A great degree of respectability amongst
companies registered in other tax incentive or tax haven countries. (Cyprus is not black
listed in any country of the World).
Cyprus is not considered to be a tax
haven or laissez faire country but a tax incentive country.
No withholding of tax on dividends
No capital gains tax
Freely transferable accounts of any
currency may be kept either in Cyprus or anywhere abroad without any exchange control
restrictions.
No exchange control restrictions once the
approval for the registration of the company is granted by the Central Bank of Cyprus
All expenses incurred for the earning of
income as well as annual allowance on fixed assets are allowed as deductions.
Company’s foreign employees working
in Cyprus are liable to personal income tax at a rate from 0 to 20% and if working outside
Cyprus but receiving their salary through Cyprus at a rate from 0 to 2%.
The foreign employees are exempt from
social insurance contributions
The net profits of the company are
subject to a corporate tax at the flat rate of 4.25% and if such profits are derived from
dividends received from another Cyprus offshore company, then no further tax is payable
other than the flat rate of 4.25% paid only by the distributing company. This rate is paid
irrespective of whether they are managed and controlled from Cyprus or elsewhere.
Shareholders are not liable to an
additional tax on dividends over and above the amount of corporate tax paid by the company
Exemption from stamp duty on any
contracts entered into by offshore entities
No estate duty on the inheritance of the
shares provided the deceased was not domiciled in Cyprus
Duty free facilities are extended to
offshore companies maintaining an office in Cyprus and to their expatriate personnel in
respect of motor vehicles, office equipment and household effects (except furniture and
air-conditioning equipment)
Cyprus has a wide network of double tax
treaties with many countries including Russia and other ex Eastern Block countries.
Specifically with reference to Russia, the tax treaty provides for zero withholding tax on
dividends paid from Russia to a Cyprus company as well as on gains generated by Cyprus
companies from the disposal of securities in Russia.
The identity of the owners can be kept
secret, and nominee shareholders may be used.
An offshore entity is not subject to any
capital gains tax except on gains arising from the disposal or immovable property held in
Cyprus.
The existence of double tax treaties
combined with the low tax paid by offshore entities offer tremendous possibilities for
international tax planning through Cyprus in view of the fact that:
Any tax paid in a country with which
Cyprus has a treaty is deducted from the Cyprus tax payable on the same income
Cyprus does not impose any withholding
tax on dividends, interest and royalties paid by Cyprus offshore companies
Offshore entities are exempt from VAT on
their trading activities. Furthermore they do not pay VAT on telecommunication services
and on goods eligible to be purchased duty free.
No withholding tax is payable on
dividends, interest and royalty payments
Full tax exemption of income derived by
way of interest on foreign capital imported into Cyprus and deposited with banks operating
in Cyprus
.
