Cyprus offers excellent value for money with its quality and depth of supporting professional services, thus maintaining its competitive edge ahead of other jurisdictions, says BDO Cyprus head Karlos Zangoulos.
Could you give a brief overview of BDO Cyprus and its core business?
We are the Cyprus member of BDO international, the world's fifth largest accountancy network, which employs over 60,000 people in over 150 countries. In Cyprus, we employ approximately 110 professionals in our offices in Nicosia and Limassol. Audit and assurance services account for 60% of our revenue, tax compliance and tax advisory 10%, while bookkeeping and payroll outsourcing and compliance services 20%. The remaining 10% of our revenue comes from our advisory practice, which includes insolvency, financial advisory and debt restructuring services. Currently we have clients from all over Europe, and a significant proportion of those clients have offices and staff also in Cyprus.
What sectors do you see providing opportunities for growth in Cyprus?
We anticipate higher growth in 2017 as opposed to 2016, with tourism in particular enjoying another excellent year. We also see continued foreign investment by companies bringing employees, functions and responsibilities to increase their substance in Cyprus. In addition to the non-domicile regime, these companies are attracted to the island by the quality of the labour force, and the fact that Cyprus offers excellent value for money in regard to the depth and breadth of experience of our supporting professional services providers.
Cyprus has a robust agenda of reforms and incentives, what advantages do these measures offer international business and foreign investors?
There is no doubt that the incentives introduced by the government to entice foreign investment to Cyprus have been successful over the last three years. The Citizenship by Investment programme has been very beneficial to the real estate sector and to real estate developers, while the so-called ‘non-dom’ regime provides incentives for wealthy individuals to move to Cyprus. However, in order to attract business substance, operations and employment, and to create long-term sustainable growth, our government needs to become more client service oriented. Investment in new technologies is urgently required to assist in eliminating unnecessary bureaucracy and improving efficiency. Regulators and licensing authorities should be given the resources they need to properly carry out their functions, and encouraged to serve the public interest by engaging in constructive communication with the business community. As employers, the professional services firms must continue to invest in our people to ensure that our industry is at the forefront of developments and that Cyprus continues to be a jurisdiction that offers a competitively priced high quality and value proposition.
What are your expectations for the financial services sector in 2017?
We understand that the Cyprus Securities and Exchange Commission (CySEC) is currently preparing new legislation that will introduce Registered Alternative Investment Funds and Mini (sub-threshold) Fund Managers, as well as regulation over fund administrators. Provided that this legislation is passed within reasonable time, this should give much-needed impetus to the fund sector, increasing the speed at which funds can be set up, reducing the administrative costs for smaller funds, as well as increasing confidence in the Cyprus funds industry. In addition to this, the improving confidence in the banking sector has given us all the prerequisites for significant growth for the fund sector and the firms that serve it. In our view, other parts of the financial services sector are likely to show only modest growth during 2017.
How do you see Cyprus developing in the next five years?
The drive against harmful tax practices, increased regulation and transparency will result in increased competition between international business centres, which in turn will increase the need to become more proactive in attracting new business. Companies and corporations will need to increase their substance in the jurisdictions that they use by transferring people and functions to those locations. Our challenge, and opportunity, will be to provide those businesses with all the reasons for choosing Cyprus. Those reasons will be based more on costs, quality of service and efficiency, rather than tax reasons, as was traditionally the case. In this regard, Cyprus has an advantage due to its relatively low cost of living and the fact that it has a huge pool of highly qualified professionals, not to mention that it is a great place to live and relocate to. If we invest in infrastructure and improve efficiency in our government sector, then I am confident that Cyprus will continue to grow as an international business centre with a positive impact on the economy as a whole.
Karlos is a founding partner of BDO Ltd in Cyprus with over 30 years of experience as a professional accountant. As well as his position as managing partner of the firm, Karlos also heads the firm’s tax division advising and assisting businesses ranging in size and complexity from large global corporations to small closely held enterprises, and high net worth individuals. Karlos is presently serving as a member of the Council of the Institute of Certified Public Accountants of Cyprus, the body that regulates the accountancy profession in Cyprus.