International Financial Services Guide Cyprus

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CyprusProfile Digital Series International Financial Services FROM MODEST TO ROBUST Financial services have since become a pillar of progress and recovery. With a combined output of more than 17%, financial activities (8.4%) and professional services (9%) make an important contribution to Cyprus’ economy. Growth has gone from modest to robust, with financial services rising on average 6.5% per annum in recent years and accounting for 20,000 jobs on the island. The Cyprus Securities and Exchange Commission (CySEC), the country’s financial services regulator, had 806 entities under its supervision at the end of 2021, compared to 788 at the end of 2020. Brexit is widely seen as a key factor responsible for some of the most recent growth. Numerous UK financial firms wanting to retain a base in the EU relocated part or all of their operations to Cyprus. A MORE DIVERSE ROLE A large number of activities are today part and parcel of Cyprus’ financial services industry. While corporate services and corporate structuring continue to play an important role, investment funds, trust services and private wealth have expanded significantly. Facilitating the next steps in the finance sector’s evolution, Cyprus has established an Innovation Hub that provides a safe space for fintech entrepreneurs who are developing the business models of the future. There is also a strong will to make sustainable finance a key driving force in the further development of the financial centre. CONNECTING MARKETS Success in the financial services industry is not just a matter of sector diversification. International connectedness and access to investor markets are equally important, and in recent years, Cyprus has invested time and resources into building the foundations of a top-notch finance platform. Its membership of the EU, the eurozone and the Commonwealth, along with the island’s strategic position between three continents – Europe, Africa and Asia – with regular flight connections, have been a constant in Cyprus’ ability to attract investors. Thanks to its location, Cyprus also enjoys business-friendly time zones, enabling international companies to do business with the East in the morning, Europe throughout the day and with the West in the afternoon. 14
CyprusProfile Digital Series International Financial Services MORE THAN TAX A low corporate tax rate, as well as a network of about 66 Double Tax Treaties that facilitate access to the world’s high-growth markets, have long supported Cyprus’ competitiveness. However, Cyprus is moving with the times and is currently overhauling many facets of its taxation framework. Following an OECDbrokered agreement on global tax reform, Cyprus is looking to increase its corporate tax rate from 12.5% to 15% while also simplifying the tax system, enhancing transparency and reducing administrative burdens. There is widespread agreement that the new tax rate will not significantly affect Cyprus’ ability to attract business, and the government is currently working on a set of measures and incentives that will offset the small increase in corporate tax. GLOBAL STANDARDS Ensuring that Cyprus enjoys the trust and confidence of the international finance community is a critical element in the country’s economic vision. The financial services sector is aligned with the demands and expectations of global standard setting bodies, which regularly visit the island: Cyprus follows the International Financial Reporting Standards (IFRS), has a mandatory audit regime for all sizes and types of companies, and its legal system is fully compliant with the EU, the Financial Action Task Force on Money Laundering (FATF), OECD, FATCA, the Financial Stability Forum laws and regulations and EU AML directives. The MONEYVAL Committee of the Council of Europe also found Cyprus to be compliant or largely compliant with all its parameters, and CySEC highlights that it is committed to the continued global fight against financial crime. In 2021, the regulator significantly invested in regtech technology to better monitor and supervise licence holders. 15
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International Financial Services Guide Cyprus

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