On 29 and 30 October 2015, the Global Forum on Transparency and Exchange of Information for Tax Purposes meeting took place in Barbados, during which the most recent outcomes of the Peer Reviews were presented and as a result of these Cyprus’ ranking was elevated from Non-Compliant to ‘Largely Compliant, with the OECD also duly communicating this improvement via the 30 October release of the results of the Forum.By way of background, this Global Forum is a multilateral framework encompassing work and progress by both OECD and non-OECD economies, in the fields of transparency and Exchange of Information (EoI) in the area of taxation, and is the international body in charge of implementing the internationally agreed standards in these areas. It further conducts peer reviews on the ability of its member jurisdictions to effectively co-operate with various other tax administration offices reference to these standards, and then reviews and issues reports on resulting compliance performance. It is worth mentioning that these peer review process by the Global Forum, examines the legal and the regulatory aspects via Phase 1 Reviews and the EoI in actual practice via Phase 2 Reviews.Year 2013 and Year 2015 ratings:
In November 2013, the Forum run an evaluation for Cyprus reference to the country’s implementation level of the standard in practice for the years 2009 – 2013 where it was ranked as non-compliant in respect to the global forum standards, while in October 2015 Cyprus’s supplementary reports for the years 2012 to 2014 were approved and thus resulting to the new rating of Largely Compliant, and in this way now enjoying same ranking status with Germany, U.K, U.S.A.
Cyprus’s progress: Additionally, for the record on Cyprus’ overall progress, the Executive Summary of the above-mentioned Supplementary Peer Review Reports, as released by the OECD, state amongst other that Cyprus’s EoI (exchange of information) network has significantly increased, primarily because the country became a party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, and it now reaches 103.Further, in contrast with the earlier positions in the Phase 1 and the Phase 2 reports on Cyprus, no jurisdictions have reported any delays or negative responses from Cyprus to their requests towards entering into an information exchange agreement, and thereafter the rating for element C.2 [Exchange of information mechanisms with all relevant partners] has been upgraded to Compliant.Moreover, under element C.5 [Timeliness of responses to requests for information], the earlier Phase 2 report had concluded that the Cypriot competent authority had not been very responsive to the EoI requests in a timely manner, and in particular less than 10% of the cases were answered within 90 days, only 20% were answered within 180 days, and approximately 40% was still pending, while one of the main reasons causing this was identified to be the lack of sufficient numbers in staff available to handle all of the incoming requests. As a follow-up to and a remedy to this situation then, immediately after the end of the review period of the Phase 2 report, additional staff members had been swiftly allocated to these Cypriot authorities during end of 2012 and beginning of 2013, and since then the response times to the incoming EoI requests have been outstandingly improved, as also confirmed by the latest peer input. The new figures denoted that not only had new incoming requests been responded to a lot more faster [ 33% replied to within 90 days, 64% replied to within 180 days, and only 3% was still pending] but also the Cyprus authorities had achieved elimination of the backlog from the previous review period as well!Distinctively, the above-presented are also referencing to the following table as this was provided through the discussed Supplementary Peer Review Report:
Undoubtedly there exists of course a lot of potential towards further improvement, yet both the procedural mechanism and the increased numbers of personnel, are both currently facilitating a sufficient basis towards provision of timely reactions and responses. As a result then, taking this progress into consideration, the rating of ‘Timeliness of Responses to Requests for Information’ has now being leveled-up to ‘Largely Compliant’.Conclusively, what has arisen from this Review is that the grading for all of the 10 Essential Elements as well as the Overall Rating for Cyprus has been very positively revised, with the exact individual statuses currently being at Compliant level for Elements A 3 Availability of Banking Information, B 1 Access to Information, B 2 Rights and Safeguards, C 1 EOI Mechanisms, C 2 Network of EOI Mechanisms C 3 Confidentiality and C 4 Rights and Safeguards, while even better rated at the Largely Compliant status are Elements A 1 Availability of Ownership and Identity Information, A 2 Availability of Accounting Information, and the already above-discussed C 5 of Exchanging Information.
Successively, by taking into consideration the performance on each of the elements in their entirety, the Global Forum has now assigned Cyprus with the overall prestigious rating of ‘Largely Compliant’, thus reflecting Cyprus’ dedication, effort and commitment to fully harmonise its tax systems with all OECD principles and fully comply with all globally acceptable and internationally agreed standards in the era of transparency and information exchange.
As Cyprus is undoubtedly a well-established international business and financial centre due to the many favourable tax incentives it offers, the good infrastructure and the transparent legal system that are in place, its extensive network of Double Tax Treaties, as well as its EU membership and full compliance with both EU and OECD standards, all these place the island amongst the most favourable holding company jurisdictions. Here at Eurofast our finance and tax specialists are always ready to assist you towards yielding considerable benefits for your personal and business purposes by including Cyprus to your corporate structuring and investment destinations.