Cyprus
Introduction
Cyprus passed a number of laws in 2004 relating to e-commerce, including
the Regulation of Electronic Communications
and Posts Law (112(I)/2004), and the Legal Framework
for Electronic Signatures and for Relevant Matters
Law (N.188(I)/2004). The 2002 Law on Radiocommunications
was also amended.
These
laws included the transposition of the EU's
regulatory framework into national law. Cyprus,
however, has not yet introduced the necessary
secondary legislation for the Law on Electronic
Communications.
The Cyprus
government says the island is a communications
hub and an international business centre in
the Eastern Mediterranean region due to the
forward-looking policies of the Cyprus Telecommunications
Authority (CYTA). Despite its fine words, however,
the government has lamentably failed to move
forward with liberalisation of the telecommunications
sector, which in most respects remains firmly
under the monopoly control of CYTA. This organisation's
profits are so high that the government year
after year uses it as a mine for contributions
towards the national budget, and in 2003 CYTA
was shamed into refunding CYP20m to its subscribers.
Competitors
to CYTA in the mobile sector have struggled
to make headway. Only in the Internet sector
has any significant degree of competition been
allowed, where there are a number of ISPs in
addition to CYTA itself.
Under
liberalisation legislation originally introduced
in December 2000, a telecommunications regulator
has been appointed, although until 2003 he was
without the resources that would allow him to
be effective. There is no doubt that this was
largely due to reactionary forces within the
government and the industry which wish to preserve
CYTA's monopoly for as long as possible.
The regulator
has amongst his responsibilities the granting
of new telecoms and postal licences and the
authorisation of telecommunications networks
& services. He was appointed for a six-year
term and will determine the procedures for granting
licences for telecommunications and postal services
and the creation of telecommunication and postal
networks.
As
part of the government's plan to liberalise
the telecommunications sector, plans were announced
in March 2001 to table legislation which would
privatise the state-owned CYTA, with 94% of
the shares intended for the private sector and
6% for the company's employees. Needless to
say, this plan came to nothing.
The
first real sign of progress was the decision
to issue two mobile phone licenses, for which
bidding began late in 2002, with the first license
being awarded as of right to CYTA. But in June,
2004, the bidding process for a second license
was threatened after Atlantic Crest was disqualified
from participating in the auction for the licence
for failing to meet the minimum tender requirements
in a decision also backed by the Attorney General.
Eventually the second license was awarded to
Scancom, which trades under the name of areeba.
A price
war began in 2005 between Vodaphone-CYTA and
competitor areeba; in mid-2005 CYTA refused
to accept a Commission ruling that it should
re-instate higher prices pending an appeal to
the Supreme Court. The Court ruled in July that
CYTA must obey the ruling.
In
February 2002 Cyprus Electricity Authority (EAC)
vice-president Andreas Louroudjiatis told a
parliamentary committee that the EAC planned
to enter the telecommunications sector once
it is liberalised. Speaking before the House
Finance Committee, which was discussing the
annual budget for the EAC and the Telecommunications
Authority (CyTA), EAC said his department would
soon be in a position to offer a wide range
of services, including telephone, data and cable
television facilities, using optical fibres.
"We
are looking for a strategic investor or a collaborator
to assist us with the technical side. Five foreign
companies have already expressed an interest
to undertake the task," he added.
Communications Minister Averoff Neophytou however said that public
companies should not compete against each other,
saying: "There cannot be real competition between
two companies which have the same owner. We
are only trying to ensure consumers' best interests."
But he conceded that he could not stop the EAC
from expanding into the area of telecommunications:
"They are welcome to join the club if that's
what they want," he said, stressing at the same
time that, "private companies should also be
encouraged to do so in order to increase competition
in the field."
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Cyprus Facilities
ISP and Hosting Services
Cyprus
ISPs include planitis.net, thunderworx.com,
logos.net, avacom.net, CYTAnet, teledev.net
and Spidernet.
On-Line Banking
Laiki
eBank, launched by Laiki Bank in September 2000,
was the first electronic bank in Cyprus to allow
banking and stock market transactions via the
Internet. Laiki eBank customers are able to
trade securities on the CSE, track developments
on the CSE and have a live update of their portfolio.
Laiki
is promising fast access to its customers, who
need only to fill in a "simple" form, apparently
not as time-consuming and difficult as the one
needed to become a member of Laiki Online. Once
the application is processed, customers will
receive a special card together with their personal
pin number in order to enter Laiki eBank in
a secure environment.
