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of offshore companies registered in Cyprus increased every year, the only available
data 106 suggests that this has not been an entirely positive trend. In 1994 only 6% of
offshore companies were fully fledged companies and just over 2 % employed three
or more people. In 1993 8% of offshore companies were considered to be fully
fledged by the Central Bank and 3% employed three or more people, whereas in
1992 it was 10% and 4% respectively. Essentially, a lot of new offshore companies
were registered in Cyprus every year, but very few of them (and in recent years a
declining number of them) contributed anything other than a registration fee to the
economy of the Republic of Cyprus.
Figure 2.25 The growth of other invisibles; the number of offshore companies
registered in Cyprus, 1976-1994.
Source: Central Bank of Cyprus
However, by the late 1980s the offshore sector generated a significant amount of
foreign exchange (see Figure 2.26 below). Even without considering the
contribution of the many shipping companies (many of which simply relocated from
Greece to Cyprus to reduce their exposure to taxation), the income generated
directly from the offshore sector appears significant.
106 Confidential Central Bank Report: "Offshore & Shipping Developments Düring 1994".
116