Cyprus - An international business centre
 
INTERNATIONAL BUSINESS COMPANIES
  1. IBCs will be considered as tax residents and taxed in accordance with the above corporation tax rates in the case where they are managed and controlled in Cyprus


  2. IBCs will be entitled to the new beneficial tax provisions.


  3. IBCs are now entitled to derive income from Cyprus sources. (Necessary permits must be obtained).


  4. IBCs will be subject to the Social Cohesion Fund Law and will be required to contribute at the rate of 2% over the gross emoluments of all its tax resident employees working in Cyprus.


  5. 50% of the interest income will be exempted from corporate tax but the whole amount of interest income will be subject to Special contribution at the rate of 10%. Interest from normal trading activities such as banking and finance activities is considered as trading income and taxed at the normal prevailing corporation tax rates.


  6. Dividend income from overseas companies is exempted provided that the Cyprus recipient company owns at least 1% of the shares of the investing company. This exemption is only available in the case where the paying company’s activities is more that 50% of investing nature and the governing tax jurisdiction is not substantially lower that that of Cyprus. (The present Laws encourages the setting up of International Holding Companies)


  7. IBCs are totally exempted from the Defense Fund levy on dividend or on deemed dividend distribution provisions.


  8. Profits from operations from a permanent establishment abroad are completely exempted. This exemption is not granted where the permanent establishment directly or indirectly engages in more than 50% of its activities in producing investment income and the governing jurisdiction’s tax rate is substantially lower than that of Cyprus.


  9. IBCs holding royalty rights will be outside the scope of withholding tax scheme on royalties’ payable if the right is granted for use outside Cyprus.


  10. Profits from trading in securities and other derivatives are exempted from Income Tax. (This will encourage the establishment of Collective Investment Schemes).