DOING BUSINESS IN CYPRUS

PREFACE

THE BOOKLET has been prepared for the benefit of clients and associated firms throughout the world. The guide describes in broad terms Cyprus in general and the prevailing accounting and auditing practices as well as the various forms of business organisations and provides the framework of the legal, financial, taxation and employment requirements and incentives which we believe will be of particular interest to potential investors contemplating setting up business in Cyprus.

It does not however attempt to deal exhaustively with any of the topics covered. Companies and individuals planning to use Cyprus in their future business operations or indeed companies which have already been established in Cyprus are strongly advised to seek professional advice before deciding on the complex issues of foreign operations.

The information contained in this booklet is accurate as at the date of its publication. It is designed to increase the reader’s general awareness about Cyprus. For explanations and other clarifications or professional advice, please, contact Nexia Poyiadjis.

NEXIA POYIADJISCHARTERED ACCOUNTANTS

The Chanteclair House,2, Sophouli street,8 Floor,P O Box 21814, 1513 Nicosia, Cyprus.Tel No +357 22 456111, Fax No +357 22 666276Email np@nexia,com.cyWebsite www.nexia.com.cy

January, 2008

ABOUT US

Nexia Poyiadjis is a prominent Nicosia partnership of Chartered Accountants and business advisors with a proud history dating back to 1969. We are leading providers of business advisory and accounting services to small and large owner-managed businesses, public companies, professional practices and private individuals. A significant number of our clients are international clients using Cyprus as a base or taking advantage of the extensive number of favourable Tax Treaties that Cyprus has signed with other countries.

Today we are a dynamic and successful team of professionals offering advice on an experienced understanding of the national and international scenes. Over the last three decades Nexia Poyiadjis has become established as one of Cyprus major national firm's of accountants and business consultants. We attribute this success to our unrivaled quality service and professionalism, integrity and continued commitment to our clients' success.

We are proud of our record in advising and assisting international companies and private individuals. We are the exclusive member firm in Cyprus of Nexia International one of the larger and longest established global networks of independent accounting and consulting firms. With over 12,000 people in 96 countries Nexia International is well placed in advising and assisting international clients.

Our worldwide network of Nexia International offices is available to clients in any country who require advice on specific issues raised in this booklet. An international director of the offices of Nexia International is available on request from us.

NEXIA POYIADJISChartered Accountants

January, 2008

CONTENTSI. Cyprus at a glanceI.1 Name of CountryI.2 Location and AreaI.3 ClimateI.4 HistoryI.5 PopulationI.6 Official LanguagesI.7 ReligionI.8 PoliticsI.9 Executive PowerI.10 Legislative PowerI.11 Judicial PowerI.12 The Central Bank of CyprusI.13 CurrencyI.14 Local AuthoritiesI.15 International RelationsI.16 British Sovereign AreasI.17 Agriculture I.18 Natural ResourcesI.19 EnvironmentI.20 Manufacturing I.21 ImportsI.22 ExportsI.23 High Technology IndustryI.24 TranshipmentI.25 Banking and ShippingI.26 ServicesI.27 Health and Social WelfareI.28 EducationI.29 CultureI.30 MediaI.31 TimeI.32 Business HoursI.33 The Cyprus Way of Doing BusinessI.34 Public Holidays

II. Business EnvironmentII.1 The Dynamism of the Cyprus EconomyII.2 The Cyprus Economy and the European UnionII.3 The Stock Exchange

Obtaining a Stock Exchange ListingII.4 Manufacturing and IndustryII.5 Free ZonesII.6 Banking and Sources of Finance

Central Bank of Cyprus Domestic Banks International Business Units (IBUs) Other Financial Institutions

II.7 InsuranceII.8 Tourism

All Eyes on Cyprus Tourism Policy

II.9 Investment FirmsII.10 Franchising

III. Investment ClimateIII.1 Foreign Investment in CyprusIII.2 Investment from EU CountriesIII.3 Investment from non EU CountriesIII.4 Investment Incentives

Basic Government Investment Goals Government Investment Incentives and Schemes

III.5 Fiscal IncentivesIII.6 Holding CompaniesIII.7 Regulated ActivitiesIII.8 Foreign Exchange ControlsIII.9 Acquisition of Real EstateIII.10 Intellectual PropertyIII.11 Competition Law IV. Business EntitiesIV.1 Forms of EnterpriseIV.2 Companies registered in Cyprus

Companies Limited by Shares Companies Limited by Guarantee Unlimited Companies Cyprus International Business Companies

IV.3 Branches of Foreign Legal EntitiesIV.4 PartnershipsIV.5 Sole Proprietors / Sole Traders / Business NamesIV.6 International TrustsIV.7 Co-operativesiV.8 The European Company SE

V. Formation of a Limited CompanyV.I Formation ProceduresV.2 Capital Structure

Par Value and Classes of Shares Pre-emptive Rights Debentures Increases and Reductions in Share Capital

V.3 Shareholders Agreements

VI. Company AdministrationVI.1 ShareholdersVI.2 Directors

Appointment Retirement and Removal Types of Directors Duties of Directors

VI.3 Company Secretary

VI.4 Meetings Annual General Meetings Extraordinary General Meetings Conduct at General Meetings

1. Ordinary Resolutions 2. Extraordinary Resolutions3. Special Resolutions

Minutes of Resolutions and Single Member Companies Board Meetings

VI.5 Registered Office VI.6 Liquidation and Receivership

Liquidation1. Compulsory Liquidation2. Voluntary Liquidation

i) Members’ Voluntary Liquidationii) Creditors’ Voluntary Liquidation

Receivership

VII. Audit and Statutory RequirementsVII.1 Financial Reporting and AuditingVII.2 Form and Content of Financial Statements

Responsibility to Prepare Financial Statements Form and Content

VII.3 Public Filing RequirementsVII.4 Group Financial Statements

Related Party TransactionsVII.5 Audit RequirementsVII.6 Appointment and Dismissal of AuditorsVII.7 Qualifications of an AuditorVII.8 Accounting RecordsVII.9 The Accounting Profession

VIII. Cyprus TaxesVIII.1 Personal Income Tax

Who is Liable Exemptions Social Incentives Deductions from Income Non – Deductible Expenses Capital Allowances Losses

VIII.2 Corporation Tax Who is Liable Exemptions from Cyprus Tax Deductions Non-Deductible Expenses Losses Group Relief Loss of a Permanent Establishment outside the Republic Insurance Companies International Business Companies Company Re-Organisations Capital Allowances for Annual Wear and Tear

VIII.3 Special Contribution for Defence Rates Dividends Interest Income Deemed Distribution Company Dissolution Reduction of Capital Tax credit for Foreign Tax Paid International Business Companies

VIII.4 Capital Gains Tax

Imposition Exemptions Deductions

VIII.5 Immovable Property Tax Imposition of Tax Rates Exemptions

VIII.6 Estate Duty

VIII.7 Value Added Tax Imposition of Tax Rates Exemptions Taxable Persons and Registration Taxable Basis Right of Registration VAT Returns and Payment of VAT Cyprus Non-Resident Companies Administration of Intra-Community Trading Penalties and Interest SECURITY CONTRIBUTIONS

VIII.8 Social Security Contributions Contributions

VIII.9 Social Cohesion Fund Who is Liable Emoluments

VIII.10 Special Modes of Taxation

Cyprus International Business Companies (IBCs) Profits from Shipping Activities Pension Income from Services Rendered Abroad Intellectual Rights etc Film Royalties Profits of Professionals, Entertainers etc

VIII.11 Transfer Fees, Stamp Duties and Other Fees Immovable Property Transfer Fees Stamp Duties Stock Exchange Transactions

VIII.12 Dividends

VIII.13 Foreign Tax Relief

VIII.14 Mergers/Combinations and De-Mergers of Businesses

IX. Labour and Immigration RequirementsIX.1 Entry Visas

Passports and Visas Issue of Visas Visa Application Procedure and Documents Required

IX.2 Work and Residence PermitsIX.3 Permanent Residence Permits

X. AppendicesX.1 Double Tax TreatiesX.2 Rates of Taxes

a) Personalb) Corporatec) Capital Gainsd) Immovable Property

X.3 Tax Diary - Dates for Settlement of Taxes and Submission of Tax Forms.

Chapter 1

I. Cyprus at a Glance

I.1 Name of CountryRepublic of Cyprus.

I.2 Location and Area Cyprus is an island of 9.251 sq kms. It is strategically situated in the far eastern end of the Mediterranean, at the crossroads of Europe, Africa and Asia, and in close proximity to the busy trade routes linking Europe with the Middle East, Russia, Central Asia and the Far East.

Its capital is Nicosia (Lefkosia).

I.3 Climate Mediterranean, with mild, wet winters (mean daily minimum 5o C, 41o F), and hot, dry summers (mean daily maximum 36o C, 97%F).

I.4 HistoryCyprus according to mythology is the birthplace of the Greek goddess of love and beauty, Aphrodite. The island is both an ancient land, with eleven thousand years of history and a young independent republic since 1960. Its strategic location positioned in the Mediterranean and at the meeting point of great civilizations, has been one of the critical factors influencing the course of the island’s history through the centuries.

I.5 Population775,927.000 (2004)(85,2%)Greek Cypriots(11,6%)Turkish Cypriots24.000 (3,2%) foreign residents and workers Population density: 82 persons / sq km.The figure of the Greek Cypriot population includes the 8.000 Maronites, Armenians and Latins.

I.6 Official LanguagesGreek and TurkishEnglish is widely spoken

I.7 ReligionThe Greek Cypriots are Christian Orthodox, the Turkish Cypriots are Muslims, while the smaller Cypriot minorities of Maronites, Armenians and Latins belong to other Christian denominations mainly Catholics.

I.8 PoliticsCyprus gained its independence from British rule in 1960. I.9 Executive PowerPresidential system of government. The President is elected by universal suffrage for a five-year term. Executive power is exercised through an 11-member Council of Ministers appointed by the President.

I.10 Legislative Power

Multi-party House of Representatives.Voting system: Simple proportional representation. House members are elected by universal suffrage for a five-year term.

I.11 Judicial Power Justice is administered by the Supreme Court and by the Assize and District Courts.

I.12 The Central Bank of CyprusThe Central Bank of Cyprus was established in 1963. It is responsible for formulating and implementing monetary and credit policy. It also administers the foreign exchange reserves of the Republic, supervises banks and acts as banker and financial agent of the Government.

I.13 CurrencyUntil, 31 December, 2007 the Cyprus pound was the currency of Cyprus. As from 1 January, 2008, Cyprus adopted the Euro as the currency of Cyprus. The Euro is divided into 100 cent. There are no exchange control restrictions. The US Dollar is also, widely accepted in Cyprus.

I.14 Local AuthoritiesLocal government is the responsibility of the Municipal and Community Councils.

I.15 International Relations Cyprus is a member of the European Union since May, 2004 and is also a member in many international organisations including:The United Nations (UN) (1960) and its specialized agenciesCouncil of Europe (CoE) (1961)The British Commonwealth (1961)Organisation for Security and Co-operation in Europe (OSCE) (1975)Non-Aligned Movement (NAM) (1960)World Trade Organisation (WTO) (1995)World BankInternational Monetary Fund

Cyprus is represented through diplomatic missions in over 33 countries. Moreover Cyprus has particularly good relations with the Mediterranean Countries the Middle East Region as well as other developing countries.

I.16 British Sovereign Areas There are British military bases at Akrotiri / Episkopi and Dhekelia covering 2,74% of the country's territory. The bases were retained by Britain under the 1960 treaty, which gave Cyprus its independence. I.17 Agriculture Agriculture contributed about 4,1% to GDP in 2007 and gave employment to 9,0% of the working population.

Principal crops are potatoes, other vegetables, cereals, citrus, grapes and olives. Livestock farming is mainly in cattle, sheep, goats, pigs and poultry. Fish production is derived from inshore and trawl fishing and marine aquaculture.

I.18 Natural Resources The island's natural resources are copper, gypsum, timber, marble, bentonite and earth pigment, but none exist in significant quantities. Water is a scarce resource in Cyprus. The

problem has been met by the construction of dams and desalination plants.

I.19 Environment The protection of the environment is an essential element in the country's economic and social development policies. Environmental legislation has been completely harmonised with the relevant EU laws and directives

I.20 ManufacturingManufacturing accounts for 10,8% of GDP and provides employment to 13,3% of the workforce. The main industries are food, beverages, tobacco, textiles, clothing, footwear, leather goods, metal products, chemicals and plastic products.

I.21 ImportsChief imports are raw materials, consumer and capital goods, transport equipment and fuels. In 2007, 51% of total imports come from the EU, mainly the UK (11%), Italy (8.8%), Greece (8.6 %), Germany (7%) and France (4.4%). The USA accounted for 10.6% of imports, Japan 5.8 %, and China (15%).

I.22 ExportsMajor exports are manufactured and agricultural products such as clothing, footwear, pharmaceutical products, cement, cigarettes, furniture, paper goods, wines, potatoes and citrus fruit. In 2007, 48% of domestic exports went to EU countries, mainly to the UK (17.2%), Greece (9.5%) and Germany (6.3%). Also 24.3% of exports went to Arab and 7.8% to Eastern European countries.

I.23 High Technology IndustryThe Government is currently promoting the establishment of high technology industry through the creation of incubators and a research and technological development centre. I.24 Transhipment On account of its geographical location Cyprus has developed into an important transhipment centre with a large volume of re-exports going to the emerging markets of the Middle East and Central Europe.

I.25 Banking and shippingCyprus has developed into an international banking and business centre with over 35 foreign banks, two administered banking units and over 1.000 fully-fledged overseas companies operating on the island. It has also become an important shipping centre and currently ranks sixth in the world as a maritime nation. The central geographical location of the island, British modelled legal system, availability of wide-ranging professional services, excellent infra-structural facilities, advanced telecommunications network and widespread knowledge of English are some of the factors that have helped create an ideal business environment for foreign firms.

I.26 ServicesThe tertiary or services sector is the fastest growing area and today accounts for about 75.4% of GDP and 69% of the gainfully employed population. The sector includes tourism, transport and communications, trade, banking, insurance, accounting, real estate, catering, public administration and business and legal services.

I.27 Health and Social Welfare

Free medical care in government hospitals is available for low-income families, government employees and refugees. There are also over 100 private clinics with some1.500 beds and a large number of practices offering a wide range of medical services.The ratio of persons per doctor is 357:1. A comprehensive social insurance scheme covers every working male and female and their dependants. Benefits and pensions from the scheme cover unemployment, sickness, maternity, widows, injury at work, old age and death.

I.28 Education Full time education is compulsory from the age of 5. Primary and secondary education is free. In addition to state schools there are private fee-paying schools in all towns, whose basic language is English. Cyprus offers a distinguished University as well a number of private institutions of higher education.

I.29 Culture Cultural life finds expression through the creative arts. Literature, poetry, concerts, opera, dance, painting and sculpture are some of its manifestations. There are also a number of museums and art galleries.

I.30 MediaFreedom of expression and media pluralism are safeguarded by the Constitution and the relevant press and radio and television station laws.

I.31 TimeCyprus is two hours ahead of Greenwich Mean Time (GMT).

I.32 Working HoursNormal working hours are 8.30 am to 5.30 pm, Monday to Friday. The normal industrial working week is between 37 and 40 hours a week.

I.33 The Cyprus Way of Doing BusinessBusiness customs in Cyprus are not very different from the U.S or, indeed, the rest of Europe. Despite the long and hot summer, the conventional business dress code usually calls for a suit and tie for men and conservative attire for women. More casual wear is usually worn when entertaining business guests, depending on the venue.

I.34 Public Holidays

The following table lists public holidays in Cyprus in 2008:New Year’s Day 1 JanuaryEpiphany Day 6 JanuaryGreen Monday 14 March Greek Independence Day 25 MarchCyprus National Day 1 AprilEaster Monday 24 AprilInternational Labour Day 1 MayHoly Spirit Day 20 JuneAssumption Day 15 AugustCyprus Independence Day 1 OctoberGreek National Day 28 OctoberChristmas 24-26 December

CHAPTER II

II. Business Environment

II.1 The Dynamism of the Cyprus Economy

Cyprus’ economy is market-oriented, with the private sector playing the dominant role in the production sphere. The government’s role focuses on the creation of a favourable entrepreneurial climate, through the maintenance of conditions of macroeconomic stability, the upgrading of socio-economic and legal infrastructure, and the pursuit of sustainable development.

The economy of Cyprus has exhibited dynamism and flexibility throughout the period since the island’s independence. In spite of the 1974 Turkish military invasion and its devastating aftermath, the economy managed to recover and attain some major accomplishments. It is no coincidence that a few years after the invasion, the international Press described the Cypriot economy’s leap forward as a real “economic miracle”.

Some of the accomplishments are the following:

• An impressive real annual rate of growth of GDP.• The rapid growth of GDP accompanied by the creation of a large number of employment opportunities and the consolidation of conditions of full employment.• The satisfactory growth performance accompanied by conditions of relative internal and external economic stability.• The rapid rate of growth was accompanied by a profound restructuring of the economy from the sectoral point of view.

II.2 The Cyprus Economy and the European Union

As a full member of the European Union Cyprus is ready to meet successfully the challenge of being part of the enlarged European family. The island’s economy is characterised by robustness and macroeconomic stability, which is evidenced by the favourable evaluations and comments of the European Commission, the International Monetary Fund and other international organisations.  In addition, in 2006, Cyprus was ranked 25th in the United Nations Index of Human Development.

The Cyprus economy has continued to perform well in 2007, after a solid performance in 2006. GDP growth reached 3.8% in 2006 and is expected to accelerate to 4.2% in 2007. Overall growth performance during the past few years has been robust, thus facilitating real convergence with the European Union.

It is noteworthy that this growth was accomplished in an environment of full employment conditions, low inflation and a stable and strong currency. 

Strong demand for financial and other business services, health and education, as well as, real estate related activities has heightened growth, offsetting the continuous below potential expansion of the tourism sector. At the same time buoyant demand for agricultural exports and dwellings has sustained growth in these key sectors of the economy, resulting in a more balanced growth pattern. Foreign demand for real estate in Cyprus rose fast and the tourism industry which has been operating below potential has staged a recovery with tourist revenues rising by 7% in the first none months of 2007

II.3 Manufacturing and Industry

Even though the blow inflicted on the manufacturing sector by the Turkish invasion of 1974 was severe, recovery during the 1975-83 period was remarkable. In the post invasion period in particular during 1975 -1983 the sector has been growing at an average annual rate of 9,1% and has become increasingly important for the economy, especially when emphasis was geared to supplying the foreign markets.

By 2006 the sector accounted for about 10% of Gross Domestic Product (GDP) and 12% of employment. Exports of manufactured products in 2006, compared to 1973 figures (£15 million), recorded a large increase and reached about £191,6 million. The most important sectors in terms of value added are food and beverages, clothing, furniture and metal products. Other industrial sectors, which continue to expand, include printing and publishing, plastics, chemical and pharmaceutical products.

The manufacturing industry of Cyprus has been going through difficult times in the past decade, experiencing a fall in the growth of production, exports and employment. This development has been the result of an erosion in our competitiveness, both abroad and in the local market, at a time of increasingly intensified, international competition. At the root of these problems lie the structural weaknesses of the sector, the drastic reduction of tariff protection due to the participation of Cyprus in the World Trade Organization, the rising labor costs and low productivity. As a result the share of the manufacturing sector in the Gross Domestic Product and in employment remained stagnant.

International competition is increasingly intensified mainly from two directions: on the one hand, the high-wage producers, who have combined design, quality and new forms of flexible production to cut working and capital costs and improve response times and on the other, the low-wage mass producers of South-East Asia.

Faced with this situation the Government having thoroughly considered ways and means for the reconstruction and development of the sector, has reformulated government policy to facilitate the process of modernization and technological upgrading of the productive fabric of the economy within the framework of harmonization with EU Regulations and the Acquis – Communautaire in general. More specifically, the Government has set amongst its priorities the following basic goals:

- Attraction and development of new high-tech industries- Assistance and reconstruction of Cyprus traditional industry- Productivity improvement- Attraction of capital intensive foreign investment

Foreign capital would also play a major role in these efforts, as it contributes substantially to the introduction of high technology, know-how and expertise. Further, the full liberalization of the capital markets, within the context of harmonization with the European Union will add impetus to the inflow of foreign investment capital and the creation of joint ventures.

The accession of Cyprus to the European Union provides Cypriot small and medium sized enterprises with the opportunity of participating in the various community programmes concerning industrial technology, professional training, product development, marketing etc. thus further enhancing the process of restructuring. Cypriot firms will also be presented with the challenge of penetrating the European market of 450 million consumers.

II.4 The Stock Exchange

The Cyprus Stock Exchange started its operations as a legal entity in the form of a public corporation body on the 29th of March of 1996, by virtue of The Cyprus Stock Exchange Laws and Regulations which had been passed by the House of Representatives in 1993 and 1995 respectively.

The Cyprus Stock Exchange is a regulated Exchange where all transactions concerning corporate and public securities are carried out. Such securities include stocks, bonds and warrants. The main participants in the market are the Members of the Stock Exchange (stock brokerage firms), the listed issuers and the investors.

The Council of the Cyprus Stock Exchange (CSE) in September 2002 issued the Code of Corporate Governance for the Cyprus Stock Exchange. The aim of the Code is to strengthen the monitoring role of the Board of Directors, to protect small shareholders, to adopt greater transparency and to provide timely information, as well as to sufficiently safeguard the independence of the Board of Directors in its decision - making. The Code is voluntary for the listed companies.

Trading of shares by foreigners on the Stock Exchange is as easy as on any modern stock market. Foreign investors are subject to the same rules and regulations of the CSE as Cypriots or other EU nationals, regarding capital distribution.

Provided that the investment is in line with the CSE’s laws and procedures, investors may acquire up to 100% of the share capital of all Cypriot companies, listed on the CSE, except companies operating in specific sectors, such as the banking sector.

Obtaining a Stock Exchange Listing

Basic RequirementsEach company that seeks a listing a listing must some basic requirements the most important of which are:

1. The issuer must have the right to issue the proposed category of titles in accordance with the company’s Memorandum and Articles of Association

2. The expected market value of the proposed issue must be in excess of CYP600.0003. There must be no restrictions in the transferability of the titles 4. The issuer must have published audited accounts for at least the three years

preceding the application5. Companies that have been established with the sole purpose of financing a large

project, investment companies and newly established companies are exempted from this provision provided that they satisfy the Council of the Cyprus Stock Exchange that potential shareholders will be given sufficient information to enable them to access properly the value of the titles.

6. It is not allowed for any shareholder to control either directly or indirectly more than seventy per cent of the share capital and a percentage of at least twenty five per cent of the share capital must be satisfactorily dispersed to the public at large.

7. The issuer must safeguard that existing shareholders will enjoy pre-emption rights in every subsequent issue

8. The issuer must make a commitment to list all the titles of the same category that have already been issued or will be subsequently issued.

Applying for listingIn order for a company to obtain a listing it is necessary to submit to the Council of the CSE for approval a signed application and a number of other documents. The most important of these other documents are the Prospectus and the Listing Particulars.Professional advice must be sought in preparing a Prospectus or Listing Particulars.

Continuing obligations

Companies must observe a number of obligations to maintain a listing. These ensure that the CSE and investors are informed immediately of financial and other information including:

1. Financial statements2. Capital changes3. Dividends,4. Changes in the position of Chairman, Member of the Board of Directors, Senior

Management, the Auditor or any other executive.5. Share dealings by the directors, the Secretary, the Auditors, the Employees Provident

Fund and any other person connected with them.6. Transactions pertaining to titles of the issuer carried out by shareholders who hold

more than 5% of the company’s share capital or by persons related to them.7. Other price sensitive information, if appropriate

There are also minimum standards of corporate governance to be observed.

II.5 Free Zones

Cyprus has three Free Zones (FZs). The first two, located in the two main ports of Limassol and Larnaca, are used only for transit trade, while the third, located near the international airport in Larnaca, can also be used for repacking and reprocessing. These areas are treated as being outside normal EU customs territory. Consequently, non-EU goods placed in FZs are not subject to any import duties, VAT or excise tax. FZs are governed under the provisions of relevant EU and Cypriot legislation. The Department of Customs has jurisdiction over all three areas and can impose restrictions or prohibitions on certain activities, depending on the nature of the goods. Additionally, the Ministry of Commerce, Industry and Tourism has management oversight over the Larnaca FZ. Companies given permission to locate in the Larnaca FZ take advantage of the fact that the FZ operates outside the normal jurisdiction of Cyprus Customs. This allows the company to import raw materials or goods for transhipment without paying the normal import duty and VAT. The only limitation is that the goods must be sold or re-exported strictly outside the EU. If the company wants to do business with the local market, it must obtain permission from Customs and pay the appropriate duties. The procedure for applying is straightforward. Interested companies apply to the Ministry of Commerce, Industry, and Tourism, laying out their investment plans. The Ministry reviews the application and makes a recommendation. An inter-agency Council, with participation from the Central Bank of Cyprus and the Ministry of Finance, reviews the application and the Ministry of Commerce, Industry andTourism issues approval.

