Dear Colleague,

This week:

• Tax-news Headlines
• Gibraltar
• Cyprus
• Report: Gibraltar
• 25% Discount: LowtaxLibrary

I hope you find this update useful. Please remember that you can customise your mailing preferences by visiting your own profile page to choose from 29 offshore tax and law subjects in order to receive just the information you want. You can also unsubscribe completely by following the instructions at the bottom of this page.

Kind regards,

Kate James

Cyprus

Cyprus is an independent democratic republic, and a member of the Commonwealth. It is prosperous: GDP US$23,000 per head. The economy is dominated by services, with tourism particularly important. Unemployment is low.

The Cyprus Government worked hard to create a favourable offshore tax regime while at the same time maintaining a normal-looking domestic economy, albeit with rates of taxation that are low by international standards. The success of this programme is attested by the nearly 50,000 offshore companies registered in Cyprus since 1975. However, the island's entry to the EU in 2004 meant a restructuring of the tax regime, which took place on 1st January 2003. Domestic and offshore companies alike now pay 10% tax.

Cyprus has double-tax treaties with 33 other countries, including most major Western 'high-tax' countries, and most Central and Eastern European states. This is unusual for an international offshore financial centre and the effect is that Cyprus is a very effective location for holding and investment companies aimed at emerging markets.

Cyprus has a good, European-standard business infrastructure, and English is widely spoken. However, it is a relatively expensive jurisdiction for offshore operations, and many documents need to be filed in Greek.

The legal system is predominantly based on English law, and provides for various types of trust.

The division of the island into Greek Cypriot and Turkish Cypriot zones separated by a UN buffer zone following the Turkish invasion of 1974 does not seem to impede normal commercial or offshore operations, which take place in the Greek zone.

In November, 2002, the United Nations presented a plan for a 2-state federation under a common government intended to resolve the problem before Cyprus's admission to the EU. Even after the Copenhagen summit in December which confirmed the island's admission to the EU in 2004, negotiations between north and south continued; but they broke down in early 2003 and the island signed its EU accession treaty in April. The European Commission and the US strenuously supported the United Nations' Annan Plan for reunification, but it was rejected by a Greek Cypriot referendum in April, 2004. Reunification, it if takes place, may form part of Turkey's negotiation to join the EU.

The island's listing by the FATF in June, 2000, as one of 15 offshore jurisdictions said to have inadequate defences against money-laundering hastened a process of adjustment to international standards of banking supervision and information exchange. After the EU finally agreed its Tax Directive in June, 2003, Cyprus announced that it would implement the 'information sharing' provision of the Directive on entry to the Union in 2004. This means that information about savings returns received in Cyprus by nationals of other EU countries are now being passed to the tax authorities in the individuals' home countries. In late 2003 the government also announced plans to weaken previously tight banking confidentiality, although these were strongly resisted by the banks.

Learn more in our full Cyprus Knowledgebase and Cyprus News sections.

Gibraltar Report

Every offshore financial centre has its own individuality, its particular characteristics that make it suitable for one purpose and not for another. So, looking for the right offshore jurisdiction is just a matter of comparison? Yes, but it's not so easy: in Europe alone, there are at least a dozen candidates - each one wants your business and sets out its stall in the most attractive terms. Advisers likewise tend to have links with particular jurisdictions, they may even have offices there, and find it difficult to be objective.

On the other hand, there is the stream of negative propaganda about offshore jurisdictions issuing from the OECD and its FAFT (Financial Action Task Force), the G7's FSF (Financial Stability Forum), the EU and its member states. Oh, but hang on, isn't Gibraltar a member of the EU? It is, but that doesn't stop the criticism - Gibraltar represents a threat to the revenues of the EU's larger, high-taxing states, and they defend themselves!

Using the experiences of a fictional company, Peyton Media Group, and its 'dotcom' spin-off, PayTechPublishing ('PayTech'), the Lowtax Gibraltar Report sets out to analyse the suitability of Gibraltar as an e-commerce location. The Report will be useful to every company considering the switch to e-commerce, and uncertain whether or not to 'go offshore'.

Learn more: Gibraltar Report.

Gibraltar