Cyprus is not an offshore centre. An offshore centre has no double tax treaties and is not a signatory to international conventions. Moreover, it is used by wealthy individuals or international corporations for brass plate structures and for sheltering their wealth without tax liabilities.
Cyprus should be referred to as an international business centre. An international business centre in contrast with an offshore centre, is a country with a suitable infrastructure and expertise to accommodate and service the international entrepreneurial community in its dealings and transactions.
An international business centre has a network of double tax and other treaties and is a signatory to many international conventions. It has strict laws and regulations on international crimes, money laundering and even tax evasion. Its banking and financial system is highly regulated and supervised and its tax system is uniform, without discrimination or favouritism.
There are certain international or regional business centres in the EU which, although not exempted from the directives on financial services and money laundering, enjoy certain privileges and have special features outside the scope of the acquis communautaire. These centres, ie Ireland, Holland, Luxembourg, Madeira and the Channel Islands, can be cited as useful precedents for Cyprus.
As an international business centre, Cyprus offers the following:
- it has an impressive network of double tax treaties with more than 40 countries;
- it has entered into many other treaties for the promotion and protection of foreign investments and developments, tourism, shipping;
- it is a signatory to almost all the international treaties and conventions; and
- its financial system is strictly regulated and supervised.
Cyprus is consequently ready and willing to ease and assist international business activities and cross-border investments and transactions.
Cyprus has no raw material, agriculture, industry, water or oil. Indeed it has no other resources, except human resources which, combined with its key geographical position, has made Cyprus an effective international business centre throughout its long history.
Cyprus' accession process to the EU should enhance its status as an international business centre. It involves the following:
- a strategic plan setting out short- and long-term goals in respect of each important sector of the Cyprus economy likely to be affected by the accession—the agricultural sector, the industrial sector and the services sector;
- the full and active participation of the various government departments and bodies, as well as all those contributing to the island's economy, through and in conjunction with the professional bodies, trade unions and associations;
- a scientific study of all the developments in Europe, with a view to formulating a strong and effective stance during the accession negotiations;
- bringing Cyprus in line with the acquis communautaire and making it even more effective and attractive to multinational companies and generally to the international entrepreneurial community;
- providing for corrections to Cyprus' so-called offshore company to make it accessible to both Cypriots and non-Cypriots. There should be only one type of company which can carry out activities in or outside Cyprus, to be treated tax-wise with uniformity. When generating income from abroad, for instance, it could be taxed at a lower rate;
- designing and promoting certain new products or certain areas where Cyprus could be useful to its future European partners, for instance its unique ties with Russia and other eastern European countries and its increasing role in the financial sector.