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E-Commerce:
E-Commerce is an expanding business worldwide. An unlimited number of goods and services may be dealt or provided through the web.
The most important ones are the following:
- Website supply and maintenance
- Software’s updates and maintenance
- Supply of images, typescripts and information accessible from databases
- Music, movies, games and political, cultural, artistic, sporting, scientific and entertainment emissions or manifestations
- E-learning
- Telecommunications
- Call Centre
- E-billing
- Electronic tickets
The absence of restrictions towards physical borders in the case of E-Commerce Business, offers the flexibility to the companies engaged in E-Commerce to select a strategic place to establish down the company, taking into account its competitiveness, specifically to the reduction of the tax burden.
Cyprus experience:
Every single country that aims at attracting foreign investment desires to propose the most auspicious environment to the implementation and development of e-commerce business. Cyprus is an ideal international business jurisdiction which offers unique conditions for the provision of these sorts of services and setting up E-Commerce Business. Several corporations related to e-commerce already operate in Cyprus: telecommunication companies, web designers, computer and information systems, consulting companies.
Tax advantages offered by Cyprus
- Only 10% corporation tax-the lowest rate in the EU
- Exemption from tax of dividend income, in most cases
- Exemption from tax of profits generated from transactions in shares, securities bonds and units
- Exemption from withholding tax on the repatriation income either in the form of dividends, interest and on almost all royalties
- Extensive double tax treaties network
- Access to EU directives
- No thin capitalization rules
- Absence of Controlled Foreign Company (CFC) rules thus exemption foreign income received
- Flexible reorganization rules and group relief provisions
- VAT related advantages; the applicable Cyprus VAT rate is at 15%, the lowest in EU
- Intercomunal transactions between European companies belonging in different European States are at zero VAT. Therefore, if the E-Commerce Business is outside Europe, then by providing services to European country they must charge the VAT of the country of the consumer. So by using a Cyprus company the VAT applied will be the Cyprus VAT at 15% which is the lowest in Europe while the Cyprus company will provide the services at zero VAT to other European companies.
Other advantages Cyprus offers
- Member of the European union
- Strategic location
- High standard of business environment
- Tax system in full conformity to European law & OECD directives against harmful tax practices
- Reputable and longstanding international business centre with stable and committed policy towards international business companies
- Tax on income earned outside Cyprus is applied only to Cyprus tax residents
- Non tax residents do not pay tax on their income earned outside Cyprus
- Tax on income earned in Cyprus is always taxed
- A company which is not tax resident of Cyprus is tax exempt from income earned outside Cyprus
- An example is that instead of using as trade agent an offshore company you can use a Cyprus non resident
- Cyprus is applied to all