Under the current tax legislation, Cyprus has the lowest tax regime in Europe and its role as an international financial centre is greatly enhanced. There is no longer a differentiation in the tax treatment of local companies and International Business Companies as a single corporation tax rate is applicable for all companies. Cyprus clearly stands as a prestigious tax - incentive EU country and is be free from suspicions usually associated with "tax-havens" which have zero tax.

IBCs may decide to set-up a fully fledged office in Cyprus in order to carry out their operations. Such companies can obtain permission to employ expatriate staff who will be living and working in Cyprus.

Work permits can be readily obtained by foreign employees of such IBCs which set up an office in Cyprus provided they work in executive positions or in positions where similar skills cannot be found amongst the local labour force.

Cyprus became a member of the EU in 2004. The benefits are expected to be quite substantial and will include political, economic, social, environmental and other benefits.

Cyprus has concluded 34 double tax treaties which apply to 40 countries. The main purpose of these treaties is the avoidance of double taxation on income earned in any of these countries. Under these agreements, a credit is usually allowed against the tax levied by the country in which the taxpayer resides for taxes levied in the other treaty country and as a result the tax payer pays no more than the higher of the two rates.

Under the current legislation, Cyprus has the lowest tax regime in the European Union and its role as an international financial centre is greatly enhanced. Due to the extensive double - tax treaty network, Cyprus is an ideal location for investments to and from Central and Eastern Europe and for investments to and from the European Union.

The main provisions of the tax legislation affecting International Business Companies (IBC's) are outlined below: