Find Accountancy, Audit and Tax expertise in Cyprus
- Overview
- Profession
- Tax
Overview
Numerous local and international accounting firms can be found operating in Cyprus, including the ‘Big Four’ (PwC, Deloitte, KPMG and Ernst & Young). The prospects of the profession widened with the arrival of new off-shore companies, the listing of a large number of companies in the Cyprus Stock Exchange, the lifting of restrictions in the capital movement and accession in the EU. Companies in Cyprus must file annual financial statements with the Registrar of Companies in accordance with the International Financial Reporting Standards (IFRS) in line with European Commission regulations. Although IFRS are required to be used by all Cyprus companies, there are some exceptions for consolidation for private entities based on small group exemptions or when consolidated financial statements are prepared by the parent company in accordance with GAAP (Generally Accepted Accounting Principles). In the World Economic Forum’s Global Competitiveness Report (2012-13) Cyprus came 29th in the world (out of 144 countries) for the strength of its auditing and reporting standards, with a value of 5.4 out of 7, above the world mean of 4.6. In the 2011 World Bank’s Ease of Doing Business Index Cyprus placed 23rd in the world (out of 183 countries) for resolving insolvency, coming just below Portugal and three below Spain.
Profession
The Institute of Certified Public Accountants of Cyprus (ICPAC), founded shortly after independence in 1961, is the leading professional body for the country’s accountancy sector with around 3000 members. As of 2003, ICPAC operate a joint examination plan with the Association of Chartered Certified Accountants (ACCA), with exams taking place twice a year. Higher education and practical experience are both required to undertake professional training.
Tax
Personal income tax rates in Cyprus are progressive, ranging up to 30% for incomes over €36,300 (tax year 2010-11). Cyprus’ corporate tax rate is set at 10% for both onshore and offshore companies, and 25% for semi-government organisations. The standard value added tax (VAT) rate is 15% imposed on taxable supplies of goods and services. However, certain goods and services are charged at a reduced rate of 8%, whilst others are zero-rated. Suppliers of goods and services that are exempt from VAT include financial services, health and welfare, insurance and education. The country has a number of tax incentives, including its low corporation tax rate low VAT rate and the fact that a Cyprus holding company can pay virtually no tax on its profits; non-resident entities are only taxed on their Cyprus-sourced income and there is no withholding tax on payments to non-residents. In the 2011 Ease of Doing Business Index Cyprus came 37th in the world for paying taxes, just below the high-income economy of New Zealand. In the Global Competitiveness Report (2012-13) it placed 19th in the world in relation to its total tax rate, with a value of 23.1%, compared to Turkey with a score of 41.1% (81st place).