II.6 Banking and Sources of Finance

The banking system comprises the Central Bank of Cyprus Domestic Banks International Banking Units (IBUs) Co-operative Credit Institutions, which are supervised by the Co-Operative Societies’ Supervision and Development Authority.

Central Bank of CyprusThe Central Bank of Cyprus, by virtue of the powers conferred upon it by the Central Bank of Cyprus Law, is the licensing authority for the conduct of banking business and for the supervision of banks. In the exercise of its supervisory role, the Central Bank is guided by the recommendations of the Basel Committee on Banking Supervision and the regulatory framework of the European Union. In July 2003, the Banking (Amendment) Law 2003 was enacted by the House of Representatives for purposes of full compliance and harmonisation of the regulatory and supervisory framework within which banking business may be carried out with the acquis. Domestic Banks

There are currently 14 domestic banks operating in Cyprus, 11 commercial banks and 3 specialised financial institutions. All banks are incorporated in Cyprus with the exception of Arab Bank plc and National Bank of Greece S.A. which operate as branches of foreign banks. The commercial banks incorporated in Cyprus are:

i) Bank of Cyprus Public Company Ltd, ii) Marfin Popular Bank Public Ltd,iii) Hellenic Bank Public Company Limited,iv) Co-operative Central Bank Ltd,v) Universal Bank Public Ltd, vi) Alpha Bank Cyprus Ltd,vii) National Bank of Greece (Cyprus) Ltd,viii) Emporiki Bank - Cyprus Ltd, ix) Societe Generale Cyprus Ltd. x) Eurobank EFG Cyprus Ltdxi) Bank of Piraeus (Cyprus) Ltdxii) Russian Commercial Bank (Cyprus) Ltdxiii) Kommunalkredit International Bank Ltd

The latter eight are subsidiaries of foreign banks.

Branches of Banks from EU Member States

i) Barclays Bank PLCii) Banque SBA SAiii) First Investment Bank Ltdiv) Joint Stock Company “Trasta Kommercbanka”v) National Bank of Greece A.E.vi) Central Cooperative Bank PLCvii) Banca Transilvania S.A.

Branches of Banks from Non-EU Countries

i) BankMed s.a.l.ii) Arab Jordan Investment Bank SAiii) Banque Bemo SALiv) Bank of Beirut SALv) BBAC SALvi) BLOM Bank SALvii) Byblos Bank SALviii) Credit Libanais SALix) FBME Bank Ltdx) Industrial Commercial AvtoVAZbankxi) Jordan Kuwait Bank PLCxii) Jordan Ahli Bank plcxiii) Lebanon and Gulf Bank SALxiv) Lloyds TSB Offshore Limitedxv) Privatbank Commercial Bank

Representative Offices of Foreign Banks

i) UBS AGii) HSBC Bank PLC

In recent years banks have expanded their activities beyond traditional banking and their services include insurance, leasing, hire purchase finance, factoring, mutual fund management, investment and consulting as well as custody and asset management services. They have also developed new products and services through electronic means or electronic access, using alternative distribution channels such as the internet etc. International Business Units (IBUs)In addition to the domestic banks, there are currently 29 IBUs, which have been authorised by the Central Bank of Cyprus to operate from within Cyprus. They are required, however, to confine their activities primarily with non-residents and in currencies other than the Cyprus pound. As from 1 January 2001, these institutions have been permitted to grant medium and long-term loans in foreign currencies to residents.

Other Financial InstitutionsThe specialised financial institutions are the:

i) Cyprus Development Bank Ltd, ii) Housing Finance Corporation andiii) Mortgage Bank of Cyprus Ltd.

The Cyprus Development Bank Ltd specialises in the provision of medium and long-term finance for development purposes, carries out investment banking operations and provides consulting services to companies. The Housing Finance Corporation provides long-term housing loans mainly to low and middle-income families.Mortgage Bank of Cyprus Ltd specialises in granting medium and long-term loans for the development of the tourism and manufacturing industries.

As far as the banking sector is concerned no person either resident or non resident may own directly or indirectly 10% or more of a banking company’s share capital or voting stock without the Central Bank’s approval. Banking companies are also required to obtain the Central Bank’s approval before registering more than 50% of their share capital in the name of non residents.

II.7 Insurance

The activities of Insurance Companies are governed by the Insurance Companies Laws and the Superintendent of Insurance monitors regulations and their operations. The major insurance companies are subsidiaries or affiliates of banks. There are also a number of captive insurance companies.

II.8 Tourism

All Eyes on CyprusTourism is one of the most important sectors of the Cyprus economy. The Cyprus mystique is as much a product of its legendary beauty as it is of millennia of competing empires, all unable to resist the island’s strategic allure of the island. The perfect location, nestled into the eastern Mediterranean Sea and the crossroads of three continents, Cyprus is the third largest island in the Mediterranean and an ideal starting point for the discovery of other exotic locales such as the Greek Islands, Egypt and the Middle East.

Tourism Policy

Cyprus has evolved into a well-developed destination, which operates in a highly competitive environment and deals with the impacts of globalization and tourism market maturity. The EU accession has created a wide range of opportunities and challenges for Cyprus as a tourism destination which have to be timely and effectively addressed.

Hence, a long-term strategy until 2013 has been drafted and tourism policies, measures and incentive schemes are being adopted in order to qualitatively upgrade the tourism product and secure the sustainable development of tourism in Cyprus.

II.9 Investment Firms

The activities of Cyprus Investment Firms (CIFs) are governed by the Investment Firms Act of 2002 and the Cyrus Securities and Exchange Commission monitor their operations.

Investment Firms that are incorporated in Cyprus and granted authorisation from the Cyprus Securities and Exchange Commission. European Investment Firms incorporated in a Member State and granted authorisation by the respective supervisory authority.

II.10 Franchising

U.S. franchises, particularly in the food business, have been extremely successful in Cyprus in recent years. The following companies have opened franchise outlets in Cyprus since 1990: McDonald’s, Pizza Inn, Pizza Hut, Kentucky Fried Chicken, Kenny Rogers Roasters, and TGI Friday’s. The most recent franchises that opened outlets on the island are Starbucks coffee and Burger King. Bennigan’s has also opened its first restaurant on the island last summer. Bonanza Steakhouse is scheduled to open in 2005 as well. Such non-food U.S. franchises as Athlete’s Foot and Gold’s Gym are also present and successful in Cyprus. Operation of these ventures results in a substantial outflow of capital in the form of licensing fees and royalty payments, estimated at around USDollars 20.0 million a year for U.S. and other foreign franchises. Present trends suggest that the franchising sector has great prospects for growth in Cyprus.

CHAPTER III

III Investment Climate

III.1 Foreign Investment in Cyprus

One of the primary objectives of the Government’s development policy is to foster the infusion of foreign investment in all economic sectors, with an emphasis οn the fields of high-technology, tourism and industry.

In order to attract foreign investments and enhance economic prosperity in Cyprus, the government has liberalised the Foreign Direct Investment (FDI) policy for both EU and non-EU nationals. Administrative procedures have been simplified and no limitations apply in most sectors of the economy, as per the minimum level of investment and the foreigners΄ participation percentage. Moreover, bureaucratic intervention has been reduced, fostering investment opportunities by non-residents.

Consequently, foreign companies now have the opportunity of investing and establishing business in Cyprus on equal terms with local investors; no distinction is being made between foreign and Cypriot companies.

Among the significant advantages that Cyprus has to offer as an international business centre are:

Member of the European Union Strategic location at the crossroads of three continents, serving as Europe's Middle

Eastern outpost Favourable tax regime including 10% corporation tax Liberal Foreign Direct Investment regime Simplified administrative procedures for acquiring necessary permits Bilateral investment agreements with 17 countries Low set up and operating costs Highly qualified, well-educated and multilingual labour force Double tax treaties with 44 countries Freedom of movement of foreign currency Availability of Free Zone Area Efficient legal, accounting and banking services European standard of living Pleasant climate and agreeable topography Excellent telecommunications Democratic country with a free market economy Political stability Low crime rate: one of the lowest in Europe

III.2 Investment from EU Countries

As of 1 May 2004, Cyprus is a full member state of the European Union.

There are no exchange control restrictions applicable to direct investments in Cyprus by natural or legal persons from EU member states. Investors from the EU wishing to register a company in Cyprus apply directly to the Registrar of Companies without any Central Bank involvement.

The EU constitutes Cyprus' main trading partner absorbing more than 55% of its domestic exports and supplying around 50% of the total imports to Cyprus. Furthermore, around 70% of tourists visiting the island originate from EU member states.

III.3 Investment from non EU Countries

As of 1 October, 2004 there are no exchange control restrictions applicable to direct investments in Cyprus by natural or legal persons from non EU member states. Investors from non EU wishing to register a company in Cyprus apply directly to the Registrar of Companies without any Central Bank involvement.

Cyprus maintains close political and trading ties with the countries of the Middle East region, both the Arab world and Israel, as well as with the former socialist countries of Central and Eastern Europe.

Profits, dividends and the proceeds from the liquidation of investments are transferable abroad without restrictions and are routinely handled by commercial banks.

III.4 Investment Incentives

At a time of increasingly intensified international competition, the Government has taken several measures to enhance Cyprus competitiveness, both in the international and local market, to achieve steady and self sustained growth, and to maximise the Gross Domestic Product. Specifically the Government having extensively considered ways for the development and reconstruction of the economy, with an emphasis on the industrial sector, has introduced a framework of incentives within the EU harmonisation process and the Acqui- Communautaire in general.

Basic Government Investment GoalsThe basic goals which form the central core of the government incentives framework are:

a) Attraction and development of new high-tech industries and skill intensive products

b) Assistance and reconstruction of Cyprus traditional economic sectorsc) Productivity and labour skills improvementd) Attraction of capital – intensive foreign investmente) Industrial Development

Government Investment Incentives and Schemes The main incentives and schemes are:

a) High Technology Business Incubators

- The Technology Incubating Programme seeks to effectively link talent, technology capital and know how

Research & Development

b) Testing and Laboratories for Quality Assurance Grants for products’ testing abroad Strengthening the laboratory infrastructure in Cyprus The HACCP system in the food and beverage industry

c) Government Guarantee Scheme for Loans Granted to SMEs of the Manufacturing Sector

d) Subsidisation of Specific Studies and Projects Studies for the implementation of Quality Control Standards Scheme for the subsidisation of purchase / development of specialized

software Scheme for the subsidisation of market research studies on foreign

markets Scheme for promoting the utilisation of the Internet

e) State Grants for Upgrading the Manufacturing Sector State grant for technological upgrading Supplementary grant scheme for the manufacturing of agricultural

products State grant for the relocation of small enterprises to authorized areas State grant for the protection of the environment fro industrial pollution Grant scheme for the establishment / expansion of manufacturing units in rural areas

f) Grant Scheme for Energy Conservation and the Promotion of Renewable Energy Sources (RES) Utilisation

Scheme for Energy Conservation Schemes for the promotion of Renewable Energy sources (RES) utilisation

g) Incentives for the Export Promotion of Industrial Products Scheme for granting aid for exploring export potentials in foreign markets – “De Minimis Rule” Schemes for entrepreneurs/manufacturers of Cypriot products participating in Trade Fairs abroad at their own expenses Schemes for entrepreneurs/manufacturers of Cypriot products, participating if Foreign Trade Fairs / Trade Missions abroad / Cyprus Week Trade Fairs abroad, organized by the Ministry of Commerce, Industry and Commerce

h) Grant Scheme for the Encouragement, Strengthening, and Reinforcement of Entrepreneurship

Scheme for the encouragement of Women Entrepreneurship Scheme for the encouragement of youth Entrepreneurship

i) Programme for the Enhancement of Manufacturing and Trading Agricultural Products

j) Investment Incentives for the Services Sector State Grant for the export promotion of services and penetration of foreign markets State Grant for the export promotion of services through participation in trade

fairs and exhibitions abroad

III.5 Fiscal Incentives

The main objective of the fiscal reform applicable as from 1 April, 2004 were to conform to the European Union and OECD requirements and at the same time to maintain the competitiveness of Cyprus as an international business centre and enhance its attractiveness as a suitable jurisdiction for holding companies.

The many fiscal incentives available to foreign investors, provided certain conditions are met, include, but are not limited to:

Lowest corporate tax rate in the EU – 10% on net profits.

