In July 2002 (with effect from 1 January 2003), the House of Parliament passed a tax reform legislation abolishing tax discrimination afforded to offshore companies by the end of 2005, in line with Cyprus’ commitments to the EU and OECD. Under the new regime, corporate tax on profits has been set at 10% - the same as for local companies.
Having amended its tax legislation in anticipation to EU Accession, Cyprus has set up a tax system that is ideally suited both to inbound and outbound EU investors.
The new tax climate offers to the investors:
- Low taxation
- Non offshore – EU – status
- Possibilities for tax planning in order to legally lower taxes even further (in some cases to 0%)
- Extensive double tax treaty network
- Exemption from tax on dividends received
- Exemption from tax of profit generated from transactions in securities
- Exemption from withholding tax on the repatriation of income either of dividends, interest and royalties.
- Access to EU directives