In 1975, Cyprus introduced a tax legislation aiming to attract international business companies to set up in Cyprus. This policy was extremely successful as it was founded on an attractive tax system and a wide and continuously expanding network of favourable tax treaties.
Cyprus became one of the most successful business and financial centres in Europe, particularly attractive to investors wishing to invest in Russia, the CIS and Central and Eastern Europe; and The Middle East.
Its importance increased dramatically with the collapse of communism in Central and Eastern Europe, and Russia. The conversion of these countries into free economies attracted significant incoming foreign investment.
Cyprus, traditionally, had good political and economic relations with all these countries, an attractive tax system and most beneficial bilateral double tax treaties. As a result, most of the investments into Central and Eastern Europe, and Russia occurred through Cyprus Companies.