CyprusProfile talks to Andreas Christofides, Managing Director of KPMG Cyprus about prospects for the Cyprus economy.
"Professional services, Tourism and Shipping proved to be resilient during the financial crisis and will definitely continue to add positively to the country’s GDP. The number of new companies’ registrations have increased in 2016 by more than 20% while for tourism, it was a record year, since tourist arrivals exceeded three million for the first time.
The amendments in the tax laws last year assisted the professionals in their efforts to attract more business in Cyprus. The country offers to the investor opportunities through new financial instruments, since the establishment of the legal and tax framework for setting up funds.
Going forward, I believe that the energy sectors, research and development and the real estate will assist the economy to grow. The naturalization schemes and the tax incentives provided have increased demand in properties and this is evidenced in the numbers of sales contracts submitted at the Land Registry.
The contribution of the services sector to GDP is more than 40% and there are also some additional indirect positive effects. The sector, although faced significant challenges after the decision of the Eurogroup in 2013, managed to retain its potential.
The legal environment and the needs of the investors have changed and the professionals of the sector managed to adapt. The professional services sector employs significant number of professionals, majority of young age, with salaries well above the average salary in Cyprus.
Increased taxes, positive effects on consumption, assisting businesses to restructure and face the difficulties of the financial crisis are positive contributions of the sector to the Cyprus economy. Additionally, through the programs of Corporate Social Responsibility the sector supported the community which faces significant problems following the economic crisis.
The sector faces increased regulation and supervision both locally and internationally, something which creates additional administration burden. The professionals of the sector implemented all the Anti-Money Laundering regulations, directives and standards for the exchange of information and the supervision of the profession, while the European Directive on EU Audit Reform will create additional complexity.
It is reasonable that investing in any country is a matter of trust and confidence. We need to be able to adapt effectively to the needs of the investors, especially when referring to high wealth individuals. New department, e.g. Family Offices, have been created while continuous and objective information about the economic situation in the country is provided.
The exit of Cyprus from the Economic Adjustment program is not the end of the road. We need to remain focused in order to sustain the economic growth and achieve the fiscal targets set. The Government, the Parliament and all the authorities must continue to implement the program of restructurings so that a friendly and competitive business environment is created and maintained.
This will be another challenging year for the professional services sector. The state of the Russian and the European economy and the unstable economic and political international environment increases the need for awareness. The professionals of the sector are called to comply with the extensive laws and directives that regulate the sector, and that requires agility, extra effort and additional costs".