1. CYPRUS COMPANIES AS EFFECTIVE VEHICLES FOR INVESTMENTS By Marios Efthymiou Senior Partner Dinos Antoniou & Co Ltd Certified Public Accountants

2. MAXIMISATION OF NET RETURN THROUGH INTERNATIONAL TAX PLANNING GLOBALISATION OF THE WORLD ECONOMY HAS LED TO CROSS BORDER INVESTMENTS AND HAS ENHANCED INTERNATIONAL TRADING INVESTORS/BUSINESSMEN ARE INTERESTED IN MAXIMISING NOT JUST THEIR GROSS YIELD BUT THEIR NET RETURN AFTER TAXES HENCE MINIMISING THEIR TAX BURDEN THROUGH INTERNATIONAL TAX PLANNING STRUTURES IS SOUGHT

3. INTERNATIONAL JURISDICTIONS OFFSHORE JURISDICTIONS OFFSHORE JURISDICTIONS ( TAX HEAVENS) ( TAX HEAVENS) – British Virgin Islands – Belize – Panama – Seychelles – Delaware – And many others ONSHORE JURISDICTIONS ONSHORE JURISDICTIONS (TAX BURDEN REDUCED THROUGH COMPLICATED TAX BUSINESS STRUCTURES - HOLDING JURISDICTIONS) – Cyprus – United Kingdom – Luxembourg – Switzerland – Netherlands – Malta

4. CRITERIA FOR CHOOSING AN INTERNATIONAL JURISDICTION TAX BENEFITS AND ABILITY TO APPLY AND SUSTAIN THEM POLITICAL STABILITY RESPECTABILITY OF THE HOLDING JURISDICTION DOUBLE TAXATION TREATIES HIGH LEVEL OF PROFESSIONAL SERVICES AND RELIABLE BANKING SYSTEM ESTABLISHMENT AND MAINTENANCE COSTS

5. CYPRUS COMPANIES TAX ADVANTAGES – LOWEST TAX RATE IN EUROPE TAX ADVANTAGES – LOWEST TAX RATE IN EUROPE MEMBER OF THE EUROPEAN UNION MEMBER OF THE EUROPEAN UNION STRATEGIC LOCATION STRATEGIC LOCATION HIGH STANDARD OF BUSINESS ENVIRONMENT HIGH STANDARD OF BUSINESS ENVIRONMENT TAX SYSTEM IN FULL CONFORMITY TO EUROPEAN LAW & OECD DIRECTIVES AGAINST HARMFUL TAX PRACTICES TAX SYSTEM IN FULL CONFORMITY TO EUROPEAN LAW & OECD DIRECTIVES AGAINST HARMFUL TAX PRACTICES PAYMENTS FROM CY COMPANIES TO COMPANIES ABROAD ARE NOT SUBJECT TO ANY WITHHOLDING TAX PAYMENTS FROM CY COMPANIES TO COMPANIES ABROAD ARE NOT SUBJECT TO ANY WITHHOLDING TAX TRANSACTIONS WITH OFFSHORE COMPANIES ARE ACCEPTED TRANSACTIONS WITH OFFSHORE COMPANIES ARE ACCEPTED REPUTABLE AND LONGSTANDING INTERNATIONAL BUSINESS CENTRE WITH STABLE AND COMMITTED POLICY TOWARDS INTERNATIONAL BUSINESS COMPANIES REPUTABLE AND LONGSTANDING INTERNATIONAL BUSINESS CENTRE WITH STABLE AND COMMITTED POLICY TOWARDS INTERNATIONAL BUSINESS COMPANIES

6. PHILOSOPHY & TAX BASE PHYSICAL PERSONS CYPRUS TAX RESIDENTS ARE TAXED ON THEIR WORLDWIDE INCOME NON TAX RESIDENTS ARE ONLY TAXED ON THEIR INCOME EARNED IN CYPRUS TAX RESIDENT RULE A PHYSICAL PERSON IS CONSIDERED CYPRUS TAX RESIDENT IF HE/SHE RESIDES IN THE REPUBLIC OVER 183 DAYS IN A YEAR

7. PHILOSOPHY & TAX BASE LEGAL PERSONS (COMPANIES) A CYPRUS TAX RESIDENT COMPANY IS TAXED IN CYPRUS A NON TAX RESIDENT CYPRUS COMPANY IS ONLY TAXED ON INCOME EARNED IN CYPRUS TAX RESIDENT RULE MANAGEMENT & CONTROL IN CYPRUS. IN PRACTICE IT IS CONSIDERED WHERE:  THE MAJORITY OF DIRECTORS ARE  THE PLACE WHERE THE MAJORITY OF BOARD OF DIRECTORS MEETINGS & SIGNIFICANT DECISIONS ARE TAKEN

8. TAX RATES Main rate Cyprus Tax resident Co’s10% Main rate Non - Cyprus Tax resident Co’s0% Ship owning – Cyprus flag0% Ship owning (foreign flag ships), ship management & ship chartering Tonnage tax Trusts0%

9. EXEMPTIONS FOR LEGAL ENTITIES THE FOLLOWING ARE EXEMPTED FROM INCOME TAX: PROFITS FROM THE SALE OF SHARES INCOME FROM DIVIDENDS INCOME FROM INTEREST

10. SALE OF SHARES THE SALE OF SHARES BY CYPRUS COMPANIES ARE TOTALLY EXEMPTED FROM TAX WITHOUT ANY CONDITIONS UNLIKE OTHER COMPETITIVE JURISDICTIONS WHERE THERE ARE LIMITATIONS IN:  THE PERIOD OF HOLDING  THE % OF HOLDING I.E. IN UK THERE IS NO CAPITAL GAINS TAX ON THE DISPOSAL OF SHARES IN UNDERLYING SUBSIDIARIES IF AT LEAST 10% OF THE SUBSIDIARY CO. IS HELD FOR 2 YEARS