A non Cyprus tax resident is taxed only on income earned in Cyprus. Dividends are totally exempt from Cyprus tax. No “deemed” distribution of profits for IBUs. Interest income is taxed at the corporate rate of 10%. 50% of interest income earned by a company is exempt from tax. 100% of interest income earned by a non resident individual is tax free. Tax losses can be carried forward and set off against future profits indefinitely Losses of a Cyprus tax resident company can be set off against the profit of another

Cyprus tax resident company in case they belong to the same group of companies. Profits of permanent establishments abroad are not taxable in Cyprus given that less

than 50% of their activities result in investment income, and that the foreign tax suffered is not significantly lower than the tax payable in Cyprus.

Cyprus has over 44 Double Tax Treaties covering more than 44 countries. Profits gained from the disposal of securities are exempt from tax for all companies. Transfers of assets and liabilities between companies in the course of reorganisation

such as mergers, de-mergers, transfer of activities or exchange of shares are not subject to tax

Tax relief of foreign tax paid is granted in Cyprus even in the absence of a double tax treaty.

A more detailed description of the fiscal regime prevailing in Cyprus is given in other parts of this booklet.

III.6 Holding Companies

A Cyprus holding company can be effectively utilized for international tax planning purposes, and at the same time it may enjoy the status of being located at a reputable business centre within the EU.

In summary a Cyprus holding company offers the following advantages in relation to the major tax considerations:

No withholding tax on dividend income received from subsidiary companies abroad, provided the direct holding is at least 1% of the share capital of the overseas company; the exemption does not apply if the subsidiary company engages in more than 50% of its activities in producing investment income and the foreign tax burden on its income is substantially lower than that in Cyprus

Double Tax Treaties with over 40 countries enabling lower withholding tax rates on dividend or other income received from the subsidiaries

Being an EU member state, holding companies registered in Cyprus may also enjoy no withholding tax on dividends received from EU subsidiaries as a result of the utilization of the EU Parent Subsidiary Directive

No withholding tax on capital gains and income on the disposal of neither the shares of the subsidiary’s share capital nor the shares of the Cyprus holding company

a) No tax on capital gains or income on the liquidation of the Cyprus holding company

b) No withholding tax on distribution of profitsc) Outward dividends by the Cyprus holding company to its non resident d) shareholders are exempt from any withholding taxese) Profits earned from a permanent establishment abroad are fully exempt from f) Cyprus tax subject to certain conditionsg) A diversified group of Cyprus companies belonging to a Cyprus holding h) company can be set off Group relief for the utilization of tax losses

f) No minimum holding period of the shares.

III.7 Regulated Activities

Cypriot banking, insurance and securities activities are subject to special laws that regulate the terms of conducting their business operations, authorising the operators on the market and establishing the capital limits for carrying out these types of activities.

III.8 Foreign Exchange Controls

As of 1 May, 2004 the Exchange Control Law has been abolished; hence residents and non residents may hold and manage assets and liabilities in any foreign currency and in any foreign country, including freely convertible and transferable balances with banks on the island.

III.9 Acquisition of Real Estate

According to the “Acquisition of Real Estate (Amendment) Law” of 2003, which is in force asfrom 1st of May 2004:

No restrictions are imposed on EU nationals and EU registered companies for the acquisition of real estate linked to primary residence and Foreign Direct Investment, or the acquisition of real estate by EU real estate agents and land developers.

The acquisition of residence for secondary use is prohibited without prior authorisation by the Council of Ministers, for a period of five years following Cyprus´ accession to EU, to EU nationals not permanently residing in Cyprus and EU registered companies not having their registered office, central administration or principal place of business in Cyprus.

As regards non-EU nationals, legal entities registered in non-EU countries, and legal entities registered in Cyprus with share capital controlled by non-EU nationals, real estate may be acquired subject to the approval of the Council of Ministers. In case the real estate concerned exceeds 2 donums, approval may be granted only for the purposes of primary or secondary residence not exceeding an area of 3 donums, professional or commercial premises, and industrial sectors deemed beneficial for the Cypriot economy.

III.10 Intellectual Property

The law on the registration of patents is similar to the relevant UK legislation. Patents are registered with the Registrar of Companies. Only patents registered in the United Kingdom can be registered and application should be made within three years from the granting of the original patent in the UK. Registration of the patent remains in force as long as the patent is registered in the UK.

Trade marks can be registered in Cyprus both by Cypriot nationals and Cyprus companies as well as foreign nationals and companies,. The initial registration is for seven years sand is renewable on application for a period of 14 years at a time. All approved applications for trademarks are published in the Official Gazette and if no objections are received within two moths of publication an official certificate s issued.

III.11 Competition Law

The Commission for the Protection of Competition aims in maintaining an environment of free and healthy competition in the market, by ensuring that any anti-competitive practices by companies do not distort competition. Collusive behaviour or anti-competitive agreements between competitors are forbidden, but mergers and acquisitions are authorised provided that free competition is not affected. The Commissioner is committed to safeguarding greater competition in the economy in the interest of consumers, business and Cypriot economy in general.Cypriot competition regulations have been harmonised with similar EU rules.

CHAPTER IVIV Business Entities

IV.1 Types of Business Enterprise

The main business form is the limited liability company. The single member company has been permitted since 2000.

The main categories of business enterprise in Cyprus are: Companies incorporated in Cyprus Branch of a foreign company Partnership Sole proprietor/Sole trader / Business Names Cyprus International Trusts Cooperatives European Company (SE)

IV.2 Companies Incorporated in Cyprus

Companies are entities whose existence, rights and duties are distinct from the shareholders (members) who own the business. A company can be formed by registration under the Companies Act Cap 113 as amended.

The Companies Act Cap 113 provides for three different types of company:

a) Companies limited by sharesb) Companies limited by guarantee (where the members give a guarantee to pay a

stated sum in the event of winding upc) Unlimited companies (where the liability of members in the event of winding up is

unlimited.

Companies limited by sharesThe vast majority of business organisations in Cyprus are limited liability companies.

Limited liability companies are either

private, exempt private or public.

Their names end in “Limited” or “Ltd” unless it is a public company when it must end in “Public Limited” or “Public Ltd”.

A private company is a company which:

- Restricts the right to transfer its shares- Prohibits any invitation to the public to subscribe for any of its shares or debentures- Limited the number of its shareholders, excluding employees, to 50

An exempt private company is a company in which: - no body corporate holds any of its shares or debentures unless that body corporate is its an exempt private company - no person other than the holder has any interest in the shares or debentures of the company - the number of persons holding debentures in the company does not exceed 50 and

- no body corporate is a director of the company

A public company is a company which is not a private company.

Private companies need only have one director; public companies must have a minimum of two.

Companies Limited by Guarantee Companies limited by guarantee are often used by charities, where profits cannot be distributed to members.

Unlimited CompaniesUnlimited companies are rarely used but are intended for organisations that cannot limit liability as part of their constitution or for regulatory reasons.

Cyprus International Business CompaniesA Cyprus International Business Company (IBC) is a Cyprus limited liability company, as described above, but enjoying additional tax advantages provided certain criteria are met. In July 2002, Cyprus enacted new tax legislation aimed at satisfying the European Union’s Code of Conduct for Business Taxation as well as meeting its commitments to the OECD in their efforts to eliminate harmful tax competition.

The introduction of the new legislation has enhanced Cyprus’s attraction as a location for foreign investors. Prior to the tax reforms IBCs were confined to activities outside Cyprus. However, provided they convert their status from an IBC to a local company, IBCs can now engage in local activities without being taxed at a higher rate. By doing so they can avail themselves of the opportunities that the Cypriot market provides whilst at the same time being taxed at a much lower rate than in many other countries.

IV.3 Branches of Foreign Legal Entities

Foreign investors tend to use either subsidiary companies incorporated in Cyprus or branches in order to do business in Cyprus.

Subsidiary companies are treated as separate entities in company law. Branches are considered to be extensions of their foreign company. The foreign company is therefore liable for all debts of the branch.

To establish a branch in Cyprus without forming a subsidiary the foreign company must deliver the following documents to the Registrar of Companies within one month of establishment in Cyprus:

a) a copy of its Charter or Constitution certified by a notary in the country of its incorporation together with a Greek translation thereof

b) a return showing the names and addresses of the foreign company’s directors an secretary

c) a return containing a list of the name and address of one (or more) person resident in Cyprus authorised to accept any notices to be served on the company. The Registrar must be notified of any changes in the names or addresses of the authorised person, directors or Secretaryd) a Statutory Declaration by a director or secretary of the company or any person listed

in (b) stating the date on which the foreign company’s place of business in Cyprus was established.

IV.4 Partnerships

Partnerships are formed one two or more self-employed people work together in a business or profession. Partnerships are governed by the Partnership Act 1890 but it is usual to have a formal agreement which set out the necessary rules by which the partnership operates e.g. profit share agreements, partners’ salaries, new partners retirement of partners etc.A partnership has no legal personality distinct from its members.A partnership may be either general or limited.Under a general partnership the partners are all personally liable for the firm’s business debts. This liability is without limit.Under a limited partnership one or more partners are only liable to the extent of their capital contribution as long as those partners take no part in the management of the firm and there is at least one general partner whose liability is unlimited.

IV.5 Sole Proprietor / Sole Trader / Business Names

Sole proprietors, or sole traders, are individuals who own and run a business on their own account with or without employees. They may trade under a chosen business name, if they so wish, but they are personally for all the debts of the business.

There are no statutory requirements governing the format of sole proprietors’ accounting records. No audit of their annual accounts is required nor do they have to be filed at Companies House.

Sole traders’ profits are eligible to income tax, whether the profits are actually distributed to the proprietor or left in business.

IV.6 Cyprus International Trusts

The use of Cyprus International Trusts is constantly becoming popular as vehicle for International Tax planning and business structuring income and gains of a Cyprus International Trust derived from sources outside Cyprus are exempt fro any tax imposed in Cyprus.

Under the International Trusts Law of 1992 a Trust qualifies for a Cyprus Trust on condition that:

The Settlor is not a permanent resident in Cyprus At least one Trustee is a permanent resident in Cyprus for the whole duration of the

Trust’s life No Beneficiaries with the sole exception of charitable institution are permanent

residents of Cyprus The Trust property does not include any immovable property in Cyprus

Trusts are not legal entities as limited companies are.

IV.7 The Cyprus Co-Operatives

The Co-operative Movement was introduced in Cyprus at the beginning of the 20th century. During the period 1936-1974 the Co-operative Movement experienced a significant growth in Cyprus. However, the Turkish invasion in 1974 had devastating consequences on the Co-operative Societies and the economy of Cyprus in general. Despite those consequences, the Cyprus Co-operative Movement survived and today it is considered as one of the strongest and well-organized Co-operative Movements worldwide.

Today, profits of the Co-operative Credit Institutions that result from operations with members will continue to be exempted from corporate income tax but profits resulting from operations with non-members will be subjected to corporate income tax and the replacement of the current scheme regarding mortgage fees with a new one that will exempt all clients of credit institutions including commercial banks for housing loans up to £60.000

Cooperatives are not a usual form of doing business as regards foreign investors and its usage is mainly confined for usage but rural societies.

iV. 8 European Company

The European Company ('SE') is a legal entity offering a European perspective for businesses. Its purpose is to allow businesses that wish to extend their activities beyond their home Member State to operate throughout the EU on the basis of one set of rules and a unified management system.

CHAPTER V

V. Formation of a Limited Company

V.I Formation Procedure

In or order to register a company in Cyprus it is necessary to file with the Registrar of Companies prescribed documents in accordance with the provisions of the Companies Act Cap 113, as amended.

The documents required to be filed are the following:

The Memorandum of Association The Articles of Association A statement of the first Directors and Secretary A statement of the registered address of the company A statutory declaration as to the compliance with the requirements of the Companies

Act Cap 113, as amended.

In addition a public company’s Memorandum of Association must contain the following:

A statement that is a public company An authorised share capital of at least CYP50.000 A name ending with the words “Public Limited”

The Memorandum of Association sets out the basis of the company’s constitution including its name objects the fact that the liability of its members is limited share capital

The Articles of Association contain the regulations for the internal management of the company i.e.

the fact that the company is private or public appointment of directors and their powers conduct of shareholders’ and directors’ meetings changes in share capital arrangements

Once the Registrar of Companies has issued the Certificate of Incorporation the company becomes a distinct legal entity.

Limited companied say be registered in Cyprus fairly quickly – usually within seven days, once the company’s name has been approved by the Registrar of Companies.

“Off the shelf” companies may be purchased but the cost is usually higher depending on the alterations required.

V.2 Capital Structure

Private companies may be registered having any level of authorised share capital.Private companies need have at least one shareholder but shareholders may not exceed 50 excluding employees; public companies need have two shareholders and there is no maximum number of shareholders.

