Chimarides: “Cyprus can become a model, low-risk jurisdiction and place to do business”

Economic diplomacy and good governance are essential if Cyprus is to maintain and further enhance its reputation as an attractive and reliable destination for international business and foreign investment, says Nicos Chimarides, President of the Institute of Certified Public Accountants of Cyprus (ICPAC).

He recently spoke to GOLD magazine about the main challenges facing the Institute and how it aims to improve its position as a supervisory authority.

What were the first actions that you took after being elected President of ICPAC in June 2023?

In the two years prior to being voted in as president of ICPAC, I had served as Vice President of the Institute, so I already had a pretty good idea of what the burning issues were as well as the strategic direction that we had agreed on as Council. Of course, the business environment is changing at lightning speed these days and we therefore need to keep evolving and reconfirming our priorities. We had discussions at Council level and agreed on various actions, some of which I am sure we will be touching upon in the course of this interview.

What specific actions is ICPAC taking to assist the Government in strengthening Cyprus’ regulatory compliance framework?

With economic challenges on many fronts (e.g. the impact of global warming on the tourism sector), professional and financial services are likely to continue being among the key sectors that support economic activity and job creation in Cyprus, especially for young people. Both services sectors are well equipped to rise to this challenge. The enhanced efforts and improvements to external assessments relating to the country’s introduction of laws and regulations on AML (anti-money laundering), as well as all efforts on the sanctions front, are noteworthy. Nevertheless, we need to further improve the international reputation of the financial and professional services sectors in Cyprus and more clearly demonstrate the effectiveness of the country’s legal and regulatory framework.

ICPAC has proposed amendments to Cyprus’ supervisory framework that, in a structured and consistent way, would help ensure that Cyprus becomes a model, low-risk jurisdiction and a place to do business. We are currently in discussions with the Ministry of Finance, the Cyprus Securities and Exchange Commission (CySEC), the Cyprus Bar Association (CBA) and other stakeholders to ensure that Cyprus has the appropriate institutional structures in place, that are proactive and responsive enough to tackle the continuously evolving threats in the AML and sanctions space, as well as policy responses to those challenges.

In March, the Ministry of Finance published documents for a public consultation on Green Tax Reform. What are the biggest challenges around this issue and how do you view the ambition of achieving a green and circular economy progressing over the next few years?

As a country, we have the obligation to comply with and focus on various directives and initiatives emanating from the European Union, including the green and circular economy, the management of environmental resources and long-term sustainable development. All of these, in addition to social changes and the economic/fiscal capabilities of the state, advocate the revision of our longstanding living norms and habits and the way we traditionally operate and perceive things. This will inevitably lead to our adaptation to the new realities.

The Green Tax Reform proposals are a first attempt to address these issues. The state will raise an estimated €52 million from fuel tax, an additional tax on water consumption, etc. and use these revenues to encourage and support the transition to environmentally friendly practices – net-zero hotels, electric vehicles, etc. I am sure that this is just the first of a number of green reforms to ensure that we and the whole of the EU effectively discharge our obligations to tackle the challenges emanating from climate change.

What are ICPAC’s immediate short-term objectives for this year?

Beyond our ongoing efforts to support the state in areas such as improving Cyprus’ international image and reputation as a reliable and attractive international business destination (as part of the country’s rebranding project), to assist in the reform of the tax framework and help with the transposition of EU directives into domestic law, the main objectives for this year include:

Strengthening ICPAC’s role as a competent supervisory authority.

Strengthening ICPAC’s operational capabilities by bringing in additional specialist resources and utilising technology to streamline processes and create efficiencies.

Ensuring the continuous training, development and support of our members.

Promoting and supporting the interests of our profession, its reputation and credibility.

Improving ICPAC’s corporate governance framework by adopting international best practices.

On that first objective, how can ICPAC best strengthen its position as a supervisory authority?

The strengthening of the team with additional specialist resources will go a long way in the effort to further enhance our position as a supervisory authority. We need to continue working closely with the Public Audit Oversight Board (which is responsible for the supervision of the audit profession in Cyprus) to ensure, among others, the discharge of disciplinary responsibilities in a quick and fair manner. And, of course, it is of the utmost importance that in the AML and sanctions space, we agree with the state and the other regulators on the type of Financial Services Authority to be established, which will work and cooperate with all existing regulators to ensure robust and effective regulation.

How can we uphold Cyprus’ reputation as an attractive and reliable destination for international businesses?

The upholding and strengthening of Cyprus’ reputation of is an area on which all stakeholders, including ICPAC, need to focus continuously. The attraction of foreign investment in recent years has made a significant contribution to the country’s remarkable economic recovery following the COVID-19 pandemic. In today’s highly competitive international environment, however, any negative perception of Cyprus will clearly affect efforts to attract additional foreign investment. The rebranding effort is multifaceted:

As already noted, it is imperative that we strengthen the regulatory framework in such a way that there can be no doubt about its effectiveness.

Economic diplomacy needs to be enhanced with the private sector assisting the Government in improving Cyprus’ standing on the international business scene and strengthening its image as a regional business hub.

Corruption/transparency is arguably one of the most important issues, not only for local citizens but also for all major and serious potential investors. It is essential that we implement good governance practices along with the appropriate and effective implementation of relevant legislation.

The proper and effective promotion of Cyprus and its main benefits for international investors needs to be a well-structured and continuous effort. Invest Cyprus is perhaps best placed to take on the responsibility, coordinating role and necessary budget for this.

How does ICPAC aim to attract new people to the accountancy profession?

This is a very good question. Attracting new students and trainees to the accountancy profession is a matter of primary concern for ICPAC, as it touches upon the future of the profession. As such, in the last few years, we have placed particular emphasis on conducting an intensified and broader promotion of the accountancy profession to the young generation. Significant work is already being done in schools and universities, in cooperation with accountancy firms. The important role of qualified accountants in the business world and the contribution that our members and their firms make to the economy are strongly highlighted, as is the increasing use of technology in all aspects of our work, be it in the public service, in the profession or in business.

This interview first appeared in the April edition of GOLD magazine. Click here to view it.