The general business environment and supporting facilities, combined with the island's privileged position, the generous tax incentives, the low operating costs and concessions available to international business entities as well as the high standard of professional services and telecommunications, contributed to the development of the island as one of the world's primary business and financial offshore centres. An international business in Cyprus is essentially a legal entity registered in Cyprus, whose business activities lie outside the Republic and whose ownership belongs, directly or indirectly exclusively to aliens. The main benefits to the international investor for forming an international business company are low taxation, shareholder anonymity and freedom of exchange controls. A synopsis of the more significant of the advantages offered by Cyprus that would be of particular interest to offshore entities and their foreign employees are the following:

Tax incentives:

• Cyprus has concluded an impressive and increasing number of double tax treaties (see separate section below entitled "Double Tax Treaties").
  International business companies are taxed at the reduced rate of 4,25%.
• International business branches managed and controlled in Cyprus are taxed at the reduced rate of 4,25%.
• International business partnerships are completely tax exempt.
• International business branches managed and controlled abroad are completely tax exempt.
• No withholding tax is payable on dividends, interest and royalty payments.
• Annual capital allowances and all expenses incurred for the earning of income are allowed as deductions for tax purposes.
• Foreign employees of international business entities employed in Cyprus are liable to Cyprus income tax at reduced rates that can vary from 0% to a maximum of 20% which are equal to one half of the normal tax rates.
• The salaries of foreign employees of international business entities employed outside Cyprus are tax exempt if remitted through Cyprus.
• The salaries of foreign employees of international business entities who are employed outside Cyprus and are not paid through Cyprus are liable to income tax at reduced rates varying from 0% to 4% which are equal to one tenth of the normal tax rates.
• Shares in international business companies inherited in Cyprus are exempt from estate duty.
• Full tax exemption of income derived by way of interest on foreign capital imported into Cyprus and deposited with banks operating in Cyprus.
• International business entities are exempt from stamp duty on any instrument relating to their normal trading activities.
• International business entities are exempt from special defence contribution.
• Full capital gains tax exemption is given on capital gains, except on sale of immovable estate situated in Cyprus.
• International business entities are fully exempt from local social insurance schemes in respect of their foreign employees.
• International business entities are outside the scope of the VAT system.
• No VAT is imposed on the telecommunication services provided to international business companies with offices in Cyprus (zero rated for VAT purposes).

• There are no exchange control restrictions on international business entities and their expatriate employees can maintain bank accounts in any currency anywhere in the world.
• Cyprus is strategically situated at the cross-roads of Africa, Asia and Europe and offers excellent climatic and living conditions.
• It is internationally accessible by sea and air via frequent daily connections.
• It has a well developed infrastructure with excellent telecommunication and banking facilities.
• The Cyprus legal system is non-discriminating and is based on its English counterpart.
• Cyprus has a free enterprise economy, democratic political system and pluralistic social structure.
• The professional and management services offered in Cyprus are of a very high standard.
• Housing and office accommodation is easily available at reasonable prices.
• Cars, office and household equipment (except furniture and air conditioning equipment) are exempt from import duty if acquired for the use by an international business entity and its foreign employees.
• Foreign employees of international business entities and their family members can secure work and residence permits very easily.
• Details of beneficial owners are confidentially disclosed to the Central Bank only and anonymity is therefore assured.
• International business companies and their expatriate employees are allowed to purchase immovable property in Cyprus for their own use office premises or their residence (subject to obtaining the relevant Council of Ministers' approval).
• The Authorities of Cyprus have repeatedly declared that they are ready to interpret existing legislation as liberally as possible and even to introduce new legislation where necessary, in order to improve the already favourable environment for both international business entities and those seeking an operational base in a low-cost, low-tax area.