Par Value and Classes of Shares

Par value of a share is its nominal value. Shares must be issued according to the Memorandum of Association taking into consideration the par value of the shares. Partly paid shares may be issued. The directors may call up the unpaid part of the shares at any time. Shareholders liability is limited to the total amount unpaid on the shares.

Most companies issue only one class of share, usually called ordinary shares. Such shares usually have voting rights and no restriction on dividend. Different classes of shares may be issued carrying different rights and obligations such as voting shares, non-voting shares, right to a dividend before other class of shares, right to elect a director etc. Preference shares have a right to receive a dividend or interest up to a specified amount but may have restricted voting rights. Pre-emptive RightsPre-emptive rights give shareholders fist refusal on shares another shareholder wishes to sell, although they have no pre-emptive right to acquire them unless specified otherwise in the companies Articles of Association.

DebenturesDebentures are documents issued by the company setting out the terms of indebtedness. A debenture therefore represents a loan made to a company and may include debenture stock, bonds, and other securities of a company usually with a charge on the company’s assets (floating charge). Such a charger must be registered with the Registrar of Companies.

Share Certificates and Transfers of Shares.Shareholders are issued with Share Certificates which Certificates are prima facie proof that the shareholders named therein own the shares stated.

Transfers of shares in private companies are often restricted by pre-emptive clauses or by the directors’ right to refuse a transfer. Share PremiumWhere shares are issued at a premium the surplus must be set aside in a non-distributable capital reserve. The share premium account ma only be used to:

Issue fully paid up bonus shares to shareholders Write off preliminary expenses Write off issue expenses of the company’s shares or debentures.

Increases and Reductions in Share CapitalA company may increase its share capital by special resolution of its members an provided the Articles of Association permit such an increase.A company may reduce its share capital provided its Articles of Association permit such a reduction and the members pass a special resolution which court confirms.

V.3 Shareholders Agreements

Although It is advisable that shareholders do enter into a shareholders agreement dealing with such issues as disposal of shares, disagreements and disputes this is not very usual as all such matters are agreed through shareholders’ and directors’ meetings.

CHAPTER VI

VI. Company Administration

VI.1 Shareholders

The company is owned by its shareholders who hold shares therein. Matter of major importance as new shareholders, major investments, purchase of real property, decision to liquidate the company etc are normally dealt at Shareholders’ Extraordinary Meetings where decisions are taken. A private company must have at least one shareholder and public company must have at least five shareholders. VI.2 Directors

The day-to-day management of a company is delegated by the shareholders to the board of directors. Every public company must have at least two directors and every private company must have at least one. A shareholder may also be a director.

AppointmentThe first directors of a company are named in the relevant form submitted to the Registrar of Companies together with the Memorandum of Association and other documents. Subsequent appointments of directors are usually made by the shareholders at general meetings in accordance with the company’s Articles of Association.

Existing directors are usually permitted to appoint additional directors to fill casual vacancies subject to a maximum specified in the articles.

Retirement and removalDirectors may retire at any time. A notice becomes effective as soon as it is given and cannot be withdrawn.

Shareholders may remove directors from office at any time by passing an ordinary resolution and giving proper notice. Types of directorsVarious types of directors make up a board. Cyprus Companies Law does not distinguish between various types directors but considers all directors to have the same responsibilities.

Duties of directorsThe duties of a director are determined by law and case law. There are three main types of duty:

Fiduciary – a director must always act in a company’s best interests. Duty of skill and care – directors must act with reasonable degree of skill and care Statutory – company legislation imposes extensive duties on company directors

VI.3 Company Secretary

According to Cyprus company law all companies must have a Secretary responsible for the administration of and in particular compliance with statutory legal requirements.

Company secretaries can be limited companies. The first Secretary of the company is named in the form filed with the memorandum and other documents. Subsequent appointments and removals are made by the board of directors.

VI.4 Meetings

Company meetings comprise Shareholders’ General Meetings and Board Meetings.

Shareholders’ meeting include Annual General Meetings and Extraordinary General Meetings.

Annual General Meetings Companies must have an initial annual general meeting within 18 months of incorporation. Subsequent annual general meetings must take place within 15 months from the end of each annual general meeting.

Extraordinary General MeetingsThe directors can call an extraordinary general meeting ant any time and for any purpose, Shareholders with 10% or more of the voting capital can require the directors to call an Extraordinary General Meeting.

Conduct at General MeetingsGeneral meetings are governed by company articles and by company law generally.There are three types of resolution:

Ordinary Resolutions require 14 days’ notice to be given to shareholders and a simple majority(50% plus one) to be passed

Extraordinary Resolutions require 14 days’ notice and 75% majority Special Resolutions require 21 days’ notice and 75% majority

Minutes of Resolutions and Single Member CompaniesCompanies must record their resolutions in a minute book open for inspection by any shareholder. A company with a single member, that member has the same duty, like a private company with more than one member, to record resolutions and major decisions in a minute book.

Board MeetingsBoard meetings take place at the board’s discretion. Such meetings address board management issues such as strategic planning and record important policy decisions.

VI.5 Registered OfficeEvery company must have a registered office. Such registered office need not be an office from where the company conducts business. Usually a company’s registered office is the address of the company’s accountants or lawyers.

A company’s registered office is the address to which all official notices should be sent for legal purposes. It also where the statutory books are normally kept.

VI.6 Liquidation and Receivership

LiquidationLiquidation is a means of winding up the affairs of a company. There are two types of liquidation

Compulsory Liquidation and Voluntary Liquidation

There are two types of Voluntary Liquidation:

Members’ Voluntary Liquidation and

Creditors’ Voluntary Liquidation

ReceivershipA secured creditor holding a floating charge has the power to appoint a Receiver to realise as much of the assets of the company as it is necessary in satisfaction of its outstanding debt. This does not necessarily result in the liquidation of the company.

CHAPTER VII

VII. Audit and Statutory Requirements

VII.1 Financial Reporting and Auditing

Cyprus as an ex-colony of Great Britain and a member of the Commonwealth has traditionally tended to follow the accounting principles of and practices adopted in the United Kingdom. Also the Institute of Certified Public Accountants of Cyprus which is responsible for the control and regulation of the accountancy profession has adopted International Accounting Standards (IAS) and expects all its members to follow them. In addition since the accounting profession in Cyprus is composed to a very large extent of accountants who belong to the four main professional bodies in the UK, the generally accepted accounting principles established by those bodies embodied in Statements of Standard Accounting Practice (SSAPs), Financial Reporting Standards (FRSs), and other guidance statements and exposure drafts are followed, provided such statements do not conflict with local regulations and /or IASs.As a rule all legal entities are required to prepare financial statements and have them audited by independent auditors in compliance with specific legislation in order to satisfy the requirements of the Tax Authorities or the Cyprus Stock Exchange or the Registrar of Companies. Auditors are appointed by the shareholders and are required by law to report to them whether in his opinion the financial statements show a true and fair view of the state of affairs of the company and of the profit or loss and cash flows for the period under review and comply wit the Companies Law.

VII.2 Form and Content of Financial Statements

The Cyprus Company Law provisions (Cap 113) regarding the form and conditions of financial statements are very similar to those of the UK Companies Act 1948. In addition financial statements must conform to the provisions of the International Accounting Standards.

Responsibility to prepare financial statements The directors of every company including Cyprus International companies are responsible for the preparation of the financial statements that should consist of the following:

- Directors’ report- Balance Sheet- Profit and Loss Account ( Income Statement)- Cash Flow Statement- Statement of Changes in Equity- Notes to the Financial Statements including the accounting policies and - Audit Report

Form and ContentSchedule VIII of the Companies’ Law Cap 113 sets out formats for the balance sheet and the profit and loss account. Company accounts should be drawn in accordance with certain accounting principles which are set out in a financial reporting standard. The following concepts are regarded as being all pervasive:

That the company will continue as a going concern and That the accruals basis will be followed for income and expenditure

A further four objectives should be balanced when selecting accounting policies:

That the financial information is relevant That information is reliable

That the accounts are comparable with previous periods and That information can be understood by a suitably experienced person.

If the financial statements depart from any of the above, special mention must be made in the financial statements by way of a note.

Cyprus companies adopt the historical cost accounting convention with certain exceptions.

VII.3 Public Filing Requirements

Every company which has a share capital must make a return once a year to the Registrar of Companies. This is known as the Annual Return.

The Annual Return must be accompanied by copies of the

- Balance sheet- Profit and Loss- Directors’ Report and- Auditors’ Report.

duly certified by one Director and Secretary of the Company. Branches of overseas companies have also an obligation, under special provisions of the law, to file audited branch financial statements with the Registrar of Companies.

VII.4 Group Financial Statements

The Companies Law requires Cyprus parent companies to prepare group financial statements, normally in the form of consolidated financial statements when the parent company has subsidiaries unless it is itself a wholly owned subsidiary of another body corporate incorporated in Cyprus. The group financial statements need not include all those subsidiaries where I the opinion of the directors

- the result would be misleading or harmful to the company or its subsidiaries- the businesses are so different that they cannot reasonably be treated as a single

undertaking or- it would be impracticable or of no real value to members in the view of the

insignificant amounts involved or would cause undue hardship or delay.

Related Party TransactionsFor the purpose of consolidation all transaction with other undertakings within the group should be eliminated.IAS 24 “Related Party Disclosures” specifies the disclosures required. In addition the recently enacted Stock Exchange legislation requires certain disclosures specifically for publicly quoted companies.

Transactions with directors including loans must be disclosed separately, estimating their financial effect and whether these were transacted at arm’s length.

VII.5 Audit Requirements

Financial statements prepared by companies in Cyprus must be audited unless a company meets the “small business” criteria which in any event do not apply to consolidate financial statements. All financial statements forwarded to the Inland Revenue must however be audited.Auditors are required to report on the financial statements audited by them and on the consistency of the directors’ report with the financial statements. The audit is carried out in accordance with International Accounting Standards on Auditing issued by IFAC.

VII.6 Auditors

During Annual General Meetings members of a company appoint an Auditor. Special provisions in the Companies Law deals with the appointment, removal, disqualification and resignation of auditors.

VII.7 Qualifications of an Auditor

In order to be appointed Auditor of a company operating in Cyprus such person must be a member of the Cyprus Institute of Certified Public Accountants. Non members of the above Institute, such as members of bodies established outside Cyprus may be allowed to act as auditors under certain conditions. VII.8 Accounting Records

Under the Companies Act Cap, 113, as amended, and the relevant tax laws, the directors of every company are responsible to keep proper books of account showing the assets and liabilities and the daily receipts and payments of the company. Books of account according to the law are defined as those books of account deemed necessary for the preparation of financial statements and which are adequate for the presentation of a true and fair view of the company’s affairs and an explanation of its transactions.

VII.9 The Accounting Profession

A very advanced and sophisticated accounting profession exists in Cyprus. Most member of the Cyprus Institute of Certified Public Accountants of Cyprus are university graduates, members of the major accounting bodies of the UK and USA.

All of the big international accounting firms are represented in Cyprus with members or correspondent firms.

CHAPTER VIII

VIII. Cyprus Taxes

VIII.1 Personal Income Tax

Who is LiableWhere an individual is a resident in the Republic of Cyprus, tax is imposed on income accruing or arising worldwide, i.e. from sources both within and outside Cyprus.

An individual who is not a resident of Cyprus, tax is imposed on income accruing or arising only from sources within Cyprus.

Resident in Cyprus is an individual who is present in the Republic for a period exceeding 183 days in a tax year.

