21 Nov Interview with Menelaos Kyprianou, Managing Partner, Michael Kyprianou & Co., Cyprus
BF: Cyprus’ economy has shown resilience and recovery in recent years. How would you assess the ease of doing business in Cyprus today and how would you rate the business operating environment? What kind of policies can the private sector and investors expect?
Menelaos Kyprianou: Cyprus as a business center has certain very strong fundamentals and this explains the country’s resilience and ability to rebound, despite the many temporary setbacks we experienced in recent years, such as the banking crisis of 2013, the pandemic and conflict in Ukraine. Our strong fundamentals are the level of education of Cypriot people – one of the highest in Europe – our culture of hard work, our very sound legal system based on the common law, low taxation, and our EU membership with all the possibilities that it entails.
We cannot and do not, however, rely solely on these factors and a nation we need to keep improving. For example, Cyprus needs to continue to invest more in technology and digitalization. We also must find a way to bring our best people back when they finish their studies overseas. We also need to cut red tape more and make more commercial agreements with other countries. The public sector is more efficient than that of most countries but, of course, there is always room for improvement.
BF: How competitive is the Cypriot tax and legal regime overall compared to some of its EU counterparts? What are some of the attractive tax incentives that are worth highlighting for investors? What would be some other areas for improvement?
Menelaos Kyprianou: The figures speak for themselves. The tax rate of Cyprus is the third lowest in the EU behind Hungary and Bulgaria. In addition, we have a very wide network of double tax treaties. Importantly, the tax framework is currently in the process of improving further. The stated objectives of the tax reform are to reduce tax inequality, enhance transparency, simplify the tax system and reduce the administrative compliance burden.
BF: Since it was formed in 1991, Michael Kyprianou & Co has expanded rapidly with offices in Greece, Malta, Dubai, Ukraine, the UK, UAE and Germany. In March, the firm opened a branch in Tel Aviv, demonstrating its international success. How does the firm position itself in Cyprus today and what have been some of the big milestones over the years?
Menelaos Kyprianou: We are presently one of the largest firms in Cyprus with a total of 10 offices in Cyprus and abroad. Our main field of work is with foreign investors and cross-border transactions. We also have quite a strong intellectual property practice and another important field of work for us is real estate. We regularly work with a number of leading US law firms and I’m particularly proud to say that we are one of the legal advisors of the US Embassy in Cyprus. Our firm is consistently recommended by the leading law directories such as Legal 500 and Chambers for all its fields of work.
BF: As an expert in litigation, tell us what sort of mechanisms do international investors benefit from in Cyprus when it comes to protecting their investment, their capital or their intellectual property?
Menelaos Kyprianou: We apply the common law system which is one of the best in the world. We have had some issues with the delay in the adjudication of cases and this has led to very important reforms. These came into operation last July and the basics aspects are an increase in the number of judges, the formation of specialist courts and the introduction of new civil procedure rules. We now have a special commercial court dealing only with commercial disputes of a certain high value and above, and a specialized maritime court. Also important is the implementation of digitalization processes in our courts. We hope to soon see that this very important problem of the delays in the courts has been resolved.
Our constitution safeguards the right to property, the right to freedom to contract and the right to a fair trial. Cyprus is a signatory to the European Convention of Human Rights, and we fall under the jurisdiction of the European Court of Human Rights. As an EU Member State, we also comply with all EU principles, laws and regulations. All these factors should give comfort to a foreign investor that they are dealing with a country where the rule of law is paramount. Another key point is the independence of our judiciary: our judges are not appointed by the government, and they rise within the ranks of the judiciary. It’s an institution that has always managed to stay away from political influences and has remained truly independent.
BF: The US is a major partner to Cyprus, bilateral co-operation spans many areas and relations are at an all-time high. How has the perception of Cyprus as a business and investment destination by American investors evolved? How is the country seen in the US?
Menelaos Kyprianou: We see the US as a model of democracy and a leader in business, technology and many other fields. Cyprus as a business destination is probably not so well known in the US at present. There is a lot of scope in this respect and we hope to gradually build this relationship and to gain the trust of US businesspeople and investors. Our newly elected president and other government officials have repeated that our interests as a country lie clearly with the US and the West.
BF: One of the main challenges of the country remains its reputation. It’s been seen in the past as a potential haven for money laundering and tax evasion. Tell us a little bit about the progress that has been made around better transparency, upping the general business standards and the progress made around due diligence and compliance.
Menelaos Kyprianou: There was a stigma attached to Cyprus in the past and we cannot deny that, although a lot of progress has been made. The due diligence that companies must undergo to be accepted as customers has improved drastically and banking transactions are scrutinized very carefully.
Relevant to the legal profession is also the fact that our regulatory body, the Cyprus Bar Association, has increased its scrutiny over law firms. We welcome these developments because this is the way forward. As a country, we don’t need illegal activities. We can flourish and progress by being absolutely lawful. We are a member of the EU and we should take away the perception that we are a tax haven and project the true image which is that we are a serious business center.
BF: Your firm has had quite a successful path and has expanded into several foreign markets. How do you see the way forward and what are some of your ambitions for your upcoming developments?
Menelaos Kyprianou: One of our targets is to keep growing internationally. Firstly, this gives us access to many more markets, so we are not solely reliant on Cyprus. Secondly, it gives us this international character. This also increases the work we attract in Cyprus itself. One of the things foreign investors would like to see to decide which law firm to trust, rightly or wrongly, is this international perspective of the firm. They feel even more comfortable that they are going to deal with a serious and successful law firm.
BF: What would be your final message to the readers of USA Today?
Menelaos Kyprianou: I hope readers will take the time to learn more about the possibilities that Cyprus offers and also that the ties between our two countries will continue becoming stronger.