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FINANCE: Cyprus blacklisted by OECD for dodgy Golden Visa scheme

16 October, 2018

Cyprus has found itself on another ‘Golden Visa’ blacklist despite Nicosia arguing its being unjustly picked on.


Cyprus is listed among 21 countries whose ‘golden passport’ schemes threaten international efforts to combat tax evasion, according to the Organisation for Economic Cooperation and Development (OECD).

“Residence and citizenship by investment (CBI/RBI) schemes, often referred to as golden passports or visas, can create the potential for misuse as tools to hide assets held abroad from reporting under the OECD/G20 Common Reporting Standard (CRS),” said the OECD on Tuesday.

It said Identity Cards, residence permits, and other documentation obtained through these schemes can potentially be abused to misrepresent an individual’s jurisdiction(s) of tax residence which endangers due diligence procedures.

The OECD published a report in which Cyprus was among three European countries (Malta and Monaco) singled out for its “high risk” citizenship and residence by investment schemes that generates billions. 

It analysed 100 countries operating similar schemes and singled out the worst offenders where beneficiaries of such schemes were more liable to dodge the tax authorities by undermining information sharing.

“Potentially high-risk CBI/RBI schemes are those that give access to a low personal tax rate on income from foreign financial assets and do not require an individual to spend a significant amount of time in the jurisdiction offering the scheme,” said OECD.

It said such schemes are currently operated by; Antigua and Barbuda, The Bahamas, Bahrain, Barbados, Colombia, Cyprus, Dominica, Grenada, Malaysia, Malta, Mauritius, Monaco, Montserrat, Panama, Qatar, Saint Kitts and Nevis, Saint Lucia, Seychelles, Turks and Caicos Islands, United Arab Emirates and Vanuatu.

This body-blow for Cyprus’ reputation comes week after Transparency International and Global Witness placed Nicosia in the dock for its ‘Golden Visa’ schemes. 

A joint report by Global Witness and Transparency International urged Brussels to set standards for managing the schemes and to extend anti-money laundering rules, applied so far to banks or gaming firms, to all those involved in the visa-for-sale industry.

The European Commission is expected to publish a report on schemes in EU countries by December.

Acquiring these documents costs on average €900,000, but Cyprus’ passport could cost up to €2 mln, the report said.

Cyprus has raised €4.8 bln from its scheme, while Portugal could earn nearly a billion euros a year, according to figures cited in the report, called “European Getaway – Inside the Murky World of Golden Visas”.

EU states generated around €25 bln in foreign direct investment in a decade from selling at least 6,000 passports and nearly 100,000 residency permits, the report said using what it called conservative estimates.

“Cyprus, Portugal, Spain and the UK appear to earn between half a billion and close to a billion euros per year,” said the report.

“Despite the large amounts of money involved, Cyprus and Portugal do not seem to question applicants’ source of wealth,” it added.

Nicosia says it has tightened its procedures for its citizenship for investment scheme while refuting it is tantamount to selling off Cyprus passports.