Tax rates

Taxable Income Tax Rate Tax Cumulative Tax Euro % Euro Euro

0-19,500 0 0 019,501- 28,000 20 1,700 1,70028,001- 36,300 25 2,075 3,77536,301 and over 30

ExemptionsThe following are exempt from income tax:

a) Interest Income under certain conditions 100% b) Dividend income 100% c) Deposits with the Housing Finance corporation ( the annual deposit cannot exceed 25% of the gross income). 40% Only for schemes that were in existence on 30/4/2003. d) Gains from disposal of securities 100% e) Remuneration for the rendering outside the Republic of salaries services to anon resident employer or to a permanent establishment outside the Republic of a resident employer for a total aggregate period in the year of assessment of more than 90 days. 100% f) Remuneration from any office or employment exercised in the Republic b an individual whose residence was outside the Republic before the commencement of the employment. The exemption is applicable for a period of three years from 1 January following the year of commencement of the employment. 20% of the remuneration or Euro 8.543,01 whichever is the lower. g) Profits from a permanent establishment maintained outside the Republic (subject to certain conditions) 100% h) Rents receivable from property under preservation order 100% i) Widow’s pension granted under schemes approved by the Commissioner of income Tax 100%

j) Foreign pension Euro 3.410 (Special rate of 5% on balance of income)

k) Gratuity of lump sum received on retirement or commutation of pension or as a result of death. 100%l) Lump sum received from life assurance schemes or from approved provident funds. 100% m) Life Assurance Premiums (7% of cover), social insurance contributions, provident funds contributions, contributions to medical and other approved funds. Restricted to 1/6 of taxable incomeSocial Incentivesa) Allowance in cash for every child that attends university either in Cyprus or abroad Euro 2.562,90 b) Blind Persons Allowance in cash Euro 3.417,20c) Cash Allowance for every child depending on his parents and who has his permanent residence in Cyprus Varies

Also other social incentives are available (allowance to mothers with at least four children, invalidity allowances, grant for the purchase of vehicle to invalids etc), the amount of assistance varying according to disability etc

Deductions from incomea) Interest relating to the acquisition of fixed assets used in a business 100%b) Rents receivable 20% of the gross rents

interest on loans for acquisition of building and capital allowances deduction. No further expenses for letting of building allowed

c) Subscriptions to trade unions or professional bodies 100%d) Expenditure for the maintenance of building under preservation order Upto Euro 512,58, Euro 854,30 or 939.73 per sq m (depending on the size of the building)e) Donations to approved charitable organisations (with receipts) 100%

Non – deductible expensesThe following expenses are not tax deductible:

a) Business entertainment expenses Including hospitality expenses of any kind which are incurred for the purposes of the business Amount in excess of 1% of the gross income or Euro 107.86,01 whichever is the lower)d) Private motor vehicle expenses 100%e) Professional Tax 100%f) Interest payable or deemed to be payable in relation to the acquisition of a private motor vehicle, irrespective of whether it is used in the business or not, or other asset not used in the business. This restriction is lifted after seven years from the date of purchase of the relevant asset. 100%

g) In the event of cancellation of a life assurance contract within

6 years from the date it was entered into, part of the life insurance premiums already given as an allowance will be taxable as follows: - cancellation within 3 years 30% - cancellation between 4 to 6 years 20%

Capital AllowancesThe same capital allowances apply to individuals who prepare financial statements as they apply to companies.

Lossesa) Losses are carried forward indefinitely. Losses for the years 1997 onwards, which have not been offset against profits arising up to the year 2002, will be carried forward to 2003 and subsequent years without restriction.

b) Where a person including a partnership converts his business into a limited liability company, any unrelieved losses can be transferred to the new company.

c) Losses arising from a permanent establishment maintained outside the Republic can be offset against profits arising in the Republic. However when a profit arises from such a permanent establishment an amount equal to the losses that have been utilised in the past against profits arising in the Republic will be included in the taxable income.

VIII.2 Company Income Tax

Who is liableA company that is resident in the Republic is liable to Cyprus tax on income accruing or arising both fro sources in and outside the Republic.

A company that is not resident in the Republic is liable to Cyprus tax on income accruing or arising only from sources within the Republic.

Resident in the Republic is a company that is managed and controlled in the Republic.

Tax Rates

Companies 10%Public corporate bodies 25%

Exemptions from Cyprus TaxInterest income arising in the ordinary course of business including interest closely connected with the carrying on of the business, is not considered interest but trading and therefore the 50% exemption is not applicable 50%

Dividend income 100%

Profit from the disposal of securities 100%

Profits from a permanent establishment maintained outside the Republic Subject to certain conditions) 100%

DeductionsDeductible from income are all expenses incurred wholly and exclusively for the

production of income including:

a) Interest incurred for the acquisition of a fixed asset used in the business 100%

b) Subscriptions to trade unions or professional bodies 100%c) Expenditure for the maintenance of building under preservation order Upto Euro 512,58, Euro 854,30 or Euro 939,73 per sq m (depending on the size of the building)d) Donations to approved charitable organisations (with receipts) 100%

Non-deductible expensesThe following are not deductible from income:

a) Business entertainment expenses including hospitality expenses of any kind which are incurred for the purposes of the business Amount in excess of 1% of the gross income or Euro17.086,01 whichever is the lower)b) Private motor vehicle expenses 100%c) Professional Tax 100%d) Interest payable or deemed to be payable in relation to the acquisition of a private motor vehicle, irrespective of whether it is used in the business or not, or other asset not used in the business. This restriction is lifted after seven years from the date of purchase of the relevant asset. 100%

Contributions to the Social Cohesion Fund 100%

Lossesa) Losses are carried forward indefinitely. Losses for the years 1997 onwards, which have not been offset against profits arising up to the year 2002, will be carried forward to 2003 and subsequent years without restriction.

b) Where a person including a partnership converts his business into a limited liability company, any unrelieved losses can be transferred to the new company.

Group ReliefLosses for the current year only can be surrendered by a group to another group company. Group relief will be given provided that both companies are members of the same group for the whole of a tax year.

Two companies are considered to be part of group for group relief purposes if:

- one is a 75% subsidiary of the other or- both are 75% subsidiaries of a third company.

Loss of a permanent establishment outside the Republic

Losses arising from a permanent establishment maintained outside the Republic can be offset against profits arising in the Republic. However when a profit arises from such a permanent establishment an amount equal to the losses that have been utilised in the past against profits arising in the Republic will be included in the taxable income.

Insurance companies- losses of the life business can be offset against profits of the general business- losses of the life business can be offset against profits fro other sources- losses of the life business can be carried forward indefinitely

International Business CompaniesIn July 2002, Cyprus enacted new tax legislation aimed at satisfying the European Union’s Code of Conduct for Business Taxation as well as meeting its commitments to the OECD in their efforts to eliminate harmful tax competition.

Under the new legislation, which came into effect on 1 January 2003, there is a uniform rate of corporation tax (10%) for all companies registered in Cyprus, including Cyprus International Business Companies (IBCs).

The introduction of the new legislation has enhanced Cyprus’s attraction as a location for foreign investors. Prior to the tax reforms international business companies (IBCs) were confined to activities outside Cyprus. However, provided they convert their status from an IBC to a local company, IBCs can now engage in local activities without being taxed at a higher rate. By doing so they can avail themselves of the opportunities that the Cypriot market provides whilst at the same time being taxed at a much lower rate than in many other countries. Company Re-organisationsIn the event of a company reorganisation unused losses brought forward will be transferred to the new company and the provisions dealing with the set off of transfer of losses will apply accordingly.

Capital Allowances for Annual Wear and Tear%

Plant and Machinery

Usual Plant and Machinery, furniture and Fittings 10Bulldozers, excavators, fork lifts etc 25 Motor Vehicles –except private saloon cars 20Personal computers – hardware and software 20Agricultural Plant and Machinery 15Water Drilling, industrial carpets, video recorders, tv 10

Buildings

Industrial agricultural and hotel buildings 4Commercial, shops etc 3 Metallic frame of greenhouses 10Wooden frame of greenhouses 33.5

Ships

Steamships, tugboats and shipsUsed in the fishing industry 6Sailing vessels 4.5

%

Ship launching machinery 12.5New commercial ships 8New passenger ships 6Used ships special agreement or remaining useful economic life

Tools

All tools in general 33 1/3Videotapes used by video clubs 50

VIII.3 Special Contribution for Defence

RatesAll residents of the Republic are subject to Defence Contribution on the sources of income indicated below. Non residents are not subject to the Defence Contribution.

Dividends 15%Interest income 10%Interest received by an individual from Government Savings Certificates 3%Interest received by an individual from Government Bonds 3%Interest earned by an approved provident fund 3%Rental income less 25% 3%Profits earned by public corporate bodies 3%

Dividends

Exemptions:

a) dividends paid by a company resident in the Republic to another company resident in the Republicb) dividends received by a company resident in the Republic or a company not resident in the Republic which maintains a permanent establishment in the Republic from a company which is non-resident in the Republic and of which at least 1% of the share capital is held (with certain criteria)c) dividends paid out of dividend income which has suffered income tax at source of 20% and are paid within a period of six years from the date of receiving such dividend income.d) dividends derived directly or indirectly from profits arising from operating a Cyprus flag ship in the course of shipping activities or from ship management servicesSPECIAL CONTRIBUTION FOR DInterest incomeInterest that is received as a result of the carrying on of a business activity, including interest closely connected to the ordinary activities of the business, is not considered interest for Special Defence Contribution purposes. A person whose total annual income, including interest, does not exceed Euro 11.960,21 who receives interest which has been subject to Defence Contribution at 10%, has the right to a refund of the amount of Defence Contribution suffered in excess of 3%.

Deemed distribution

A company resident in the Republic is deemed to have made a distribution of 70% of its profits after tax in the form of dividends at the end of the two years from the end of the tax year in which the profits relate and must account for 15% Defence Contribution thereon. In arriving at the amount of the deemed distribution, any actual dividend which is distributed during the two year period from the end of the tax year in which the profits relate is deducted. In cases where an actual dividend is paid after the two year period, any deemed distribution reduces the actual dividend on which the Defence Contribution is withheld. For the purpose of calculating the amount of the deemed distribution, "profits" mean the accounting profits arrived at using generally acceptable accounting principles, but after the deduction of any transfers to reserves as specified by any law. Any offset of group losses as well as any amounts, including any additional depreciation, which emanate or are the result of revaluation of movable and immovable property are ignored.

The deemed distribution provisions do not apply to profits which relate to non-resident shareholders.

In the case of a person not being resident in the Republic receiving dividends from a company which is resident in the Republic, emanating from profits which at any stage were subject to deemed distribution, the special contribution paid as a result of the deemed distribution which is attributable to such person is refundable.

Company dissolutionThe aggregate amount of profits in the five years prior to the company dissolution, which have not been distributed or be deemed to be distributed, will be considered as distributed on dissolution and will be subject to Defence Contribution at 15%. These provisions do not apply in the case of dissolution under reorganisation, in accordance with certain pre-requisites set out in Regulations and where the shareholders are non-residents in the Republic.

Reduction of capitalIn the case of a reduction of capital of a company, any amounts due or paid to the shareholders up to the amount of the undistributed taxable income of any tax year calculated before the deduction of losses from prior years, will be considered as distributed dividends subject to special Defence Contribution at 15% (after deducting any amounts which have been deemed as distributable profits). These provisions do not apply where the shareholders are non-residents in the Republic.

Tax credit for foreign tax paidAny tax suffered abroad on income which is subject to special Defence Contribution will be credited against any Defence Contribution payable on such income irrespective of the existence of a double taxation treaty.

VIII.4 Capital Gains Tax

Imposition of TaxCapital Gains Tax is imposed on gains from disposal of immovable property situated in the Republic including shares of companies, not listed on a recognised Stock Exchange, which own immovable property situated in the Republic, at the rate of 20%. In computing the capital gain the value of the immovable property as at 1January 1980 (or cost if the date of acquisition is later), the cost of any additions after 1 January 1980 or the date of acquisition if later, any expenditure incurred for the production of the gain and the indexation allowance, are deducted from the sale proceeds.

ExemptionsThe following disposals of immovable property are exempt from Capital Gains Tax:

a) transfer on deathb) gifts between spouses, parents and children and relatives up to third degreec) gift to a company whose shareholders are members of the donor’s family and continue to be members of the family for a period of five years from the date of the giftd) gift by a family company to its shareholders, if the company had also acquired the property in question via donation and provided the property remains in the possession of the shareholder for at least three years.e) gifts to charitable organisation or the Republicf) exchange or disposal under the Agricultural Land (Consolidation) Lawsg) exchange provided the gain is used for the acquisition of new property. The gain derived from the exchange reduces the cost of the new property and the tax is paid when the latter is disposedh) expropriationsi) transfer of ownership or share transfers in the event of company reorganisations.

DeductionsIndividuals are entitled to deduct from the gains the following: EuroDisposal of principal private residence 85.430,07(subject to conditions)Disposal of agricultural land by a farmer 25.629,02Other disposals 17.086,01

The above are lifetime deductions.

VIII.5 Immovable Property Tax¹ªªImposition of TaxImmovable property tax is imposed on the market value of immovable property as at 1 January 1980 and is calculated on the immovable property owned by the taxpayer on 1 January of each year.

Rates

Value of Property Rate Tax Cumulative Tax

% Euro Euro

0 - 170.860,14 0 0 0170.860,15 - 427.150,36 0,25 640,73 640,73427.150,37 - 854.300,72 0,35 1.495,03 2.135,76854.300,73 and over 0.40

ExemptionsThe following properties are exempt from immovable property tax:a) public cemeteriesb) churches and other religious buildingsc) public hospitalsd) schoolse) immovable property owned by the Republic, foreign embassies and consulatesf) buildings under a preservation order subject to conditionsg) buildings of charitable organisationsh) agricultural land used for agriculture or animal husbandry by a farmer.i) immovable properly situated in inaccessible or depressed areas.

