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Cyprus Implements EU-Mandated 15% Tax Rate On Large Multinationals

by THEFUTURE.TEAM

August 27, 2024

Cyprus is set to introduce a 15% minimum tax rate for large multinational corporations, in compliance with the EU directive aimed at harmonising tax policies across member states. The move, endorsed by Cyprus’ Finance Minister Makis Keravnos, is expected to generate over €200 million in additional revenue. This decision, while marking a significant shift from the current 12.5% rate, aligns Cyprus with the broader OECD-led initiative to establish a global minimum tax rate. Despite concerns, Keravnos reassured that the change is unlikely to drive multinationals out of the country, as the directive applies EU-wide.

This adjustment reflects a crucial step in Cyprus’ ongoing efforts to maintain competitiveness while adhering to international tax standards. With the proposal now before the Cabinet and soon to be discussed in Parliament, the nation is poised to balance its attractive tax regime with the demands of a globalised economy.

The introduction of this tax rate signals Cyprus’ commitment to international cooperation on tax matters, aiming to prevent profit-shifting practices that have historically allowed large corporations to minimise tax liabilities. For Cyprus, a key hub for multinational firms, this move could redefine its positioning in the global business landscape, ensuring it remains a compliant yet competitive destination for international business.

While the increase may seem minor, the 15% rate represents a broader shift in global tax policy, driven by a collective effort to create a more level playing field for taxation. For Cyprus, traditionally seen as a tax-friendly jurisdiction, this could challenge its status, pushing it to leverage other competitive advantages beyond low tax rates, such as a robust legal framework, strategic location, and skilled workforce. The long-term impact on foreign direct investment will be a critical metric to watch as this policy unfolds.

Cyprus Showcases Its Business Advantages At 2024 London Event

by THEFUTURE.TEAM

December 5, 2024

Cyprus seized the opportunity to present itself as a premier destination for high-net-worth individuals (HNWIs) at the ‘Non-Doms: The Cyprus Private Client Offering Gathering 2024,’ held at the iconic London Stock Exchange. The event attracted over 150 participants, including professionals from the UK and experts from Cyprus, all gathering to explore Cyprus’ business advantages.

The gathering aimed to strengthen ties between the international investment community and Cyprus, highlighting the island’s competitive tax regime and wealth management opportunities. The central focus was Cyprus’ strategic appeal for non-domiciled residents, particularly as changes to the UK’s tax framework prompted many HNWIs to reconsider their tax and residency options.

A Shift in Global Tax Dynamics

With the UK government’s decision to abolish its long-standing non-dom tax regime, Cyprus stands poised to become an attractive alternative. The UK’s new residence-based system, set to take effect in April 2025, could direct more wealthy individuals and businesses toward jurisdictions like Cyprus, known for its fiscal benefits and strategic location in the Eastern Mediterranean.

Marios Tannousis, CEO of Invest Cyprus, and George Pantelis, former Director General of the Finance Ministry, addressed how Cyprus is uniquely positioned to capitalize on this shift. Their presentations underscored the island’s stability, tax benefits, and favorable environment for both personal wealth and corporate operations.

Key Highlights from the Conference

One of the highlights of the event was the panel discussion titled “Cyprus: A Destination of Choice for HNWIs, Their Families, Companies, and Employees.” Experts like Christos Neokleous, Consultant at Tsirides Law, outlined the simplicity of doing business in Cyprus, emphasizing the ease of setting up companies and understanding the regulatory environment.

Andreas Andronicou, Partner at PwC Cyprus, discussed the significant tax advantages for both individuals and corporations looking to operate from Cyprus, especially within the European and global markets. The country’s legal framework, based on the English Common Law system, was another focus, with Melina Dionysiou, Director/Head of Corporate at Totalserve, explaining its business-friendly aspects.

A Strategic Business Environment

Cyprus’ status as an international business hub is further reinforced by its competitive tax rates, skilled workforce, and advantageous legal system. These factors, combined with its prime location, make it an ideal choice for companies seeking to expand into new markets. Moreover, the conference highlighted the island’s growing appeal to foreign investors and companies, with opportunities ranging from tax-efficient corporate structures to residency-by-investment programs.

As the world moves toward greater tax competitiveness, Cyprus is keen to attract international clients seeking efficiency and flexibility. This year’s event comes at a crucial moment, as the UK’s changes to its non-dom tax regime create new openings for Cyprus to solidify its position as a leading destination for wealthy individuals and businesses.

Global Appeal for High Net-Worth Individuals

Cyprus’ tax benefits, wealth protection solutions, and modern legal structures were the focal points of the final panel, which also explored investment opportunities on the island. Experts such as Sara Eojourian, Head of Wealth Management at Athlos Capital, discussed the array of investment solutions that Cyprus offers, particularly for HNWIs. These services not only provide personalized wealth management but also come at competitive costs, making them an attractive option for international investors.

Conclusion: Cyprus, an Attractive Option for International Clients

In conclusion, Cyprus is increasingly recognized as a top destination for both high-net-worth individuals and international businesses. Thanks to its competitive tax system, business-friendly legal environment, and strategic location, Cyprus is solidifying its status as a prime hub for foreign investment. As global tax policies continue to evolve, Cyprus remains well-positioned to provide attractive opportunities for clients and businesses seeking stability, efficiency, and significant fiscal benefits.