Using Cyprus as Your Springboard for International Expansion

Mr. Phidias PilidesChairman of the Board, CIPA

Moscow, Russia June 23, 2011

CYPRUSINVEST WITH CONFIDENCE

Historic moment…

Page 2

Cyprus and Russia: Dynamic Relationship

Signing of the Protocol between the Republic of Cyprus and Russia Federation – October 2010

Protocol will:Further strengthen the bilateral investment relationships; Increase flow of trade Act as a catalyst of new investment opportunities; Enhance the business environment and benefit other areas of growth.

Country Overview

Official Name: The Republic of Cyprus

Capital: Nicosia

Area: 9,251 sq km

Population: 870,000

Official Languages: Greek, Turkish

English Widely Spoken

Real GDP Growth: 1.0%

GDP per inhabitant: €21,700

Inflation (HICP): 2.6%

Unemployment Rate: 6.5%

Monetary Unit: Euro

Life Expectancy: 79 years

Form of State: Presidential Republic

(Data 2010)

Cyprus Economy and Competitive Advantages

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“Global Competitiveness Report 2010-2011”

Cyprus was ranked number 40 out of 139 countries by the World Economic Forum "Global Competitiveness Report 2010 - 2011"

The Global Competitiveness Report is a yearly report published by the World Economic Forum

The report assesses the ability of countries to provide high levels of prosperity to their citizens

The World Economic Forum is an independent internationalorganization committed to improving the state of the world byengaging leaders in partnerships to shape global, regional and

industry agendas. 10

“Doing Business Report 2011”

4 6 9 1314

2517

22 23 2432 30 26

37 4151

46

3142

5649 45

7063

80

109

High – 1

Low -183

Cyprus ranked #37 of 183 countries on the overall ease of doing business and #15 of the EU 26

Cyprus as an Attractive Investment Destination

EU and European Monetary Union Member State

Strategic geographical location – ideal for expansion in new markets

Well-developed socio-economic infrastructure

An active Stock Exchange and robust Securities and Exchange Commission

More than 30 years experience as An International Business Center

Cyprus as an Attractive Investment Destination

Market-oriented economy

Macroeconomic stability and performance

Highly educated, qualified and multilingual talent

Stable and welcoming business environment

Low set up and operating costs

Advanced transport and telecommunications network

Renown international shipping centre

Enviable quality of life

Cyprus as an Attractive Investment Destination

Broad range and international quality of financial and business services - legal, tax, accounting, investment and brokerage

Transparent accounting system harmonized withinternational standards

Well developed banking sector for all financial needs

Low-risk business environment offering quick and efficient operations

The Global Integrated Economy is a reality and Cyprus can play a key role as a

Business and Financial Center

Cyprus: Simple, Low Taxation

Cyprus has the lowest corporate tax in Europe of 10%.  

A tax administration regime that wants to help foreign investors.

Exempt from tax: Dividend incomeProfits from overseas permanent establishments Profits from the sale of securities

No withholding tax on: DividendsInterestRoyalties paid from Cyprus

Most international transactions exempt from VAT 

Cyprus has concluded Double Tax Avoidance Treaties with 43 countries worldwide.

Cyprus as a holding company location

RussianUltimate

Holding Co

Cyprus Holding Co

Treatysubsidiary

EUsubsidiary

Invest through Cyprus in:

an EU country or

a country with no DTT with Russia or

a country with a better DTT with Cyprus

Benefits

Wide Cyprus DTT network

EU Parent Subsidiary Directive

Zero/Low withholding tax in target country

Dividends received by Cyprus Holding Co exempt from tax

No withholding taxes on payments to Russian Ultitmate HoldCo

Russian Outbound Investments

Cyprus as a financing company location

RussianUltimate

Holding Co

Cyprus Financing Co

Treatysubsidiary

EUsubsidiary

Russian Outbound Investments

Russian investor establishes Cyprus company to be the group finance company of foreign operations.

Capitalisation with equity.

Benefits

Tax on profit 10%

Access to EU interest & royalty directive

Zero/Low withholding tax on interest from target country

Interest deductibility in paying company

No WHT on dividends paid to

Russia

Cyprus as an Ideal International Business Services Centre

What Cyprus also offers…

Shipping Companies– Zero tax rate

Financial Group Companies– Low tax rate within a small profit margin

Companies Trading Securities– No tax on profits from sale of securities

Investment Trusts– Tax exemption

Doing Business Through Cyprus

• Cyprus is a dynamic business and financial centre for inward FDI

• Investors have the opportunity to access, through Cyprus, new markets both within Europe and non-EU countries

• The Global Integrated Economy is a reality and Cyprus can play a key role as an business and financial center

Cross-border IPOs through Cyprus

Tax benefits important, but also:

– Legal environment based on common law –

similar to UK

– Companies’ Law based on previous version of

English equivalent

– Capital markets legislation fully harmonised

with EU directives

CIS IPOs at the London Stock Exchange (LSE)

The LSE has been the preferred destination for CIS IPOs abroad

over the last few years.

17 CIS IPOs in LSE during the period 2008-2011

7 of these with topco jurisdiction other than Russia and UK

Cyprus chosen in 4 out of these 7 IPOs

Pipeline appears to be growing

Total funds raised by CIS companies in LSE IPOs 2008-2011

amounted to $6bn.

Russian IPOs into the LSE in 2011

\ Cyprus is now an established and credible TopCo jurisdiction, with increased confidence placed by issuers, investors, bankers and lawyers

\

International Transit Trade Centre

Efficient Customs

Formalities

Reliable Handling and

Delivery System

Advanced Regional

Warehouse &

Distribution Centers

Some of the companies already in Cyprus

GROME MARKETING

Cyprus: Safe & Sunny

Security and safety Excellent public and private

international schools High standard of living High quality tourist facilities

year round Gastronomy Millenia of culture, history and art Fabulous weather

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Cyprus: Investment Opportunities

Banking & Financial Services

B&F Services account for 9% of GDP (2009) and the sector is characterized by economic stability

Offers a strong regional platform for the provision of various banking products and financial services, including investment funds

Unique opportunities for cross-border and international transactions of mutual funds through reliable infrastructure

Cyprus: International Shipping Center

Ranks 3rd top maritime nation in EU27and top 10 globally

Shipping accounts 4% of Cyprus GDP (2009) More than 2,000 vessels with 40 million

gross tonnage Over 130 ship owning and ship

management companies based in Cyprus 2 deep-sea ports with easy access to Suez

Canal and other major freight routes New legislation enacted 29 April 2010 with

the New Competitive “Tonnage Tax System” (TTS)

Favorable tax regime and other benefits for ship owning, ship management, charterers and crew members

Energy Opportunities for the development of Renewable Energy Sources

(RES), Technologies and Production

Important Energy Projects underway: Establishment of the Energy Centre at Vasilikos- Terminal for the importation and storage of petroleum products

Exploration of vast natural gas reserves in Cyprus’ Exclusive Economic Zone (EEZ)

Development and Infrastructure Projects

Projects for promotion of sea tourism (Five marinas in coastal cities)

Large international-scale development projects and thematic parks

Luxurious and state-of-the-art resorts and golf courses

Infrastructure for development of advanced educational and health services

Contact CIPA to learn more!

For more information regarding investment opportunities in Cyprus, please contact us:

+357-22-441133 www.cipa.org.cy info@cipa.org.cy

Thank you!Спасибо!