11. DIVIDENDS RECEIVED LEGAL ENTITIES DIVIDENDS RECEIVED BY A CYPRUS RESIDENT COMPANY FROM ANOTHER CYPRUS RESIDENT COMPANY ARE EXEMPTED FROM ANY TAXATION DIVIDENDS RECEIVED BY A CYPRUS COMPANY FROM A COMPANY ABROAD IS ONLY TAXED IF BOTH OF THE BELOW CONDITIONS ARE MET (WHICH IS VERY RARE):  THE COMPANY PAYING THE DIVIDENDS ENGAGES MORE THAN 50% IN ACTIVITIES THAT LEAD TO INVESTMENT INCOME AND  THE FOREIGN TAX BURDEN ON THE INCOME OF THE COMPANY PAYING THE DIVIDENDS IS SUBSTANTIALLY LOWER THAN THE TAX BURDEN OF THE COMPANY IN CYPRUS PHYSICAL PERSONS DIVIDENDS RECEIVED BY PHYSICAL PERSONS ARE TAXED AT 15% DEFENCE TAX ONLY IF THE RECIPIENTS ARE CYPRUS TAX RESIDENTS

12. INTEREST RECEIVED TRADING INTEREST IS TAXED AT 10% INCOME TAX AFTER DEDUCTING INTEREST EXPENSE AND ALL OTHER COMPANY EXPENSES NON TRADING INTEREST IS TAXED AT 10% DEFENCE TAX ON THE GROSS AMOUNT

13. TAX ADVANTAGES IDEAL FOR HOLDING COMPANY EXEMPTION FROM TAX ON PROFIT GENERATED FROM THE SALE OF SECURITIES EXEMPTION FROM TAX ON DIVIDEND RECEIVED WHEN CERTAIN CONDITIONS ARE MET EXEMPTION FROM TAX ON THE PROFITS THAT ARISE FROM A PERMANENT ESTABLISHMENT ABROAD NO WITHHOLDING TAX ON DIVIDENDS RECEIVED FROM A EUROPEAN SUBSIDIARY COMPANY LOWER WITHHOLDING TAX ON INCOMING DIVIDENDS PAID BY A NON EU COMPANY WITH WHICH CYPRUS HAS A DOUBLE TAX TREATY

14. NEW SHIPPING TAX SYSTEM LAW (ENACTED ON 29 APRIL 2010) THE NEW SHIPPING TAX SYSTEM LAW IS APPLICABLE RETROACTIVELY AS FROM 1/1/2010 AND REMAINS IN FORCE UNTIL 31/12/2019 THE NEW LAW COVERS SHIP OWNERS AND CHARTERERS, AS WELL AS SHIP MANAGERS, AND ALLOWS COMPANIES TO OPT FOR THE TAXATION OF INCOME RESULTING FROM A QUALIFYING SHIPPING ACTIVITY UNDER THE TONNAGE TAX REGIME INSTEAD OF UNDER THE CORPORATE INCOME TAX LAW THE NEW CYPRUS SHIPPING TAXATION SYSTEM IS OFFICIALLY APPROVED BY THE EUROPEAN COMMISSION AND IS IN FULL COMPLIANCE WITH EU GUIDELINES ON STATE AID TO THE MARITIME INDUSTRY

15. NEW SHIPPING TAX SYSTEM LAW EXTENSION OF TAX BENEFITS THE NEW REGIME EXTENDS THE TAX BENEFITS PREVIOUSLY APPLICABLE ONLY TO OWNERS OF CYPRUS FLAG VESSELS AND SHIP MANAGERS, TO OWNERS OF FOREIGN FLAG VESSELS AND CHARTERERS EXTENDS THE TAX BENEFITS PREVIOUSLY ONLY APPLIED TO PROFITS FROM THE EXPLOITATION OF VESSELS IN SHIPPING OPERATIONS TO PROFITS ON THE DISPOSAL OF VESSELS, INTEREST EARNED ON FUNDS AND DIVIDENDS PAID DIRECTLY OR INDIRECTLY FROM SHIPPING-RELATED PROFITS THE TONNAGE TAX OPTION IS NOW EXTENDED TO CREW MANAGEMENT COMPANIES WHO OTHERWISE WOULD HAVE BEEN EXPOSED TO A 10% CORPORATE TAX

16. LOSSES LOSSES CARRIED FORWARD CAN BE SET OFF AGAINST PROFITS WITHOUT LIMITATION IN TIME LOSSES INCURRED ABROAD CAN BE SET OFF AGAINST THE COMPANY’S PROFITS LOSSES OF ONE CO IN THE GROUP CAN BE SET OFF AGAINST PROFITS OF ANOTHER CO

17. THANK YOU DINOS ANTONIOU & CO LTD 9 VASSILI MICHAELIDES 3026, LIMASSOL-CYPRUS P.O BOX 57048, 3311, LIMASSOL, CYPRUS TEL. 00357 25 824545 FAX. 00357 25 824060 WEB SITE:www.dinoscpa.comwww.dinoscpa.com EMAIL: dinos@dinoscpa.com marios@dinoscpa.comdinos@dinoscpa.com marios@dinoscpa.com CONTACT PERSONS: DINOS ANTONIOU, C.E.O MARIOS EFTHIMOU, SENIOR PARTNER