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Cyprus: royalty collector Nr 1
In accordance with the amendments to the tax laws, income of companies registered in Cyprus arising from royalties will be subject to a tax discount of 80%. According to the earlier laws, such income was subject to the standard 10% rate of profit tax. In line with the new law, however, taking into account the 80% discount, the maximum amount of tax will be 2%. 2% really will be the maximum, as the amended law also states that for the first 5 years, 20% of the amount used for the acquisition of royalties can be deducted as an expense each year. Taking this into account, for the first 5 years the tax rate will not even reach 2%. The amendments will be introduced retroactively, coming into force on January 1st 2012. The intention of the Cypriot Parliament was to make companies registered in Cyprus even more competitive in the international market, providing even more scope for businessmen wishing to establish their international holding centres in Cyprus, or transfer existing ones to the island. This is made possible not only by the attractive tax rates, with local enterprises generally paying the standard rate of 10%, but also by the extremely wide range of expenses which can be deducted.