
within a country, the more complicated the
solution of moving out becomes. So the message given by the award-winning companies is
very welcome and they should be applauded
for their trust and support. On the other hand,
we need to be careful because we have been
given a second chance by most international
businesses and investors but I don’t think that
they’ll easily give us another one.
Gold: The Government appears to be determined to faithfully implement the agreement with the Troika but will this automatically get everything back on track as far
as the island’s image abroad is concerned?
G.S.: The agreement with the Troika is meant
to bring Cyprus back to financial stability
and economic growth, while also ensuring
that structural malfunctions that have existed
for decades are dealt with decisively. In this
respect, the agreement with the international
lenders is a very important tool that will let
Cyprus return to the international business
arena and shout out loud that it is still here.
However, this by itself is not enough; we need
to come up with a concerted effort, backed and
shared by all those concerned, to stand a good
chance of restoring the country’s damaged
image.
Gold: More than two years ago you wrote
an article in Gold about what Cyprus could
learn from Luxembourg. We obviously
didn’t learn the right lessons. What needs to
be done if the island is to emulate Luxembourg as a financial centre?
G.S.: First of all, I am among those who be-

WE NEED THE
FORMULATION
OF A PLAN
FOLLOWED BY ITS
WELL-ORGANISED,
STRICT AND
TIRELESS
IMPLEMENTATION

lieve tha t Cyprus has never been a financial
centre and I doubt if it will ever manage to
become one, though this is not necessarily a
bad thing, especially after the events of March.
But the number of fully operational banks on
the island is pretty small, the range of services is
restricted to the basic minimum (mostly related to retail banking), there is lack of sophistication (for example, custody services – a vital
component for a place to become a hub for
investment funds), and not even a handful of
big international brands. Compare this to Luxembourg, where there are around 130 banks
offering a vast array of services and appealing to
many different legal backgrounds (i.e. civil law,
common law, Islamic law, etc.).
Luxembourg has been bold enough to take
firm decisions that have led it to focus on extensive and sophisticated operations, such as
institutionalised collective investment schemes
and securitisation vehicles. I have long argued
that Cyprus has a long way to go in terms of
specialisation, as we have always preferred the
“a little bit of everything” approach. We need
to change our philosophy and accept that we
can not excel in everything and focus on what
we can do best.
Gold: You made a number of proposals at
the time. Were any of them taken on board?
G.S.: I regret to say that very little has been
done in terms of the issues touched upon in
that particular article. Bureaucracy still reigns;
very little has also been done on digitalisation
of the procedures at the Registrar of Companies; on tax rulings, let me quote the words
of Eric Ryan who told your magazine that,
“As rules change globally, corporate clients
will want to eliminate as much uncertainty as
possible. Countries such as Luxembourg and
the Netherlands have well established ruling
practices, and Cyprus may want to review
those models”. Irrespective of the extent and
form the tax rulings may take, one thing that
definitely needs to be improved is the time required to obtain a reply from the Tax Authorities. Many other suggestions have been made
since the time of that article. They include
the ability to pay tax liabilities and receive tax
refunds in foreign currency for organisations,
which have a functional currency other than
the euro; the introduction of new products,
such as captive insurance, leasing and securitisation vehicles, and the promotion of Cyprus
for international call centre services. Another
proposal is the transfer of the decision-making
powers concerning the citizenship-by-invest-

WE NEED TO
CHANGE OUR
PHILOSOPHY AND
ACCEPT THAT WE
CAN NOT EXCEL IN
EVERYTHING AND
FOCUS ON WHAT
WE CAN DO BEST
ment scheme from the Council of Ministers
to an independent committee, which will add
objectivity and transparency to the whole process. Cyprus is an ideal location for establishing
substantive operations and the fact that it is the
biggest ship management centre in the EU and
hosts a quarter of all international companies
engaged in the foreign exchange industry is a
testament to this.
Coming to the Cyprus Fiduciary Association,
it has been our principle since its formation
that the existence of three different supervisory
bodies for fiduciary firms is discriminatory and
promotes unfair competition among providers
of the same services. More importantly, during these critical times for Cyprus, it opens us
up to criticism and mud-slinging from abroad
and, in any case, consolidation of regulation for
the same or similar services is a measure proposed by the Troika as well as by the Lascelles
Commission (which examined the future of
the banking sector) and various other bodies.
Gold: Do you have a new set of suggestions
for the government of President Anastasiades?
G.S.: I have many but essentially would urge
the President to let the professionals express
their ideas and contribute in any way they can
to restoring the country’s damaged reputation.
Cyprus still has all the advantages that it did at
this time last year, including the attractive legal
and tax regimes, the quality of the professional
services offered, the first-rate infrastructure,
the strategic geographical location and much
more. What we need is a collective effort by
everybody involved, the formulation of a plan
followed by its well-organised, strict and tireless
implementation. The Cyprus Fiduciary Association is at the disposal of all public and private authorities to work hand in hand, utilising
everyone’s experience and expertise.

48 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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07/11/2013 18:30