It is time to take bold decisions!

Repeating a comment that I usually make during the last years, I’d say, “we are indeed living in interesting times!” Interesting from many perspectives, including political, geostrategic, social, diplomatic, financial and investment. There is a continual emergence of crises in the international landscape, which ground governments, the business community and the civic society to a constant struggle in combating them, rather being focused on a more productive agenda and on a more robust future planning.

We have experienced it recently with the covid pandemic, and we currently live it as a result of the war in Ukraine coupled by the political and commercial restrictions and the sanctions imposed. At the same time, a primary place in the daily agenda is kept for the wider compliance matters in the financial and corporate services sectors, the discussions around international tax planning and compliance, as well as the ESG and green transition and the overall sustainability saga.

As a consequence, all of the above led the world and the national economies in the arms of a stubborn high inflation and a radical surge in retail prices, especially in the areas of international trade, energy cost and the supply chains. In addition, the continuous increase in the cost of capital and the interest rates impose additional hurdles in sustaining existing businesses and in providing the essential financial resources for new ventures and start ups. The civilians and tax payers undergo a noticeable contraction of their revenues along with their purchasing power.

We are standing at a critical edge, where, on the one side, governments and national treasuries need to exhibit their strengths and resilience and, on the other, businesses and households, have to measure and strengthen their own financial resilience and set out their priorities.

Inevitably, the effects of the war in Ukraine and the imposition of sanctions on Russian interest entities changes the scenery. Furthermore, the designation of Cypriot natural and legal persons in US and UK sanctions brought new dimensions in the business and political horizon of the country, together with a shade of uncertainty. The aftermath of this development impacts not only the reputation and image of Cyprus, but affects directly the whole services sector.

In my opinion, the last few months unveiled how sensitive and susceptible eventually the services sector is to external influences and international pressure and threats, and also, how profuse speculation and whispers in the media cause panic and uncertainty. Ultimately, the lesson learned over the last few months is that the services sector touches and affects the whole of the economic environment of the country.

At the same time, this predicament highlights the responsibility that all of us who live in/from the servicers sector (eg the State, private sector, professionals, media etc) must do our best in entrenching and safeguarding the sector, taking good care of its institutional, regulatory and operational framework.

There is an imminent need to amend errors and close loop wholes, by departing from ill practices of the past. We have to adapt to the new realities as they are brought into the scene from the international community, creating thus a truly modern, attractive, transparent, credible, growth oriented and sustainable business model.

It's about time to adopt best international practices, putting aside legacy habits and perceptions of “citykingdom”. It’s about time for everyone to rise to the occasion of the circumstances, to take up his/her own share of responsibility and, under the umbrella of a national strategy and supreme authority, to progress forward. Maybe, it is about time to instigate the discussion for a national Financial Services Authority, as other more advanced countries have, within the ambit of which all current competent authorities (governmental and private sector) to work together in a coordinated and uniform manner. Although it may sound like a taboo for some, probably this is the only reasonable and acceptable way forward, in rectifying the country’s bruised reputation.

We have a duty to dare making the next big leap, taking advantage of the opportunities that lie ahead, ensuring that Cyprus exits the stressful and restricting dires that currently constrain it, in becoming once again an international business jurisdiction of repute and trust.

The way towards that goal is not easy, but it is feasible given we commit to it. One of the most catalytical factors to that end is of course technology and digital governance. Therefore, accelerating the pace of its implementation is of paramount importance. Additionally, by taming the beast of bureaucracy and investing in the increase of efficiency and competitiveness, in a culture of meritocracy, we can increase the speed of economic growth and credibility, achieving better ratings from international investors, stable and lasting growth rates as well as a parallel enrichment of the welfare and prospects of the businesses, of the society and of the people.

ICPAC has been at the spearhead of professional services for decades now. ICPAC and its members have been instrumental in the development of the economic model and the evolution of Cyprus as a business centre. We shall remain as such. We remain at the disposal of the government, the stakeholders and the society towards this quest. We will not be tired of submitting proposals and options aiming at the improvement of the business landscape, of the competitiveness and innovation of the country, and of the strengthening of the professional services sector and the economy in general.

Afterall, we all share the same country, the same challenges, the same prospects.

