Language: The official languages are Greek and Turkish, even though English is widely spoken and understood, particularly in the government and commercial sectors.

Population: Greek Cypriots represents approximately 82% and Turkish Cypriots 18% of a total population of 706,000.

Political System: In 1960, Cyprus became an independent republic. Cyprus has a presidential system of government and the president, who is elected for a five-year term of office, is the head of state. Cyprus has a multiparty system, and the electoral system is based on proportional representation.

Legal System: The legal system is based on the same principles as in the United Kingdom. Most laws are translated into English, and all statutes regulating business matters and procedures are based essentially on English law.

Criminal jurisdiction rests in six assize courts for more serious crimes and in six district courts for minor offences. Appeals are made to the Supreme Court, which declares final judgment.

Taxation: In Cyprus income tax is paid by both individuals and companies. Individuals are subject to progressive tax rates up to a maximum of 60%, and resident companies pay 42.5% in taxes on net profits.

Companies registered in Cyprus whose income come from sources outside Cyprus and are owned, either directly or indirectly, by foreigners qualify as offshore companies. These companies are taxed at one-tenth of the normal rate ( 4.25%) regardless of the place of management and control of the company. Shareholders who receive dividends from offshore companies are not subject to any further taxation.

Cyprus has an extensive network of double-taxation treaties. Under these treaties, there are possibilities to obtain income from contracting states that have either suffered no tax at all or have been subject to tax at a reduced rate in those states. Agreements exist with following countries:

• Bulgaria
• Canada
• Czechoslovakia
• Denmark
• France
• Germany
• Greece
• Hungary
• Ireland
• Italy
• Kuwait
• Norway
• Sweden
• United Kingdom
• United States
• Yugoslavia

Incorporation: The companies law is almost identical to the United Kingdom's Companies Act 1948, which provides for private and public companies. Private companies may be limited by shares or by guarantee, but they are not allowed to issue bearer shares. Private companies cannot have more than 50 members and are prohibited by its articles from inviting public subscription. The formation procedures of a company can normally be completed within one month.

Requirements for establishing an offshore company are:

• The company must have a registered office address in Cyprus. The address is determined by filing a return with the Registrar of Companies at the time of registration.
• Exchange control permission is required, and because of the exchange controls, ready-made companies are not available.
• Non-residents must have permission to subscribe to shares in the company.
• A minimum of one director, who can be either a local or foreign natural person, is required.
• A company secretary, who may be a person or a company and a resident in Cyprus, must be appointed by the directors.
• The information regarding directors and company secretary is available to the general public and has to be kept at the registry.
• The company must also maintain a share register with details of the directors and company secretary, which has to be submitted to the registry upon filing of an annual return.
• At least two shareholders are required and not more than 50 in the case of a private limited company.
• Because bearer shares are not permitted, shares must be in registered form. Nominees may hold the shares in trust for the beneficial owner, if anonymity is required. However, the Central Bank of Cyprus requires the identity of the beneficial owners of the shares in an offshore company to be disclosed to them.
• The share capital must be expressed in Cyprus pounds, and it has to be provided from external sources in the case of non-residents. It can be divided into any desired denomination.

The Memorandum of Association must include:

• The name of the company including "limited."
• The objects of the company.
• The numbers of shares and their value.
• A statement of how the shares are to be paid up.
• A statement of the shareholders limited liability.

There are no minimum share capital requirements, authorized or issued; however, an authorized share capital of 10,000 Cyprus pounds is recommended with a minimum of 1,000 Cyprus pounds issued and paid up. Shares are normally issued with a par value of one Cyprus pound, but there is no legal minimum par value.

Special Features:

1. The low tax rates applicable to offshore companies and the existence of double-taxation agreements, provides for tax planning often unique to Cyprus.
2. The Central Bank of Cyprus Law provides very strict regulations regarding disclosure of information. Each director, officer or employee of the bank is required to give an oath of secrecy and is therefore criminally liable for disclosing information to any unauthorized person. As a result, complete secrecy is maintained.

• Political, social and economic stability
• Excellent communications, commercial and professional infrastructure
• A modern companies act, based on U.K models
• An established international banking system
• An excellent double-taxation treaty network
• Low tax rates for offshore companies
• Strict regulations regarding secrecy and disclosure of information