21 Nov Interview with Michael Antoniades, Chairman, KPMG Cyprus
BF: Cyprus’ economy has shown resilience and recovery in recent years, with promising sectors such as tourism, shipping and technology driving growth. What are the most promising economic segments and some of the major trends that will shape the country’s future?
Michael Antoniades: Due to the constantly changing business and geopolitical environment, Cyprus has transitioned its economy and working line to comply with international developments and regulations. In my view, there are five core areas that are strategically important for the growth of the economy and for national income. The first is attracting the set-up of regional and multinational company offices that have worldwide operations. Cyprus has something which is unique and it is very difficult to be offered by other jurisdictions – our geographical location
Apart from our legal system, which is based on the Anglo-Saxon model, Cyrpus is friendly from the perspective of those wishing to run a company as our time zone is very convenient for coordinating activities between the East and the West. We have American companies that have had a regional office here for several years. They use the mornings to coordinate operations of their group with Asia and the East, and the afternoons to work with their headquarters in the US.
Cyprus also offers several advantages that complement its geographical location, including an advanced level of technology and telecommunications to facilitate effective communication within a multinational group. We also have an increasing number of connections and flights at both our international airports: Larnaca and Paphos.
The second core area is the energy sector, with opportunities to develop the oil and gas industry. Our Minister of Energy has been in the industry for decades. He knows the details from a technical perspective and the political aspects that are very sensitive, meaning he is well-positioned in setting a development strategy for the sector. Apart from oil and gas, Cyprus has a lot of sun and wind, so there are a lot of opportunities for developing renewable energy. solutions and incentives to support renewable development.
The next core area is the development of our education system and universities. We have a very high level of education and are seeing growing cooperation between our universities and their counterparts other in Western countries. This facilitates the introduction of specified courses and student exchanges. Again, our excellent geographic location is convenient for people coming from Asia or the East who want to benefit from a high level of education provision.
The fourth core area is healthcare. In recent years, we have witnessed an appetite to build hospital and healthcare infrastructure that will facilitate the work of scientists and support cooperation between foreign scientists with our scientists to provide specialized solutions – not only for Cypriots, but for people from elsewhere who may not have those solutions in their countries.
The fifth core area is tourism. Tourism has received a shock because we have been highly dependent on Russians, but now we are not. They have been replaced on a continuous basis by other tourists. We have seen a lot of French coming in the last year. This was not the case in the past as they used to go to Greece, but not come here. Cyprus also intends to expand tourism to North America as we have a lot of North Americans who visit the region. They head to Greece, to Israel, so combining Cyprus with these jurisdictions will boost our numbers and diversify our source markets.
BF: Cyprus has the fourth lowest corporate tax rate in the EU, making it an attractive destination for businesses. Please give us an overview of Cyprus’ business operating environment.
Michael Antoniades: We have evolved over the year, and the competitive tax rate is no longer considered a primary factor by overseas corporations. That’s why I said we would like to have serious multinational corporations establish regional offices with substance here. Irrespective of the rate of taxation, what multinational companies look for is the advanced level and quality of professional, legal, accounting and tax services, or transfer pricing.
They will want the comfort that if they pay X amount of taxes in Cyprus that will be acceptable in their overseas jurisdiction where they have their headquarters. This is where transfer pricing is becoming very important. Additionally, it is also adding substance to the jurisdiction and takes away some of the reputational issues that existed in the past.
BF: From a reputation standpoint, how has the international business community’s perception of Cyprus evolved?
Michael Antoniades: When something happens, it’s very difficult to change the reputational damage. It takes time and effort to convince people that today’s Cyprus is a well-regulated center where someone can do business and have the comfort of a regulation that does not entail risks different to what they may find elsewhere. As an example, our Anti-Money Laundering Law is one of the strictest in the world. If you try to open a bank account here in Cyprus, you will go through a detailed process that is primarily backed up by legislation that reduces any unwelcome sort of business to a very small percentage of risk. It takes time to inform people that Cyprus is a very solid and sound place to be and to do business.
BF: Cyprus has a growing pool of talented professionals in various sectors, fueled by a quality higher education system and government initiatives to attract and retain talent. What is your assessment of Cyprus’ higher education and training system and what are your own strategies to retain and attract top talent in your company?
Michael Antoniades: There is a high level of education here and we are supporting the process of training professionals in our industry. Our aim is to attract individuals that are willing to work hard and deliver quality. Transparency and accountability are very important, and we aim to deliver through enthusiasm, professionalism and initiative, value-added services to our clients. We are one of the largest firms on the island and our aim is to be the firm of choice by both clients and professional staff. We continuously invest in HR in our aim to provide an effective and simultaneously pleasant environment for the people who work with us. We are also continuously investing in well-being. We have various initiatives in our HR department including a gym that is available to our staff, a running club, a social club. We emphasize that the human factor is very important and are keen to help the development of this in KPMG and in Cyprus.
BF: What is your outlook for 2023 and how would you summarize your roadmap for the short term?
Michael Antoniades: We have several services that we provide to clients from regulatory, tax and advisory and we aim to get a better understanding of their need. We then use our knowledge and experience to revert with solutions that help them develop and add value to their business.
There are certain thresholds that we are very careful not to cross – for example on the auditing aspect, we must be and be seen as independent from our clients. We are very careful not to cross the independence thresholds, but the aim is to continue to use our knowledge and expertize to provide meaningful solutions to our clients. In helping our clients, we help the evolution of the economy. We have always been next to the government and willing to help in whatever areas they might need some ideas or specialization from our side; so if there are discussions on tax issues, or proposed legislation we are happy to participate. As a large firm, we have an active social responsibility and a positive impact on society.
BF: With US and Cyprus relations at an all-time high, what would be your final message to the readers of USA TODAY?
Michael Antoniades: Come and meet us in Cyprus because this is the best way to become familiar with what Cyprus can offer and how we can bring our countries closer together.