VIII.6 Estate DutyESTATE DUTY

The law was abolished by the House of Representatives on 8 June 2000 in relation to individuals who have died on or after 1 January 2000.

At the same time, the Deceased Persons Estate (Taxation Regulations) Law of 2000 was enacted with effect from 1 January 2000, providing for a compulsory submission of an "assets and liabilities" statement of the deceased person to the Commissioner of Income Tax within six months from the date of death.

VIII.7 Value Added Tax

Imposition of TaxValue Added Tax is imposed on the provision of goods and services in Cyprus as well as on the importation of goods into Cyprus by a taxable person in the course or furtherance of any business carried on by that taxable person.

RatesStandard rate 15%Reduced rate 8%Reduced rate 5%Zero rate 0%

Standard rateThe standard rate applies to any provision of goods and services in Cyprus not subject to the zero rate, the reduced rate or is exempt.

Reduced rate 8%The reduced rate of 8% applies, among other things, to a) restaurant services and similar catering services except alcoholic drinksb) provision of hotel and tourist resorts accommodationc) transportation of passengers including taxis, and urban and rural buses d) movement of passengers in inland waters

Reduced rate 5%The reduced rate of 5% applies, among other things, toa) supply of fertilizers etcb) unbottled water c) books, newspapers ad magazinesd) gas cylinders etc e) ice-creams, yoghourts, nuts and similar product f) sundry equipment for use by the disabled g) delivery of coffinsh) services rendered by funeral directorsi) bottled water, juicesj) hair dressing servicesk) theatre tickets and tickets for cultural events, sport events etcl) repair and maintenance of private households after three years of first residence Zero rateZero rated supplies include the following:

a) intra-community supplies of goods and expertsb) provision of food supplies, except the supply of food in the course of cateringc) supply of medicinesd) ship management services

ExemptionsCertain goods and services are exempt from VAT including

Hospital and medical treatmentEducational servicesSupply of services by non-profit organisationsSale of postage stampsInsurance and re-insurance servicesSupply of lottery tickets Rental of immovable property Disposal of immovable property where the application for building permission has been submitted before 1 may, 2004Disposal of land to be used for building purposes. Financial services.

Taxable persons and registrationA taxable person is any person who makes, or intends to make, taxable supplies and who is, or is required to be, registered. A taxable person may be either a natural person or a legal person (limited company, partnership, club, association etc).Registration applies to any person operating in the course of furtherance of a business. Every such individual or legal entity is obliged to register:(a) at the end of any month, if the value of taxable supplies recorded in the last 12 months exceeds Euro 15.600 or(b) at any point in time the value of taxable supplies are expected to exceed Euro 15.600 in the next 30 days.

Taxable BasisVAT is due on the total price paid for the goods or services excluding the VAT itself.

Right of registrationPersons who trade, outside the Republic, in goods or services which would have been taxable if they were provided within the Republic, group of companies and company divisions.

VAT Returns and Payment of VATAny registered person must submit to the VAT Commissioner a VAT return within 40 days from the end of any tax period and pay the VAT due.

Cyprus Non-Resident CompaniesThere is no distinction between non-resident business entities and resident businesses. If there is a taxable supply of goods or services then registration for VAT purposes may be required.In practice, non resident companies are companies which are owned beneficially by non Cypriots. Transactions are carried out exclusively abroad and therefore they are nit required to register with the VAT Authorities of Cyprus because the place of supply is outside Cyprus, and thus outside the scope of Cypriot VAT legislation.

Administration of Intra-Community TradingMerchandisers who undertake intra-community trading, i.e. purchases (imports) and sales (exports) from/to European Union member States need to complete the following forms:Intra-Community Acquisitions (Imports)1. Intrastat - Arrivals2. Inclusion in the VAT return (on a totals basis) Intra-Community Supplies (Exports)1. Intrastat - Departures2. VAT Information Exchange System (VIES form)3. Inclusion in the VAT return (on a totals basis with 0%).

When and where are they submitted?

INTRASTAT forms are submitted to the VAT Authority not later than the 10th day which follows the end of the month stated on the INTRASTAT form. The VIES form is submitted to the VAT authorities within 40 days form the end of each calendar quarter.

Penalties and InterestLate registration Euro 85 for every month of delayLate submission of return Euro 51 one-offLate payment of VAT 10% of amount due plus 8% interestLate de-registration Euro 85 one-offLate submission of Intrastat form Euro 8 for every working day of delay with a maximum of 30 working daysLate submission of VIES Form Euro 51 for every day of delay with a maximum of 3 monthsSOCIAL SECURITY CONTRIBUTIONSVIII.8 Social Security Contributions Contributions

Social Redundancy Industrial Insurance Fund Training % % %Employer 6.3 1.2 0.5Employee 6.3 - -Self employed 11.6 - -

Upper limits for employees per week from 3/1/2008 per month per annum Euro Euro Euro

Weekly employees 885 - 46.020Monthly employees - 3.836 46.032

Lower limits for self employed Week Annual

Euro Euro

Individuals exercising a profession for a period not exceeding 10 years 325 16.900Individuals exercising a profession for a period exceeding 10 years 653 33.956 Wholesalers, estate agents, insurance agents and other businessmen 295 15.340Technicians working in rural areas 316 16.432Builders and individuals exercising business related to the construction industry 396 20.592Farmers, stock breeders, bird breeders, fishermen and other related business 219 11.388Drivers of vehicles used for public transport, excavator drivers and other related business 316 16.432

Persons not included in any other category 325 16.900

SOCIAL COHESION FUNDVIII.9 Social Cohesion Fund

Who is LiableEvery employer has an obligation to contribute 2% of the amount of salaries paid to employees, to the Social Cohesion Fund. The amount contributed to the Social Cohesion Fund, is calculated on the aggregate emoluments without restriction or any upper limit.

Emoluments"Emoluments" do not include the emoluments of a non-Cypriot who is employed by an overseas government or an international organisation or a company that owns a Cyprus ship or a ship management company.

VIII.10 Special Modes of Taxation

Cyprus International Business Companies (IBCs)From 2005 onwards all Cyprus companies, including IBCs, will be taxed at the normal tax rate of 10% on net taxable profits. IBCs, however, will continue to enjoy many tax benefits as enumerated below. - Exemption of 50% of interest income- Exemption of dividend income (except dividends received from other IBCs)- Exemption of profits from the disposal of securities- Group relief for losses- The tax benefits of company reorganisations- Unilateral credit relief for tax paid abroad (in the case where a double taxation treaty does not exist)- Exemption of the profits of a permanent establishment abroad

Losses up to the year 2000 are offset against profits up to the year 2005, whereas losses for the years 2001 onwards can be carried forward indefinitely.

Profits from Shipping ActivitiesThe following are exempt from taxation in accordance with the provisions of the Merchant Shipping (Fees and Taxing Provisions) Law:

a) The income of a ship-owner of a Cyprus ship from the operation of such ship in any shipping activity between Cyprus and ports abroad or between ports abroad.

b) The income of a person from the provision of ship management services.

c) Dividends paid to the shareholders of a company if these are paid out of profits earned from the operation of a Cyprus ship in shipping activities or from the provision of ship management services.

d) Salaries and other benefits paid to the master, the officers and the crew of a Cyprus ship.

For the purpose of the above mentioned act the term "shipowner" includes a bareboat chartered while the term "operation of ship" includes chartering of any form.

Persons providing ship management services are liable to tax at rates equal to 25% of those applied for tonnage tax. Such persons may however, elect instead to pay tax at the rate of 4.25% on their taxable profits.

Pension Income from Services Rendered Abroad

The pension income of any individual, including foreigners, resident in Cyprus, which arises from services which were rendered abroad, is taxed at a rate of 5% for amounts. The first Euro 3.417,02 are tax free.

The taxpayer has the right to choose to be taxed either under the special mode of taxation as stated above or at the normal rates. If the latter is chosen the pension is added to the individual’s other income.

Intellectual property rights / royalties etc The gross income arising from intellectual property rights, other exploitation rights, compensations or other similar income arising from sources within Cyprus of a person who is not resident in Cyprus is subject to withholding tax at a rate of 10%.

Royalties received by a connected company registered in a European Union member state are exempt from tax (subject to conditions).Rights granted for use outside Cyprus are not subject to any withholding tax.

Film royalties etcThe gross income derived by a non resident person in respect of royalties arising from film projection in Cyprus is subject to withholding tax at a rate of 5%. Royalties received by a connected company registered in a EU member state are exempt from tax (subject to conditions).

Profits of Professionals, Entertainers etcThe gross income derived by a non resident individual from services exercised in Cyprus of any profession, vocation or public entertainment services including football teams and other athletic missions, is subject to a 10% withholding tax. VIII.11 Transfer Fees, Stamp Duties and other FeesR FEES FOR IMMOVABLE PROPERTYTransfer Fees for Immovable PropertyThese are paid on transfers of immovable property and are calculated on the market value of the property as estimated by the Land Registry department.

Cumulative Market Value Percentage Fees Fees CYP % Euro Euro 1,71 - 85.430,07 3 2.562,90 2.562,9085.430,08 - 170.860,14 5 4.271,50 6.834,40170.860,15 and over 8

Transfer fees paid on the transfer of property to a family company are refunded in five years provided the company still owns the property and there have not been any changes to its shareholders. On the transfer of immovable property from a family company to its shareholders as well as on transfers by donation between spouses, spouses and children or relatives up to third degree of kindred, transfer fees are calculated on the value of property appearing on the title deed at the following rates:

Transfer to spouse 8%Transfer to children 4%Transfer to relative 8%

Transfers of immovable property by a company to another company for the purpose of a company re-organisation are exempt from transfer fees.

Mortgage Fees

On loans 1%

Stamp Duty

Type of document Duty

Cheques 3 centsLetters of guarantee Euro 3,42Letter of credit Euro 1,72Receipts for amounts from Euro3,42 – Euro 34,17 Euro 0,03Receipts for amounts over Euro 34,17 Euro 0,07Customs documents Euro 17,09/Euro 34,17Bills of lading Euro 3,42Bills of exchange Euro 0,85(payable at sight on first demandor within 3 days from demand or sight)Contracts- up to Euro 170.860,14 Euro 0,15%- over Euro 170.860,14 Euro 0,2% (Plus Euro 256,29) (Maximum fee Euro 17.086,01)- without fixed amount Euro 34,17

Charterhire document Euro 17,09General power of attorney Euro 5,13Special power of attorney Euro 1,71Certified copies of contracts and documents Euro 1,71Will Euro 17,09Estate administration document Euro 8,54

Stock Exchange Transaction FeesA special fee is imposed in relation to transactions that take place in the Cyprus Stock Exchange or are announced to the Cyprus Stock Exchange at the following rates:

Individuals 0.6%Legal entities 1.0%

The fee is suffered by the seller or the person who announces the transaction.

Exempt TransactionsThe following transactions are exempt:a) share issue and share redemption by the issuerb) transactions in non-convertible company bondsc) transactions in non-convertible company promissory notesd) transactions in bonds, development bonds and government bills of exchangee) gifts of securities by parent to child, either single or married, between spouses or relatives up to third degree.

In addition, a fee at 0.05% is imposed on purchases made in favour of the Cyprus Stock Exchange.

CHAPTER IX

IX. Labour and Immigration Requirements

IX.1 Entry Visas

Passports and VisasIn order to enter a Cyprus port or airport, passports and visas are required, except for citizens of the European Union countries, as well as of Switzerland, Iceland, Liechtenstein and Norway, who may enter Cyprus with their national identity card provided there is a photo.

Also holders of

Laissez-passer issued by the United Nations. Documents issued to stateless persons and recognised refugees. Employment Permits issued by the Migration Officer Diplomatic, service or other official passports Permanent or Temporary Residence Permits issued by the Migration Officer Study Permits

may enter Cyprus without a visa. No visa is required for a stay of up to 90 days for all bona fide tourists nationals of most of the world countries.

The following may also enter Cyprus without a visa:

Civilian air and sea crew The flight crew and attendants on emergency or rescue flights and other helpers in

the event of disaster or accident The civilian crew of ships navigating in international waters School pupils who are travelling in the context of a school excursion as members of a

group of pupils accompanied by a teacher from the school in question.

