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Next Previous Kyriakos Iordanou: We are not a tax haven HOME • INSIDER • CYPRUS • Kyriakos Iordanou: We are not a tax haven
Interview with Socrates Joachim & nbsp; & nbsp; Photos by Andreas Manolis
The consequences of the Russian invasion of Ukraine with the sanctions against Moscow and the countermeasures imposed by the latter, inevitably affect Cyprus, says in an interview with Forbes the General Director of “SELK” Kyriakos Iordanou. In the interview he explains why the economic model of the country will not collapse, expresses the view that corporate taxation should not be increased to 15% and gives answers to all those who characterize Cyprus as a tax haven.
< p> In any economic crisis, many argue that the economic model of Cyprus will collapse and that the services sector will no longer have a role to play. Will such estimates be refuted this time as well?
The business and financial sector has proven to be resilient as well as particularly important for the country. It has helped as few other sectors in the recovery of the Cypriot economy from its significant unfortunate and tragic circumstances of the last 50 years, supporting the entire socio-economic environment.
What is also acceptable and acceptable is that, in order to to remain a competitive and productive economy, it needs to be flexible, adaptable and innovative.
Undoubtedly, being a small and open economy, Cyprus is affected by the ups and downs in the international economic scene and the challenges that arise. Consequently, the local economy will also suffer the effects of everything that is happening around us in the current period.
The economic model and planning of the country need constant development and adjustment, responding to the demands of the times, the technology and geopolitical correlations.
I remain optimistic that, with the cooperation of the state and the private sector, the business model of the country will be adapted again, aligning it with the international requirements, making the correct assessment of the developments and the expected & nbsp; their direction. I believe that we are at a pivotal point where we need to work more coordinated, on the basis of strategic aspirations, perhaps in a more radical way of thinking and away from our comfort zone. This will create long-term value, positive perception and competitive advantages for our country.
There have been significant strides in these directions in recent years, and I am confident that, this time too, the services sector will show resilience and flexibility, and will cope with the difficulties.
& nbsp; FLUID STATUS
after the Russian invasion of Ukraine?
In recent decades, a close and large-scale business relationship has developed and not only between Cyprus and Russia and Ukraine. The consequences of the Russian invasion of Ukraine with the sanctions against Russia and the countermeasures imposed by the latter, inevitably affect Cyprus as well. It is an indisputable fact that, in the short and medium term, there will be negative effects on the Cypriot economy as many companies and sectors of the economy are affected, while there is still uncertainty as to the true size and significance of these effects. The situation remains fluid as hostilities continue, as well as the length of sanctions against Russia.
Efforts are being made to assess the magnitude of the impact, so as to mitigate the negative impact. their. Our goal is for these impacts to be short-lived, allowing us to reposition our business priorities.
What other significant challenges is your industry facing today?
The accounting and auditing profession reflects all the challenges facing the economy, the market and the business world in general. & Nbsp; So, as companies, accounting and auditing companies align themselves with other companies in their day-to-day problems and peculiarities. & Nbsp;
More specifically now, one of the issues that the industry in general is called to face is finding and employing satisfactory in number and quality of staff. There are several jobs in many offices, mainly for auditing and accounting work, while the supply from staff is not proportional. Our profession is also intertwined with technology and continuing education and training, two areas that require significant investment and continuous upgrading. It would not be an exaggeration to say that many accounting firms are pioneers in the implementation of state-of-the-art systems, while they also place great emphasis on sustainability issues.
On the other hand, the accounting profession is one of the most heavily regulated professions, which significantly increases both the operating costs and the responsibilities that are borne. So?
Exactly. The professional accountant and the auditor, for the work they do and the opinion they express, are responsible to their client, the state, the business and investment community and society in general. Therefore, the way he acts and works is different from many other professionals. In essence, the professional accountant is the intermediary of his clients with other bodies such as the state and the banks. He is therefore often called upon to manage bureaucratic procedures, non-functional legislation and requirements that are beyond his ability or competence to manage. A concrete example of this is the period 2020 – 2021 with the problems caused by the coronavirus pandemic, with SELK and professional accountants spending endless hours and many resources to serve Cypriot and foreign companies, trying to help where possible the competent state services to maintain the smooth operation of all. Another point worth mentioning is that the accounting profession is subject to constant change, since the environment in which it operates is changeable. In addition to the changes or modifications imposed internationally by international accounting and auditing standards, as well as European and other directives on major tax issues, the industry is required to serve its customers in the context of changes observed at home. , whether they relate to tax issues, or compliance issues, or technical issues of a professional nature. Finally, operating in an open economy such as Cyprus, providing services at the international level, the sector of professional accountants faces the risks, challenges and opportunities that exist in the international firm. Inevitably, crises like the one we are experiencing today with the war in Ukraine do not leave him unaffected.
& nbsp; In your opinion, does the tax reform that the government is pursuing include? Will the increase of the corporate tax to 15% be a blow to the Cypriot economy?
With everything that is happening around us, with the uncertainty of the developments due to the war in Ukraine and their final consequences, the significant increase in inflation, as well as with the run-up to the presidential election, I am of the opinion that now is not the right time. to increase corporate tax. & nbsp;
We clearly support the need for a comprehensive tax reform, but on the basis of prior consultation and specialized study, taking into account the strategic planning for the development of the country's economy until 2035, prepared by the Economic and Competitiveness Council. We believe that the current tax regime has served the country very well since 2002, but the time has come for it to be upgraded and developed along with the wider economic and social planning of the country. We call it “tax transformation” because we believe that it is more tempting to go to another level and dimension, incorporating structural changes in the operation of the Republic's tax system as well as its digital mutation. This design should have as its main axes the increase of the country's competitiveness and the operation of the tax model in developed frameworks of digital technology and innovation. This view, apart from SELK, is possibly embraced by all the productive actors of the economy.
What is your answer to all those who continue to call Cyprus a tax haven.
We are not such a destination. Our tax system is relatively simple and transparent, it does not have “strange” tax reliefs and exemptions, while the submission of tax returns is accompanied by the audited financial statements of companies by an independent auditor.
Also, the corporate tax rate of 12.5% does not make Cyprus a low-rate country, nor has the European Commission been asked to increase any corporate tax according to a high-ranking technocrat. We must not forget that the companies of Cypriot interests are also burdened with the extraordinary defense contribution on the so-called & nbsp; dividend distribution, which raises & nbsp; The real tax rate is over 27%.
It is noted that, internationally, Cyprus operates through an expanded network of double taxation agreements with several other countries.
In addition, Cyprus has adopted all European Directives and Regulations regarding the fight against tax evasion and avoidance, the avoidance of aggressive tax planning and the transfer of profits, the strengthening of transparency and the system of reporting and exchange of information, while international bodies and bodies with satisfactory results.
WE WANT NEW PROFESSIONALS
Does Cyprus need new accountants today?
The professional accountant is able to take on a variety of roles in financial development and to support both the private and public sectors. Their education and their contact with the entire business and operational spectrum of economic activity, endow them with knowledge, skills and specializations that are necessary in all areas of the market. & Nbsp; & nbsp; Being a country that has developed the services sector, Cyprus will continue to enrich its professional potential with qualified and effective executives. Therefore, the profession and the market today has and in the future will continue to need new professionals who will frame and/or replace the existing ones.
