Tax status needs to be clarified
The CFA Society of Cyprus has added its voice to the growing number of finance professionals calling for a resolution of the tax status of investment funds so that Cyprus can take advantage of this trillion dollar industry.
Speaking at the annual CFA Forecasting Event last Wednesday, CFA Society of Cyprus President Marios Demetriades noted that Cyprus had yet to establish itself as an investment centre but that other competitor countries “will not wait for us”.
The Certified Financial Analyst (CFA) designation is a globally recognised certification of competence for the financial services and asset management industry.
At an event attended by more than 200 financial sector professionals, Demetriades said “Cyprus has achieved remarkable results in the banking and accounting/auditing part but has not yet developed services in the investment part.”
One of the reasons why Cyprus is not attracting investment services is because the Ministry of Finance has yet to make up its mind about the tax status of collective investment schemes such as UCITS.
“There is no way you can develop services to such organisations without a clearing of their tax status,” said Demetriades.
“I invite the government to take the initiative for the immediate solution of this problem through the formation of a committee consisting of representatives of the Ministry of Finance, the Tax Authorities and the interested professional bodies.”
According to Financial Mirror sources, one of the reasons for delay is a row between the different interested parties.
While the accountants wants UCITS to be taxed, so that clients can take advantage of double taxation treaties which would not apply in competitor destinations, bankers want the “Luxembourg” non-taxation model.
Too many supervisors
However, another reason for disagreement is that Cyprus has too many supervisory authorities: four in total, covering banks, insurance, pension funds and other investments.
Demetriades called for the creation of a single authority.
“It is more efficient and will reduce bureaucratic procedures that alienate foreign investors,” he said.
Breaking EU law on pensions
Demetriades also noted that Cyprus has yet to implement the EU directive on the proper operation and supervision of pension funds.
It is all the more urgent to create such supervision because of the scandal of the Electricity Authority pension fund last year.
“the issue created lat year because of the fraud in the Electricity Authority pension fund, which arose due to inadequate supervision, is still recent our minds,” he said.
Fiona Mullen
