Cyprus is a well established and highly respected centre for the conduct of commercial, professional, financial and maritime activities within the region and around the world. Today the island is one of the major business centres in the world and the factors that have contributed towards this outcome are described below:

• the island's strategic location is offered as an ideal location for the establishment of regional or international headquarters taking into consideration the convenient accessibility by sea and air and the excellent infrastructure.
• wide and increasing network of double tax treaties offering tremendous possibilities for tax planning (see International Tax Planning).
• the legal framework and all statutes regulating business matters and procedures are based essentially on English Law.
• generous tax incentives for legal entities. The taxable profits of all Cyprus resident companies are taxed at the rate of 10%. Non-resident Companies are taxed on profits from a business activity which is carried out through a permanent establishment in Cyprus, rentals from immovable property located in Cyprus and profits from the sale of goodwill. Existing IBCs that had income from their activities at 31 December 2001 can be taxed with the rate of 4,25% until the end of the fiscal year 2005.
• Ship management companies are taxed at a rate of 4.25% on their taxable profits.
• there is no withholding tax on payments of dividends or interest to non resident shareholders.
• low personal tax rates for individuals working in Cyprus (see New Tax Law).
• for employees who were resident outside Cyprus and who move to Cyprus to be employed by a Cypriot employer, during the first 3 years they can claim an exemption of 20% of their salaried income up to a maximum annual amount of c£5.000
• freely transferable accounts of any currency may be kept either in Cyprus or anywhere abroad without any exchange control restrictions.
• residence and work permits for the foreign employees and residence permits for their families can be readily obtained.
• Cyprus provides a fairly high, European standard of living while at the same time it remains a fairly inexpensive country.
• Most of the professionals, especially accountants, lawyers and consultants are European trained and members of the respective Institutes and Bodies. They are therefore, able to provide professional services of an excellent standard.
• Non-residents may acquire real estate in Cyprus (residential property or offices) for their private use. The approval of the Council of Ministers is required and the purchase consideration must originate from external funds.

• existing IBC's (previously known as offshore companies) will now be allowed to do activities in Cyprus provided that they apply to the Central Bank of Cyprus for the alteration of their permits (the old Central Bank permits included a clause which disallowed any local activities) and also change the objects in their Memorandum of Association where needed to dispose of any clause restricting them to make any local activities
• from 1/1/2003 any companies with foreign participation which will carry out activities in Cyprus will be regulated by current Central Bank regulations on direct investment.
• from 1/1/2003 any companies with foreign participation which will carry out activities only outside Cyprus and for this purpose they are so restricted in their Memorandum of Association (if the shareholders will be E.U. residents no such restriction is needed) will be bound by the same procedures that apply today for IBC's.