Republic of Cyprus Cyprus is an island republic located in the Mediterranean Sea. It is the third largest Mediterranean island and its topography is dominated by two mountain ranges, the Troodos and the Kyrenia, which are separated by the Central Mesaoria Plain that extends the length of the island from east to west. The forest covered Troodos Ranges are an extensive massif formed from the local molten rock whereas the Kyrenia is a narrow limestone range. Capital and largest city (1996-2005 est.): Lefkosia (Nicosia) (in government-controlled area), 197,600. The Cyprus economy at present faces the challenges created by a more competitive environment both in the domestic and foreign markets and the envisaged accession of Cyprus to the European Union within the next year. With a view to successfully tackling these challenges, the Strategic Development Plan covering the period 1994-1998, aims, in general terms, at supporting the efforts for the restructuring and modernization of the Cyprus economy. More specifically, the philosophy of the Strategic Development Plan 1994-1998 is based on the preparation for the accession of Cyprus to the European Union. Within this framework, the intermediate goals are the following: - the upgrading of the relations of Cyprus with the European Union, over and above the provisions of the Customs Union Agreement, - the gradual adjustment to the Acquis Communautaire and the gradual convergence with the criteria set by the Treaty of Maastricht, - the preparation for the accession negotiations. Cyprus offers an excellent center for the establishment of corporate entities with advantages unparalleled in offshore jurisdictions. Cyprus has full OECD clearance, is a European country, which will become a full member of the European Union by 1st May 2004. New Tax Legislation: A uniform 10% corporate tax rate, applicable to the worldwide income, is now levied on all resident companies from the 1st of January 1996-2005. This is the lowest corporate tax rate in the European Union and thus the most advantageous standard rate of corporation tax for Cyprus. The new taxation status on Company is residence-based. A company is only 'resident in the Republic' if its business is centrally managed and controlled in Cyprus. Therefore, under the new rules, a resident corporation is taxable on its worldwide income accrued or arising from sources both within and outside Cyprus if it is managed and controlled from Cyprus. In view of the new tax legislation, the Holding International Business Companies operating from Cyprus are now in a much more beneficial position because they can enjoy the benefits deriving from the tax exceptions as well as the corporate tax benefits by virtue of the new tax legislation. Taxation: For General trading companies corporate tax is paid at 10% of net profits up to CYP1, 000,000 and 15% on profits over CYP1, 000,000 for 1996-2005 and 2004. Shipping Companies operating Cyprus flagged vessels are exempt from taxation. Dividends from Cyprus companies or companies which are managed and controlled in Cyprus are tax-free. Foreign, non-Cypriot, profits from establishments outside Cyprus belonging to the Cypriot Company are tax-free. Shareholders/Members: The minimum number of shareholders is one. Directors/Managers: The minimum number of directors is one. They may be natural persons or bodies corporate, be of any nationality and need not be resident in Cyprus. Company Secretary: All Cypriot companies must appoint a company secretary, who may be a natural person or body corporate. It is advisable to appoint a resident company secretary. Registered Office Required: Yes. Registered Agent Required: No. Name Restrictions: Any word that the Registrar considers undesirable. Any name that is identical or similar to an existing company. Any name that implies illegal activity or implies royal or government patronage, the following words or their derivatives: asset management, asset manager, assurance, bank, banking, broker, brokerage, capital, credit, currency, custodian, custody, dealer, dealing, deposit, derivative, exchange, fiduciary, finance, financial, fund, future, insurance, lending, loan, lender, option, pension, portfolio, reserves, savings, security, stock, trust or trustees. Annual Report: Annual Report is required. Annual Report/Licence Fees: CYP 7.

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