Following its economic crisis earlier this year, and due to the increasing number of forex and binary brokerages being licensed by CySEC, its regulating body, Cyprus has long lingered in the limelight, often for the wrong reasons. The prestigious fDi Supplement, published by the Financial Times has recently published an issue dedicated to Cyprus, under the telling title “Now in recovery mode, the country gets back to business.”
The section on the country’s finance sector, written by Wendy Atkins, highlights the emerging fund industry and foreign exchange trading as potential draws for foreign investors. According to the feature article, besides the restructured local banking sector, where foreign banks could set up shop, there are additional opportunities to be considered in the fields of asset management, ship financing, custodian services, mergers and acquisitions, private equity and venture capital schemes, as well as large infrastructure project financing.
The article goes on to cite the example of ForexTime (FXTM), as an example of a success story in Cyprus’ flourishing foreign exchange industry, pointing out that the company was founded in 2012 and it already has a workforce of 70 people. Wendy Atkins has therefore asked Andrey Dashin, the main shareholder of FXTM to share his comment on the experience of operating in the Cypriot foreign exchange industry. Contrary to recent accusations and comments being flanked about, Dashin points out that “Foreign exchange regulation in Cyprus is seasoned and mature, and in line with other European countries,” while he also maintains that “what differentiates it with regulators in other countries is the fact that we have a much closer collaboration with the authorities, which helps us feel more secure because we understand what the authorities request from the industry. Certainty brings predictability and predictability brings safety for our funds.”
Invited to offer his advice to financial firms considering a move to Cyprus, Dashin said that: “I recommend that they come here and start having open discussions with the authorities.” He also points out that “There are many experienced people working for the regulators; they’ve worked in the industry, so they’re not just bureaucrats. They understand the industry and they understand your needs.”
Moreover, we should also point out that under the EU’s Undertakings for Collective Investment in Transferable Securities Directives (Ucits) for the establishment of private and public investment funds, Cyprus also features as an attractive jurisdiction for investment funds, providing solutions such as alternative investment funds and schemes. According to the Cyprus Securities and Exchange Commission, the country offers competitive incentives for Ucits, including no capital gains tax on foreign profits from the sale of financial instruments; dividend income being exempt from tax; interest income being taxed at 10% corporate tax, but exempt from defence tax; the liquidation of Ucits not being taxable for non-tax-resident investors; and no tax on deemed dividend distribution for non-tax resident investors.