Issue of VisasVisas will be issued by the Embassies and General Consulates of the Republic of Cyprus, and additionally by the

British High Commissions/Embassies in the following countries:Argentine Republic, Bahrain, Hong Kong, Japan, Jordan, Kazakhstan, Kuwait, Norway, Oman, Switzerland, Sudan, UAE (Abu Dhabi, Dubai), Uzbekistan and

Greek Embassy in Kingdom of Saudi Arabia and Honorary Consulates in the rest of countries.

Visa application procedure and documents required:

1) Applications must be submitted in person. However, for those who reside more than 200 miles or 300 km from the Consulate application may be submitted by recorded delivery enclosing a registered self addressed “special delivery” envelope for the safe return of passport and documents.

2) One completed application form signed by the applicant (or legal guardian in the case of minors) with a passport sized photograph attached.

3) A full national passport valid for at least three months longer than the validity of the visa being applied for. Visitors who wish to obtain a visa are advised to be in possession of a passport valid at least for 6 months beyond the period of intended stay.

4) Visa for the return country must be valid for at least three months beyond the period of intended stay.

5) Provisional Booking or Itinerary of travel arrangements (Round trip ticket with fixed dates). Ticket should not be purchased before the visa is issued.

6) Prior Hotel Reservation faxed by the Hotel Manager.

7) If visiting for business, an official letter of invitation from a Cyprus company must be presented.

8) If visiting friends, a letter of invitation from the friends with their address, phone number and occupation in Cyprus.

9) Evidence that there are sufficient funds to cover the cost of the intended stay in Cyprus, e.g. bank statement or travellers’ cheques

10) Recent (less than one month old) official letter from employer addressed to the Cyprus Consulate with proof of wages/salary. If self-employed, a letter from the solicitor, the accountant or the bank manager of the applicant. If a student in the country of the Consulate, an original letter from the school or University addressed to the Cyprus Consulate confirming status/attendance and the duration of the course.

IX.2 Work and Residence Permits

A foreign national may work in Cyprus if he or she has an employment visa. Employment visas are issued to foreign nationals who are employed in Cyprus by international business companies or by local entities. This visa is granted for employment with a specific employer and is normally issued for one or two years (unless the employment is for a shorter period). It may be renew for subsequent periods.

A foreign national in an executive or managerial position who works for an international business company that maintains administrative offices in Cyprus may easily obtain an employment visa. Professional and clerical staff may be granted visas only if no suitably qualified local personnel is available. In order to obtain a permit to employ foreigners, a local employer must prove that a Cypriot employee or a EU national with comparable experience cannot be found.

EU residents can work freely in Cyprus. Residence and work permits are handled by the Ministry of Interior and the Ministry of Labour and Social Insurance. In the case of IBC arrangements have been made whereby the Ministry of Interior may issue and renew the temporary residence employment permits of expatriate executives.

No distinction is made between nationals on granting working and residence permits. The decision lies upon the availability of EU nationals for the specific job, on scientific and academic qualifications and on the probability of investment to be made by the applicant. However labour legislation and collective agreement apply equally to EU nationals and foreign employees.

Foreigners must register at the District Aliens an Immigration Branch of the Police.

An employment contract is issued regulating monthly wages, overtime rates, and leave entitlement. The employee’s travel costs medical insurance and accommodation costs are covered by the employer. In addition foreign employees are entitled to one month notice prior to repatriation irrespective of the length of employment.

IX.3 Permanent Residence Permits

Foreigners (non EU nationals) may apply to the Chief Immigration Officer under the Aliens and Immigrations Law of 1952-1997 and Aliens and Immigration Regulations of 1972-1996 for a permanent permit to take up residence in Cyprus without taking up employment (Category F).

The application will be examined by the Immigration control Board whose findings and recommendations will be submitted to the Minister of Interior for his final decision.

Together with the relevant application applicants must submit:

- Curriculum Vitae- documentary evidence that the applicant has in his own and free disposition a

secured annual income, such as pension, dividends from investments, interest from deposits etc, of a sufficient amount to support himself and his family whilst in Cyprus.

- Two photographs for himself and his family

If the application is finally approved the applicant will not be allowed to engage in any form of business, profession or occupation whether paid or unpaid while residing in Cyprus.

CHAPTER X

X. Appendices

X.1 Double Tax Treaties

Withholding TaxesThe following tables show the rates of withholding tax deducted from income, with countries that have signed a double taxation treaty with Cyprus. Received in Cyprus Dividends Interest Royalties

% % %

Armenia (27) 0 0 0Austria 10 0 0Belarus 5 (4) 5 5Belgium 10 (1) 10 (16) 0Bulgaria 5 (19) 7 (25) 10 (20) Canada 15 15 (7) 10 (11)China 10 10 10Czech Republic (29) 10 10 (8) 5 (14)Denmark 10 (1) 10 (9) 0Egypt 15 15 10France 10 (2) 10 (9) 0 (26)Germany 10 (1) 10 (8) 0 (26)Greece 25 (21) 10 0 (12)Hungary 5 (1) 10 (8) 0India 10 (2) 10 (8) 15 (15)Ireland 0 0 0 (12)Italy 15 10 0Kuwait 10 10 (8) 5 (14)Kyrgyzstan (27) 0 0 0Lebanon 5 5 (16) 0Malta 0 (22) 10 (8) 10Mauritius 0 0 0Montenegro (28) 10 10 10Moldova (27) 0 0 0Norway 5 (3) 0 0Poland 10 10 (8) 5Romania 10 10 (8) 5 (14)Russia 5 (6) 0 0San Marino 0 0 0Serbia (28) 10 10 10Seychelles 0 0 0Singapore 0 10 (23) 10Slovakia (29) 10 10 (8) 5 (14)Slovenia (28) 10 10 10South Africa 0 0 0Sweden 5 (1) 10 (8) 0Syria 0 (1) 10 (8) 15 (13)Tajikistan (27) 0 0 0Thailand 10 10 (17) 5(18)Ukraine (27) 0 0 0 United Kingdom 0 (24) 10 0 (26)USA 15 (5) 10(10) 0Uzbekistan (27) 0 0 0

Paid from Cyprus*

Dividends Interest Royalties % % %

Non-treaty countries 0 0 0**

Armenia (27) 0 0 0Austria 10 0 0Belarus 5 (4) 5 5Belgium 10 (1) 10 0Bulgaria 5(19) 7 (25) 10Canada 15 15 (7) 10(11)China 10 10 10Czech Republic (29) 10 10 (8) 5(14)Denmark 10 (1) 10 (9) 0Egypt 15 15 10France 10 (2) 10 (9) 0(26)Germany 10 (1) 10 (8) 0(26)Greece 25 10 0(12)Hungary 0 10 (8) 0India 10 (2) 10 (8) 15 (15)Ireland 0 0 0 (12)Italy 15 10 0Kuwait 10 10 (8) 5 (14)Kyrgyzstan (27) 0 0 0Lebanon 5 5 (16) 0Malta 15 10 (8) 10Mauritius 0 0 0Moldova (27) 0 0 0Montenegro (28) 10 10 10 Norway 0 0 0Poland 10 10 (8) 5Romania 10 10 (8) 5 (14)Russia 5 (6) 0 0San Marino 0 0 0Serbia 10 10 10Seychelles 0 0 0Singapore 0 10 (23) 10Slovakia (29) 10 10 (8) 5 (14)Slovenia (28) 10 10 10South Africa 0 0 0Sweden 5 (1) 10 (8) 0Syria 0 (1) 10 (8) 15 (13)Tajikistan (27) 0 0 0Thailand 10 10 (17) 5 (18)Ukraine (27) 0 0 0United Kingdom 0 10 0 (26)USA 0 10 (10) 0Uzbekistan (27) 0 0 0

Notes* Payments of dividends and interest to non residents are exempt from withholding tax in Cyprus. Royalties granted for use outside of Cyprus are also free of withholding tax in Cyprus.

** 10% in the case of royalties granted for use within the Republic. 5% on film and TV rights.

*** Armenia, Kyrgyzstan, Moldova, Tajikistan, Uzbekistan and Ukraine consider themselves bound by the treaty signed with the former USSR. The rates shown are those of the treaty between Cyprus/USSR.

1. 15% if received by a company controlling less than 25% of the voting power.2. 15% if received by a company controlling less than 10% of the voting power.3. NIL if paid to a company controlling at least 50% of the voting power.4. This rate applies if the amount invested by the beneficial owner is over Euro 200.000 irrespective of the % of voting power acquired. 10% is imposed if received by a holder of at least 25% of the share capital of the paying company. Otherwise the rate is 15%.5. 5% if received by a company controlling at least 10% of the voting power.6. 10% if received by company, which has invested less than $100.000.7. NIL if paid to the Government or for export guarantee.8. NIL if paid to the Government of the other State or to a financial institution.9. NIL if paid to the Government of the other State or in connection with the sale on credit of any industrial, commercial or scientific equipment or any merchandise by one enterprise to another or in relation to any form of loan granted by a bank or is guaranteed from government or other governmental organization.10. NIL if paid to the Government of the other State, to a bank or a financial institution or in respect to debt obligations arising in connection with sale of property or the provision of services.11. NIL on literary, dramatic, musical or artistic work with the exception of films used for television programs.12. 5% on film royalties (except films shown on TV).13. 10% on literary, dramatic, musical, artistic work, films and TV royalties.14. NIL on literary, artistic or scientific work including films.15. 10% on payment of technical fees, management fees and consultancy fees.16. NIL if paid to the Government of the other State, a political subdivision or a local authority, the National Bank or any institution the capital of which is wholly owned by the State or a political subdivision or a local authority or in the form of interest income from bank deposits.17. 10% on interest received from financial institutions, on interest paid in connection with industrial, commercial, scientific equipment or the sale or merchandise between two companies.18. 10% on right to use industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience and 15% for patents, trademarks, designs, models, plans, secret formulas or processes.19. 10% if received by a company, which owns less than 25% of the capital.20. This rate does not apply, where 25% or more of the capital of the Cypriot resident is owned directly or indirectly by the Bulgarian resident paying the royalties and the Cyprus company pays less than the normal rate of tax.21. The treaty provides for 25%, but the domestic rate of NIL applies since it is lower than the treaty rate.22. The treaty provides that the tax on the gross amount of the dividends shall not exceed that chargeable on the profits out of which the dividends are paid.23. 7% if paid to a bank or similar financial institution. NIL if paid to the government.24. The treaty provides for 15% withholding tax but the local taxation provides for 0% withholding tax.25. NIL if paid to or is guaranteed by the government, statutory body, the Central Bank.26. 5% on film royalties, including films used for television programs.27. The Treaty between the Cyprus Republic and USSR still applies.28. The Treaty between the Cyprus Republic and the Socialist Federal Republic of Yugoslavia still applies.29. The Treaty between the Cyprus Republic the Czechoslovak Socialist Republic still applies.

VIII.2 Rates of Taxes

For the year 2008 the tax rates applicable to companies and individuals are as follows:

Corporate Tax Rates %

Companies 10Public corporate bodies 25

Personal Tax Rates

Taxable Income Tax Rates (Euro) (%)

0 - 19.500 NIL19.501 - 28.000 2028.001 - 36.300 2536.301 and over 30

VIII.3 Tax Diary - Dates for Settlement of Taxes and Submission of Tax Forms.

End of each month - Payment of P.A.Y.E. deducted from employees’ monthly salaries for the previous month

- Payment of Defence Contribution deducted from dividends and interest paid for the previous month

30 April - Personal Tax Returns for 2007 by individuals whose gross income exceeds Euro 18.367,47 (CYP 10.750).

- Employers’ Return and Employees’ Details for previous year

- Payment of provisional tax by Insurance Companies (life sector) for the first four months of current year

30 June - Payment of Special Contribution for Defence for the first half of current year

- Personal Tax Return for previous year by individuals who do not prepare audited accounts if their gross income exceeds Euro 18.367,47. - Payment of tax balance for previous year through self assessment by individuals who do not prepare audited accounts

1 August - Submission of Provisional Tax Assessment for current year and payment of the first instalment

- Payment of previous year tax balance through self assessment by individuals and companies preparing audited accounts

31 August - Payment of Provisional Tax by Insurance Companies (life sector)

for the second four months of current year

30 September - Payment of the second instalment of current year Provisional Tax

- Payment of Immovable Property Tax for current year

31 December - Submission of Tax Returns for previous year by individuals and companies preparing audited accounts

- Payment of the third installment of current year Provisional Tax

- Payment of Special Contribution for Defence for the second half of current year

- Payment of Provisional Tax by Insurance Companies (life sector) for the last four months of current year

Non compliance with the above deadlines results in penalties and interest at 8% depending on the deadline not complied with.