Speech by President of the Republic at EY Conference on “Recent tax developments: Russia-Cyprus and Global Tax Trends”

It is truly a great pleasure to address such a distinguished audience, which holds a strong interest in exploring recent financial and tax developments in Russia and Cyprus, but which is also ready to work for the strengthening of the economic, commercial and investment ties between our countries.

From the outset, I would like to express my appreciation to the Cyprus International Business Association and Ernst & Young (EY) for organizing this important Tax Conference. And, of course, I would like to thank each and every one of you for your presence and participation, particularly all those friends who arrived from the Russian Federation.

Our countries share a long-standing partnership at all levels and in all fields: a partnership founded on concrete and deeply-entrenched historical, political, economic, cultural and religious ties. This relationship is greatly valued by the Government and the people of Cyprus and is one that we actively aim to upgrade even further.

In this respect, my official visit at the Russian Federation, in February 2015, constituted a milestone for reaffirming our reciprocal political engagement to the same fundamental cause:

To qualitatively enhance our strategic relationship, through the signing of a number of bilateral agreements, among others, in the fields of economic cooperation and on research and technology, with the most important being the Joint Action Program for 2015-2017, which constitutes an umbrella document, covering numerous areas of the fruitful cooperation between our two countries.

I do hope, following my extension of invitation, that my visit will soon be reciprocated at the highest level, in order to explore new areas of beneficial cooperation, as well as deepen and enhance our existing collaborations, for the mutual benefit of our countries and our people.

It would be a great omission on my behalf if I did not extend my satisfaction and gratitude for the vote of confidence, trust and faith which the Russian people, in particular the vibrant Russian community residing in Cyprus, as well as the Russian Business Community, have been displaying to Cyprus and its financial and economic system, particularly, during the past four years and following the Eurogroup Agreement of March 2013.

This is a most important demonstration of the principle of solidarity which has been characterizing our relations and also proves that Cyprus and Russia continue to enjoy a mutually beneficial partnership which, founded on a concrete basis, has a prosperous future.

To this end, I can assure you that Cyprus will remain a reliable partner to all of you, especially since we are now emerging stronger than ever from an unprecedented crisis and our journey along the road to recovery has been faster than anyone could predict. The deep recession and the severe financial crisis are fortunately behind us.

Cyprus is now one of the fastest growing economies of the EU, currently just short of 3% of the GDP. Our banking sector has undergone an ambitious restructuring, and now stands on a much healthier footing, with presence of foreign investors which we welcome and support.

Today, following successive upgrades by rating agencies, the sovereign rating of Cyprus economy is just one notch below investment grade, which confirms in the best possible way that we are on the right path towards full re-establishment of confidence towards Cyprus in the international investor community. Allow me to recall, at this point, that the economy of Cyprus was 12 notches below investment grade at the peak of the crisis.

At the same time, I am confident that, during the presentations and panel discussions to follow, you will have the opportunity to explore the comparative advantages of our economy, especially the significant potential in sectors like Tourism, Shipping and Logistics, Business and Financial services. In parallel, I have no doubt that you will be informed of the prospects of new sectors where Cyprus is set to play an important role, including the development of the Funds Industry.

From my side, what I feel I should emphasize is the strong commitment of my Government to continue working so that Cyprus remains firmly on a path of sustainable growth. We recognise the importance of maintaining sound public finances. We are committed to maintain a stable and competitive tax regime. We shall continue to invest in our human capital, supporting higher education and research. And we shall continue to stand by the local and foreign business community, always striving to create a business friendly economic environment.

We know that it is through the joint efforts of government and industry that we shall succeed in making Cyprus a top-notch destination for business and investment. This is how we shall continue creating jobs, opportunities and prosperity for our people. And this is exactly the ambition and commitment of our government. Our desire and wish is to encourage and support investment and commercial exchange in both directions, taking into account the fact that Cyprus, despite its small size, is a major center of international business, but also a base from which inroads into regional markets can be achieved.

The unique combination of EU membership, the Anglo-Saxon legal framework, the beneficial tax regime and the highly-skilled workforce, all contribute to Cyprus’ establishment as an attractive investment destination, offering significant opportunities and easy access not only to European markets, but also to those of North Africa, the Near and Middle East, the Gulf region and Asia.

I avail myself of this opportunity to express my eagerness and that of my Government, to work closely with the Russian Federation administration in order to explore new areas of beneficial cooperation, particularly in the field of investments and business transactions.

In this respect, a bilateral Cyprus � Russian Federation dialogue is in progress, in order to address a range of issues of economic issues, based on the established joint Intergovernmental Committee on Economic Cooperation, whose last meeting took place this past April, in the presence of the Cypriot Minister of Finance. At the said meeting, both sides welcomed the rise of tourism, the liberalisation of air transport, as well as investment initiatives in agriculture and telecommunications.

At the same time, I welcome the recent agreement between the state authorities of Cyprus and Russia to postpone the implementation of the Protocol amending Article 13 of the Double Tax Treaty, with respect to taxes on income and on capital, until the introduction of similar provisions in the bilateral Double Tax Treaties of Russia with other European countries.

Further, being fully aware of the strict regulatory framework of the Russian Federation and the need for transparency and accountability in all investment and business transactions �on which detailed presentations will be followed by the relevant technocrats- I am obliged to stress that Cyprus is fully harmonized with European taxation regulations and to the Organisation for Economic Cooperation and Development Policy standards on fiscal transparency and exchange of information on taxation matters.

This is also reflected by the Protocol to the Russia � Cyprus Double Tax Treaty, which entered into force in 2013, and the relevant Article relating to the exchange of information, which was revised in line with article 26 of the Organisation for Economic Cooperation and Development Model Tax Convention on Income and Capital.

The business community of the Russian Federation can rest assured that Cyprus will remain a reliable partner and will retain its position as a significant international hub for Russian and Cypriot business and investment.

I am also confident that you will all find the opportunity, during the various meetings and panel discussions to take place today, to exchange ideas and to create contacts which will enable you to act as the main drivers of the effort for further deepening and enhancing our economic and commercial relations.

I assure you that my Government stands ready to offer all the help and assistance deemed necessary and will facilitate every business and investment initiative involving the Russian Federation.

Thank you for your attention and I wish every success in your deliberations and a successful conclusion of the Conference.

Source: Press and Information Office