Cyprus

In the recent years, Cyprus has developed into an appealing business centre with focus on professional services. This is due to several factors such as, a safe and friendly environment, quality of life, a well-structured educational system, human talent, in addition to attractive tax incentives such as:

1. Corporation tax is set at 12.5% (one of the lowest in Europe)
2. Dividend Income and profits from the sale of securities are exempt from tax
3. No withholding tax on dividends and interest
4. Double tax treaties with over 60 countries
5. Significant fiscal benefits for Intellectual Property Box regimes

Statutory obligations and Audit requirements for Cyprus Registered Companies

All Cyprus registered companies need to submit annually their tax return forms (IR4) to the Inland Revenue Authorities (IRD) and the annual return form (HE32) the Cyprus Companies Registrar. These forms need to be based on their annual audited financial statements prepared in accordance with International Financial Reporting Standards (IFRS).

Thus, all Cyprus registered Companies need to prepare financial statements based on the International Financial Reporting Standards (IFRS) and perform an audit in accordance with the International Standards on Auditing. 

Further, were a company holds investments and is considered a group then, provided the local regulatory thresholds are exceeded, the Company also has to prepare consolidated financial statements in addition to the standalone financial statements.

There are 2 main criteria for a group Company not to prepare consolidated accounts which are the following:

1. The provisions of the Law exempting group of companies from preparing consolidated financial statements if the ultimate parent or parent companies publish consolidated financial statements on the basis of Generally Recognized Accounting Principles. 
2. The exemption of the Law to prepare consolidated financial statements which previously applied to small groups has been extended to apply to Small and Medium-size groups, except, where any affiliated company is a public-interest entity or where the obligation to draw up consolidated financial statements arises under other legislation.