Cyprus, considered to be the largest and the most populated island in the Eastern Mediterranean, is a popular tourist destination. One reason for its popularity is that it is the home of the most beautiful and exotic beaches. However, it is also known for its strategic and extremely favorable tax planning scheme.
In line with Cyprus’s aim to further promote their tourism industry and improve their economy’s growth, the Republic’s government has created a setting that would benefit investors and business owners. The country offers one of the lowest tax rates for enterprises. Its corporate tax of 12.5% is applicable to both onshore and offshore companies; nothing is exempted from its tax benefits.
If you’re planning to start a new venture in another country, then you might as well set it in Cyprus. There’s almost to end to Cyprus Tax benefits for your business. To give you a glimpse of what you will enjoy when you’ve set up a business the country, here is a list of those benefits.
1. Withholding tax is not imposed on dividends, interest, and royalties. Dividends intended for shareholders are also tax-free. So if you don’t have enough money to fund and run a new business yet, you can start by investing in one of the pre-existing companies in the country.
2. Profits earned from selling shares, bonds, debentures are also tax-free.
3. 50% of the income from the interest earned by a Cypriot-registered company is exempted from the corporate tax.
4. There is no inheritance or gift tax.
5. There is no Net Wealth Tax.
6. Capital gains are exempted from Capital Gains Tax.
7. The Capital Gain Tax which is normally imposed on sales of securities is exempted. This perfectly explains why there are many trading offices in Cyprus.
8. The wages or salaries of foreign employees who are working outside Cyprus are exempted from paying tax.
9. The process involved in incorporating a company in Cyprus is easy and simple. It can be incorporated even if there are only one director and shareholder. As long as you meet the requirements and follow due registration procedure, then you’re good to run a business.
10. Cyprus has more than 40 double taxation treaties with more than one country to lessen the amount of paid tax. The Double Taxation Treaties has helped eliminate withholding taxes which are imposed on capital gains, royalties, interest, and dividends.
11. Cyprus holding companies are given favorable tax exemptions including that on those with consolidation and without controlled foreign company rules.
12. Inward or outward dividends are exempted from tax.
If you want to fully enjoy these benefits, you must register your business in Cyprus and abide by the modified Cyprus Tax Law No. 118(1)/2002.
Cyprus and its tax benefits have been helping legitimate owners of companies to improve their businesses. All of these benefits are not only enjoyed by large companies, but also by the small and medium enterprises (SMEs) residing in the country. In return, these enterprises have given the country’s economy a considerable boost.