Russian owned companies strengthen Cyprus presence, PWC auditor says Mon, 7 Sep 2015
By Stelios Orphanides
Concerns over asset security in Russia and a friendlier business environment in Cyprus led to an increase in the presence of Russian owned companies on the island, seven months after Russians authorities began to implement a new law aiming to motivate Russian investors to repatriate operations, a partner at PricewaterhouseCoopers said.
“Russians know that this cannot be done 100 per cent,” said Theo Parperis, senior partner at PwC Cyprus and head of tax and legal affairs at the company.
In cases in which Russian owners companies who lack “full faith” in the Russian justice system and legislation, they prefer to pay an extra tax in Russia on profit from offshore operations so that they can continue to benefit from institutional stability enjoyed elsewhere including in Cyprus, Parperis said.
The case of the oil company Yukos which was broken up in 2003 and was stripped of its assets by the state and its owner Mikhail Khodorkovsky imprisoned, agitated Russian business owners. Khodorkovsky said his case was politically motivated. Russian owned companies are important clients for business services in Cyprus.
“What is pleasant is that most enterprises decided to maintain their Cypriot presence as Cyprus offers them the tax and legislative stability they can’t find in Russia,” Parperis said. “They are not choosing Cyprus for tax optimisation but rather for asset protection and business facilitation, something also offered by Luxembourg, Switzerland and the UK, but Cyprus has a competitive advantage, good service at a much lower cost”.
While a relatively small number of Russian owned companies opted to repatriate their operations in order to avoid paying the additional tax premium, now “we have more substance, as we have real presence in Cyprus which they use as a basis of their operations,” in the form of high-income, decision-taking managers, he added.
A bundle of tax breaks announced by President Nicos Anastasiades on July 2, partially passed by lawmakers a week later, will offer further incentives to Russian investors to maintain or strengthen their presence in Cyprus, Parperis said.
The incentives passed by lawmakers include tax breaks on new investments, a 50 per cent reduction of transfer fees for property transactions until the end of 2016 together with exemptions from capital gains tax, and the introduction of the “non-domicile” treatment of foreign tax residents, which offers beneficiaries tax exemptions in Cyprus for income eearned elsewhere, Parperis said.
Cyprus property prices point to an accelerating growth, according to the THIRTIETH edition of the RICS (Cyprus) Property Price Index.
Sun, 3 Sep 2017