Spidernet
has developed Spidertrade (http://www.spidertrade.com.cy),
an interactive online service providing the
latest financial news, real-time quotes from
the Cyprus Stock Exchange (CSE) and on-line
trading services. At the same time SpiderNet
offers free to its subscribers the SpiderWAP
service.
The
Bank of Cyprus Internet Banking Service offers
the following services:
- Money
Transfers (Between accounts, To 3rd party
accounts held in Bank of Cyprus, To Other
Banks and Co Operative Companies in Cyprus,
Abroad)
- Account Balances
- Past
Transactions
- Chequebook Ordering
- Statement Ordering
- Stop
Payment of Cheque
- Utility Payments (CYTA, EAC)
On-Line
Securities Dealing
After
a disappointing debut on the CSE, AvacomNet
announced plans to launch Avacas, its new CSE
online service that will be free to investors.
AvacomNet's decision to launch the free service
was announced just ahead of Sharelink Group's
undertaking to unleash its own electronic system,
inteliStock, into the market.
Developed
by SFS, inteliStock has scored high during the
testing period and is already being offered
to the group’s customers, but Sharelink plans
to offer inteliStock to the public for a fee
because it believes its service is superior
enough to attract professional users.
The cosy
existence of traditional sources of information
on the CSE is also about to be threatened by
newcomers to the field such as Stockwatch.com.cy,
Cypria.com and Moneynet.com.cy, who offer equity
prices and live ticker prices to all users.
Then there are the more established Internet
sites such as XAK.com.cy and Spidertrade.com.cy
who have started to offer price information
to their online customers. Furthermore, four
out of the five Internet Service Providers (ISPs)
including Spidernet, Cytanet, Logosnet and AvacomNet
are providing CSE prices through their WAP service.
And as
if that wasn't enough, banks are trying to get
in on the act as well with the Bank of Cyprus
announcing that it is offering CSE closing prices
via its WAP services, and the Laiki Bank plans
to offer CSE prices through the imminent launch
of the Laiki eBank
AG Financial
Network is the company that trail-blazed the
provision of live CSE and ASE prices to the
investing community, allowing users access to
its system either through dial-up, leased lines
or the Internet.
Another
established force offering information on CSE
prices is the giant multinational, Reuters.
As a rival to AG Financial Network, Reuters
was among the first to offer an extended service
on the local stock market. Reuters offers its
service either through its own satellite dishes
or leased lines but also allows access through
the Internet. The company can claim one over
on its rivals in the form of the Reuters pager,
which provides 30-second live update on all
stocks as well as the top 20 stocks of the ASE.
The pager, a user-friendly gadget, also provides
information on major world indices and news
while as well as the provision of live updates
on foreign exchange rates.
The other
multinational involved in the provision of CSE
prices is Telerate, but this company has not
yet managed to make major inroads in the market.
Telerate recently reduced its operations in
Cyprus and now provides services through sub-contractors,
although the original service is available either
through satellite dishes, leased lines and also
through the Internet.
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Cyprus Offshore Activities
The
natural bonding of the Internet and Offshore
stems from the fact that both, of their nature,
manage to avoid tax. Businesses which can operate
on the Internet without, so to speak, touching
ground in a high-tax jurisdiction will naturally
migrate to offshore jurisdictions; while business
that already have offshore existence will find
it highly convenient to be able to use the Internet
to trade with their high-tax customers without
having to make a landing in their countries.
As a
major offshore jurisdiction with tens of thousands
of offshore enterprises already installed, including
many trading companies, it is only a matter
of time before Cyprus becomes a centre of e-commerce
activity. The island's geographical location,
its good telecommunications links and its sophisticated
business infrastructure add to the inevitability
of an e-future for Cyprus.
The effective
abolition of Cyprus's offshore regime as a consequence
of its entry to the EU, and the introduction
of a uniform 10% rate of corporation tax may
impact the attractions of Cyprus as an e-commerce
base as compared with truly offshore jurisdictions.
It remains to be seen whether the island's EU
connections, tax treaties and advanced infrastructure
are enough to compensate for this effect.
For information
about the impact of e-commerce on a number of
the main offshore activities which take place
in Cyprus, click on a link below to go to our
specialist E-commerce site
Offshore-e-com.com
Sales and
Distribution of Physical Products
Sales and Distribution of Digital Products
Banking and Financial Services (including Investment Funds)
Corporate Support
Functions
To
see an analysis of the current state of legal
and tax issues surrounding offshore e-commerce,
click here.
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Cyprus
Case Studies
This
section will contain case studies of e-commerce
solutions applied to offshore business activities
carried out from Cyprus. The case studies will
be developed in association with lowtax.net
partners. Contact us to learn more.
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