KPMG’s origins in Cyprus can be traced back some 65 years. During this time, the firm has developed into one of the largest audit and advisory firms on the island servicing international and local clients.
As an independent member firm of the KPMG network, could you provide an overview of KPMG’s history and role in Cyprus?
KPMG Cyprus has evolved from an accountancy firm that my late father, George Syrimis, set up in 1948 and that eventually, through a series of mergers, became KPMG Cyprus in 1988. Today, the firm consists of more than 750 people and 37 partners working from six offices (Nicosia, Limassol, Larnaca, Paphos, Polis and Paralimni) throughout the island. Providing audit and accounting, tax and legal and financial advisory services, KPMG Cyprus is one of the largest organisations in this field. We offer our services to clients from a wide range of industries, including banking and finance, transport, telecommunications, entertainment and construction to name just a few. While we have many international clients, we also have the biggest share of the local market.
Based on your contact with the Cypriot business community, how do you evaluate the current state of country’s economy?
We know from experience that Cyprus tends to feel the effects of economic crises slightly later than the rest of Europe. The Cypriot economy is generally very strong; however we are currently experiencing some problems. The munitions blast which damaged our largest power plant in July 2011 and the subsequent power cuts have affected many companies, while Cyprus’ two largest banks are suffering from the Greek debt crisis at the moment. Fortunately, Cyprus banks have performed well during the financial crisis of the past years. For instance, they didn’t invest in any of the toxic products that other European banks had invested in. I am also optimistic that they will manage the current challenges. On a broader level, the government is trying to take measures to cut the public expenditure and consolidate public finances. Other sectors of Cyprus’ economy are performing well at the moment, including tourism. Arrivals increased by more than 10 per cent in the first nine months of the year. If the sector keeps up its good performance in the coming years, Cyprus entire economy will benefit. Also, the exploration of natural gas, of which we will see the results in a couple of weeks, adds to my optimistic view on the future performance of Cyprus’ economy.
The financial services industry is also a major revenue generator for Cyprus. On an international level, what are its main components and where does the business come from?
Cyprus is a very good location for holding companies. Cyprus has more than 45 agreements for the avoidance of double taxation, including good agreements with Russia and the CIS countries. They offer very favourable conditions for channelling investments into these countries. Other sectors of Cyprus finance which are also attracting growing interest include insurance and investment funds.
Cyprus has very strong relationships with Russia and Eastern Europe. Is there a recognition that Cyprus needs to open up to other markets?
We want to maintain our good business relations with Russia and Eastern Europe, but at the same time we have started to work with other countries, mainly with China and India which offer the best prospects at the moment. The double tax treaty with India for example provides favourable conditions for companies that want to invest in real estate in India. But we are also looking to other regions, for instance Africa and South America. We need to ensure that we have the right double taxation treaties in place to make Cyprus attractive for companies, not only for corporate structuring but also to attract more fund and insurance business.
What makes Cyprus attractive for these two industries?
Fund and insurance businesses can benefit from the same advantages as all other companies such as our wide network of double taxation treaties. With 10 per cent, Cyprus also has the lowest corporate tax rate in the EU. In addition, when a company distributes profits to non-residents there is no withholding tax and there is no tax on the sale of investments in shares.
What kind of support infrastructure will companies find in Cyprus?
The support infrastructure for the funds industry is currently under development. At present there is a lack of fund managers, which offers very good opportunities for management companies to set up in Cyprus. Otherwise the local support infrastructure is very good and all the large accounting firms are represented in Cyprus. All in all, there are more than 400 firms offering high quality services. The Cyprus Institute of Accountants has over 3,000 members. More than 90 per cent of which have one of the two major UK accounting qualifications, they are either chartered accountants or certified accountants. We also have excellent legal firms, which can advise on a wide range of issues.
What other reasons do you consider as important when attracting those businesses to Cyprus?
Our telecoms system is very advanced, good-quality office space is available and Cyprus offers easy access to the surrounding markets of the Middle East, Asia and Africa. Insurance companies, for example, can use Cyprus as a centre for their operations in the wider region. Foreigners living and working in Cyprus can also benefit from favourable income tax rates, with the top rate being 35 per cent.
What kind of support does KPMG offer to international businesses looking to set up in Cyprus?
Our firm grew considerably over the past years and today we offer a wealth of experience. Six or seven years ago, we were only 300 people and now we are over 750 people. Our advice is always in the best interest of our clients. We have also built up special expertise in the regulated industries, especially on the advisory side in areas such as banking and investment funds.
Do you have a personal message to the international business community?
The international business community should always consider Cyprus as one of the options for setting up a business. We know that there are other jurisdictions that have similar offerings, but we believe that for most international businesses we are the best choice mainly because of our wide range of tax treaties and our low tax regime. In addition, costs for setting up and running a company are also relatively low. People should also have trust in Cyprus – its economy and its future.