30 Int'l Bus. Law. 453 (2002)
Summary of New Tax Reforms in Cyprus Affecting International Business Companies

handle is hein.journals/ibl30 and id is 467 raw text is: Summary of New Tax Reforms
in Cyprus Affecting
International Business
Companies

Kypros Chrysostomides
Dr K Chrysostomides & Co, Nicosia

Legal entities and corporation tax
From 2003, the distinction between IBCs and local
companies is being abolished. The definition of a
company resident in Cyprus will be introduced and
such resident companies will be subject to tax in
Cyprus.
A legal entity is a 'resident of Cyprus' if its
management and control are located in Cyprus.
What is meant by 'management and control' is not
defined in the law but it usually means the location
where the decisions of the board of directors are
taken. If the majority of the directors reside in
Cyprus where the decisions are taken, the

management and control test will be satisfied.
Under the existing regulations, IBCs are liable to
Cyprus income tax (at the reduced rate of 4.25 per
cent) irrespective of where their management and
control are exercised.
Tax rates for IBCs
For the financial year 2002 the tax rate for IBCs
will continue to be 4.25 per cent as it has been in
previous years.
As from the financial year 2003, the taxable
profits of all resident companies will be taxed at a
rate of ten per cent except for those IJBCs which are
eligible for the transitional provisions described below.
IBCs already operating under the existing tax
legislation concerning offshore companies (section
28A of the Income Tax Laws) may elect to continue

International Business Lawyer November 2002

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