Address by Minister of Finance Harris Georgiades
3rd International Funds Summit
Limassol, 30 October 2017
Ladies and gentlemen,
Thank you for the invitation and let me say that I am delighted to address such a distinguished audience of professionals and experts, who have gathered here today for the 3rd International Funds Summit.
Before anything else, allow me to convey the warmest greetings of President Anastasiades, who is not able to attend in person.
Ladies and gentlemen,
There is no doubt that Cyprus is welcoming and safe place to spend a holiday, to enjoy retirement, to buy a holiday house, to send the children to school, to live.
But I am here to tell you that Cyprus is also an excellent place to do business. And at the very core of the comparative advantages of Cyprus, is its human capital. It is the skilled workforce, it is the hub of knowledge, it is the experience of a versatile industry cluster.
One should also mention the access of Cyprus to European and regional markets, and the comparatively low set-up and running costs.
For instance, Cyprus is the largest ship management center in the EU, with shipping business actually growing during the last few years, despite global challenges. But there are also other significant sectors, beyond tourism and real estate, including education, health and energy, both renewables and offshore natural gas. The latter has already seen significant involvement of global energy players.
And of course, Cyprus also has a very well developed financial and business services sector, which includes audit and legal services, banking, and administration.
It is the resilience and good prospects of these productive sectors which has enabled our economy to achieve a strong recovery.
The Cyprus economy grew by 2% of the GDP in 2015, by 3% in 2016 and is currently growing at a rate which exceeds 3.5% of the GDP. This is significantly higher than the EU average, and the outlook remains positive.
The primary objective of our policy has been to maintain conditions of macroeconomic stability, and to offer support and incentives to the private sector.
Our commitment to tax certainty has been pivotal. We have maintained corporate tax at 12.5%, and have implemented more than 15 policies reducing or cancelling taxes and introducing new tax breaks and incentives. These include a notional interest deduction for new equity invested in any Cypriot company, a tax break for innovative companies, and an attractive non-domicile tax framework.
Even when we were under an IMF/EU program a few years back and had to eliminate a very significant budget deficit, we made sure that no new taxes would be raised, focusing instead on spending cuts.
The fiscal situation has now improved significantly, we have been operating with a balanced budget since 2014 and public debt is coming down fast.
Cyprus has also been among the first wave signatories to all the key international tax information exchange programs and has been steadily widening its network of bilateral tax treaties.
Ladies and gentlemen,
These are favorable factors which complement the efforts of the industry and are enabling Cyprus to make strides as a modern and attractive investment fund jurisdiction. One which can act complementary to the other well-established EU fund domiciles.
Over the last few years, there has been a collective effort lead by the industry, which is represented by the Cyprus Investment Funds Association, with the support and involvement of the government and CySEC (the Regulator), aiming to further fine tune the legal and administrative framework.
This has enabled Cyprus to gain recognition as an attractive fund domicile with a potential for further significant growth.
Currently, a new bill which will amend and improve the Alternative Investment Funds Law, is at the final stages of legal vetting.
In fact, I have to acknowledge that we have faced unacceptable bureaucratic delays in getting this bill through, for which I have to undertake the political responsibility. But I still hope to be able to present it for approval by the Council of Ministers in November.
With this new bill we propose the introduction of registered funds not authorized by the Regulator, thus enabling a much faster set-up and marketing. We also propose the introduction of limited partnerships with legal personality, as alternative investment funds vehicles, offering advantages in terms of versatility and structure.
At the same time, we are working with CySEC in formulating legislation which will introduce licensed and regulated Mini-Managers, below the European Directive thresholds, as well as legislation on licensed and regulated Administrators.
Ladies and gentlemen,
Let me assure you that our commitment to promote reform and to continue working for a stable, business friendly economic environment remains strong. We acknowledge that more needs to be done and we know that maintaining the competitive edge of an economy requires a never-ending reform effort.
For instance, fully understanding the significance of an efficient judiciary in the functioning of an open economy like ours, we are moving ahead with the establishment of a new, specialized Commercial Court, and with a major investment in e-justice, as part of a broader judicial reform.
Fully realizing the importance of credible regulation and supervision we have been enhancing the capacity of the CySEC and we are proceeding with the establishment of a new independent and unified supervisory authority for the insurance and pension fund sector.
Fully acknowledging the need for public administration to become more efficient, we are channeling significant investment in e-government and shall soon be promoting a new legislation aiming to simplify and expedite licensing procedures for new investment.
Within the framework of this broad effort, we shall continue working closely with the industry and the Regulator in order to create the circumstances that will allow the further expansion of the Funds Industry in Cyprus. A thriving Funds Industry, will not only create opportunities for investors and professionals, but will also provide additional financing instruments for investment across the business sectors of Cyprus.
Ladies and gentlemen,
I would like to conclude by thanking CIFA, for organizing this Summit, and also the sponsors, the distinguished speakers, and all the delegates for their participation and interest.
And let me express once again the commitment of our government to work in the direction of ensuring that Cyprus remains a stable and safe jurisdiction, an attractive base for business and investment, continuously building bridges of co-operation and standing firmly in favor of open markets and free trade.
Ladies and Gentlemen,
Thank you for your attention.
