New York (HedgeCo.net) – There has been a recent focus on financial services and the hedge fund space in Cyprus, the UN went so far as to declare Cyprus the forerunner for the new Luxembourg UCITS model. The government, working closely with a US based consultancy is planning a program geared specifically to hedge funds and financial services sectors in the US market. The program is slated to begin February 2010.

The effort to transform Cyprus into a global hedge fund and asset management epicenter has been in the works for over 5 years, with the aim of providing access to key markets such as the Middle East, the Eastern European region, Asia and Russia. Some of the top hedge funds globally have already established a footprint in Cyprus in an effort to adapt to international standards. As an accesspoint to the EU, Cyprus works for the Pan/European hedge fund model, with worldwide offices and execution from the island.

In an exclusive interview with the Cyprus Trade Commissioner, Aristos Constantine of the Ministry of Commerce, Industry and Tourism, I learned that Cyprus has the lowest corporate tax regime in the whole of the EU, at 10%. Cyprus also has some of the EU’s strongest double taxation treaties (DTT), with more than 40 countries worldwide.

“It has been a primary mandate in the past five years to transform the financial system into a favored conduit for International investment.” Trade Commissioner Aristos Constantine said in the interview, “The close private-public sector cooperation that characterizes Cyprus’ approach to forming its regulatory policy is a key factor in our ability and aim for continually reviewing and reforming our regulatory framework to provide greater flexibility, efficiency and transparency within the financial services and asset management sub-sector, whilst taking into account international compliance mechanisms with due consideration to recent changes in the industry.”

Cyprus maintains a fluid regulatory system which means that the Government will have the ability to anticipate potential issues and reconcile policy to meet private sector needs, ensuring a modern and transparent regulatory framework conducive to investment funds, including a favourable tax regime.

Over the past 10 years, specifically since its accession to the EU in 2004, Cyprus has moved from being an offshore to an onshore jurisdiction. It has completed a program of reforming finance sector legislation with international best practice.

“The Cypriot Government has put a simplified, effective and transparent tax system in place that is fully compliant with the EU, the Financial Action Task Force on Money Laundering (FATF), the Organization for Economic Co-operation and Development (OECD) and the Financial Stability Forum,” Commissioner Aristos Constantine, said.

Cyprus is actively involved with the OECD and part of its “white list”. It closely works with the EU and the Commonwealth in modelling global regulatory policy.

“Within the context of the prevailing global economic climate, the need to better function within the perspective of an ever increasing global environment has never been more profound. Cyprus, as a dynamic, flexible and adaptive economy, has seriously taken up this challenge and has worked extensively to ensure we function with clarity and transparency among both our EU neighbors and partners abroad.” Trade Commissioner Aristos Constantine stated in closing.

Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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