Accountancy Cyprus

ISSN 1450-2380

The Institute Council Nicos Chimarides (Chairman)

Odysseas Christodoulou (Vice-Chairman)

Eleni Pyrgou (Secretary)

Members

Andreas Andreou, Andreas Avraamides, Pieris Markou, Demetris Vakis, Gabriel Onisiforou, Stavros Ioannou, Maria

Pastellopoulou, Petros Petrakis, Demetris Siakallis, Spyros Spyrou, Constantinos Kallis, Marios Demetriades

General Manager

Kyriakos Iordanou Address

11 Byron Avenue, 1096 Nicosia, Cyprus

Mailing Address

P.O.Box 24935, 1355, Nicosia, Cyprus Tel.: +357 22870030

Fax: + 357 22766360 e-mail: info@icpac.org.cy www.icpac.org.cy

The publication is prepared by FMW Financial Media Way

23B Armenias Street, Office 101

Strovolos, 2003, Nicosia Tel.: 22342005

Fax: 22342006 e-mail: info@fmw.com.cy www.fmw.com.cy

Design and Pagination:

Christiana Loizou

Accountancy Cyprus is published quarterly by the Institute of Certified Public Accountants of Cyprus and is send free to all members of the Institute as well as to a large number of other persons, companies and organisations. The Institute can accept no responsibility fot the accuracy of contributed statements or articles appearing in this publication and any views or opinions expressed are not necessarily endorsed by the Institute, its Council or by the Editors.

08

Icpac News

• 13th Nicosia Economic Congress

• Relations ICPAC - CFA

• Memorandum ICPAC - Philips University

- Kapodistrian University of Athens

• The 6th Cyprus International Tax Conference

• The 2nd ICPAC Mediterranean Finance Summit

- A Gathering of World-Class Finance Leaders

• New ICPAC Council

• Short bio the new President

Cover Story

The 62th Anniversary Annual General Meeting

• ADDRESS BY THE PRESIDENT OF THE REPUBLIC, Mr NIKOS CHRISTODOULIDES

ICPAC is an essential partner of the government for the Tax Transformation

• GREETING BY THE MINISTER OF FOREIGN AFFAIRS

FINANCE, Mr. MAKIS KERAVNOS

These are the government's goals for tax reform What measures are being taken for investments?

• ADDRESS BY THE CHAIRMAN OF THE ICPAC

Mr. PIERIS MARKOU

We need a modern and effective Tax Transformation

Interview with the new President of ICPAC Mr. Nikos Chimaridis

ICPAC has a major challenge agenda ahead of it

30

Taxation

• Transfer Pricing Risk in Disallowing of Intra-Group Services

Christos A. Theophilou TTaxand Cyprus | Partner | International Tax –Transfer Pricing

• The impact of AI on tax professionals – Friend or Foe?

Andreas Papagavriel Senior Manager, Tax Services Baker Tilly

• The importance of establishing a robust transfer pricing policy

Charalambos Palaontas, Head of Transfer Pricing Services, EY Cyprus, Maria Panayiotou, Assistant Manager, Transfer Pricing Services, EY Cyprus

36 AUDIT & ACCOUNTING

• ISQM 1 Quality Assurance Management as an essential element of modern practice

Nicole Stavrinidou, BSc, MSc, BFP, ACA, Quality Assurance Director RSM Cyprus Limited

38

Sustainability

• Aligning with SDGs on a nonlinear planet Nicos Sika, Strategy, Innovation & Communication Consultantt

40

BUSINESS & ECONOMY

• European Year of Skills

Loukas Fourlas, Cypriot journalist and politician Member of the European Parliament

44 IFAC ACTIVITIES

• CSRD AND CSDDD Directive. What is new about CSR?

Panos Demetriou, On behalf of the Board of Directors of Together Cyprus CSR Manager Together Cyprus

• Educational Beach Cleanup by ICPAC

Niki Christofi, Member of the Corporate Social Responsibility Committee of ICPAC Business Mentor

48 IFAC LATEST ACTIVITY

• IFAC’S Global Knowledge Gateway

• International Auditing and Assurance standards Board (IAASB)

• International Ethics Standards Board for Accountants (IESBA) code of Ethics Effective Dates

13th Nicosia Economic Congress

It is one of the most important meetings where high-level executives of all Cypriot companies, entrepreneurs, economists, academics, ministers and relevant government officials have an opportunity to learn about current economic issues and also ask their questions and develop their own positions and opinions.