INTERVIEW WITH THE NEW PRESIDENT OF ICPAC MR NICOS CHIMARIDES ICPAC has a challenging agenda ahead of it

ICPAC has a challenging agenda in the coming years, yet with the cooperation with its members and in collaboration with the relevant stakeholders, it is confident that it will be able to address them successfully.

This is stated in an exclusive interview with the new ICPAC President Mr Nicos Chimarides, who adds that "Cyprus must take some bold decisions if it aspires to have a profound impact on the economic challenges that lie ahead".

In his interview, Mr Chimarides states that he is fully aware of the responsibilities he assumes as ICPAC's President and points out that a top priority is to promote tax transformation. "We want a 'courageous' and in-depth tax reform that modernises the tax framework, is aligned with the long term strategic needs of the economy, as these were articulated in the “Vision 2035 “ report, is synchronised with the EU as well as with the trends of the international economic and regulatory landscape, facilitates taxpayers and, ultimately, contributes to the promotion of Cyprus as an attractive investment and business destination."

Referring to ICPAC's next moves, he says that he will seek meetings with the President of the Republic, the President of the House of Representatives, the Ministers closely intertwined with ICPAC's agenda, the leaders of the political parties, as well as the productive bodies of the economy and the private sector, sharing with them ICPAC's technocratic opinions and other proposals.

The interview of Mr. Chimarides can be read below: How important do you consider the assumption of the duties of ICPAC President?

As you are aware, ICPAC is a professional association which plays a leading role in the economic life of Cyprus since its founding in 1961. Over time, ICPAC contributed significantly to the development of the Cypriot economy, the recognition of the profession of the certified public accountant, the promotion of a series of tax and other reforms in Cyprus, the evaluations of Cyprus by international organisations and the efforts to strengthen and further improve the country's reputation as a credible international business destination. At the same time, it exercises its supervisory role for our profession, for the professional activities of its members whilst, at the same time, offers its good advisory services to the government on a number of issues, in taxation, business and other financial matters. In addition, further to the objectives of the Institute, ICPAC works towards the facilitation and promotion of the public interest.

With this range of responsibilities and tasks, I think it is easy to understand how important the position of the President and the

Council of ICPAC is, particularly in the current environment where we are additionally called to manage the issues of sanctions, reform aspirations and other more complex challenges.

Being the incoming President, which are the areas of emphasis you think are a priority?

The strategies, policies and objectives of ICPAC have been designed to have a lasting applicability, relevance, consistency and continuity. We are committed to the key strategic objectives of our Institute, namely:

• Strengthening the country's economy and its status as a reliable and trustworthy business center

Strengthening the accounting profession, in Cyprus and abroad

• Strengthening ICPAC's role, reputation and credibility

• Strengthening the organizational structure and operation of the Institute.

These objectives are further broken down into individual objectives and actions. So, if I were to group our priorities for the next two-year period, they would be:

(a) the internal organisation, development and upgrading of the operational activities of the Institute in order to be able to meet its objectives, and fulfill its responsibilities and obligations towards its members and the country.

(b) (Enhancement of its supervisory roles, for all areas within its remit, working in a constantly changing compliance environment. At this point, I would like to underline ICPAC's commitment to cooperate with the government in establishing mechanisms at State level for the most effective regulation and oversight of sanctions, AML and beyond, through a framework which will enhance coordination, cooperation, guidance, legal clarity and enforcement.

(c) Tax reform. A very important project in the effort to keep Cyprus at a growth and competitive level.

(d) strengthening and growth of the economy through other necessary institutional and operational reforms.

(e) strengthening the cooperation between private and public sectors, establishing cooperation and synergies with adjacent stakeholders and bodies, locally and abroad.

(f) technology and sustainable green transition constitute the imminent future of our country. Therefore, our aims are, on the one hand, to adapt to new technological realities, while, on the other hand, the transition to the "green economy" making assisting in the effective implementation of the Resilience and Recovery Plan.

(g) the continuous training and development of our members for upskilling and reskilling to ensure we stay relevant in the fast changing business environment.

What are the main parameters of ICPAC's desired tax reform?

We need a “courageous” and in-depth tax reform that modernises the tax system, is in line with the current and future economic needs, is synchronised with the EU and the international economic and regulatory trends, facilitates taxpayers and, ultimately, contributes to the promotion of Cyprus as an attractive investment and business destination.

We are not proposing a mere adjustment in either tax rates or incentives given to taxpayers.

We aspire for a tax transformation which includes modernisation of the system, simplification or abolition of taxes, changes in practices and mentalities, elimination of bureaucratic procedures, technological upgrade of the Tax Department, digital services to taxpayers, promotion of tax consciousness, etc. Tax transformation should be a modern and efficient tool for the fiscal, investment, development, and social policy of the State. Along with the general reform, we believe that the time has come to regulate the profession of tax advisor (currently unregulated), so that Cyprus complies with the European Directives and its international obligations.

We are confident that ICPAC's presence as the most relevant and competent body in the area of taxation, would be valuable, useful and necessary for the government in the ambitious project of a proper, holistic and rigorous tax reform.

What do you think will be the biggest challenges for ICPAC in the coming years?

In general, the accountancy profession follows the path of the economy. Hence, at a macroeconomic level, ICPAC will need to respond to market developments and the economic developments in general.

Main challenges include the continuous digital and organisational development of ICPAC, in order to best serve its members, students and businesses. In addition, serious attention will be given to the execution of the supervisory and regulatory roles of the Institute, in the areas of audit monitoring, AML and Sanctions compliance.

A major change that is around the corner is the harmonization with the EU for the transposition and adoption of the European Corporate Sustainability Reporting Directive (CSRD). This Directive introduces new requirements for corporate reporting and places the responsibilities of the auditors at a much higher level. This is a collective task involving the cooperation of various stakeholders, primarily the Ministry of Finance and the Ministry of Energy, Commerce and Industry. ICPAC's initiative to adopt a more simplified domestic standard for the preparation and presentation of financial statements of small and medium-sized enterprises is on the same wavelength and will significantly contribute to the simplification and more proportionate implementation of existing procedures, while reducing the administrative burden on businesses. All of the above are aligned with ICPAC's efforts to attract young people to the accountancy profession and advance the fundamental principles and ethical standards of the profession.

How much do ICPAC’s views resonate with government and the Parliament and what do you foresee happening with the new administration?

We maintain open channels of communication and cooperation with the government, ministries, the House of Representatives, business stakeholders and many other organizations, always operating objectively, selflessly and in the public interest. Our relations are at an excellent level and we share our suggestions and proposals freely, respectfully and without any restrictions.

Obviously not all our views are necessarily adopted, but overall, I must say that we are very pleased with the open and transparent discussion on our propositions which are consistent with the shared objective to strive for the greater good of the economy. We are always available to provide accumulated knowledge and know-how, preferably ex-ante (at the planning stage) rather than ex-post (at the stage of general consultation or implementation) in the areas of our specialisation and expertise.

What message do you want to send to ICPAC members as their new President?

The message is simple and clear, our members are called to remain close to ICPAC and support the institute in its efforts to work to achieve the best for our profession, the society, and the public interest. Today, the profession is amidst many challenges and only by joining forces and coordinating between us, can we effectively face them.

Intra-group services are regularly scrutinized by the tax authorities, particularly in recent years, when globalization changed the way multinational enterprises operate in a more integrated manner. Specifically, this would be the case in a centralized MNE group, whereas in a decentralized MNE structure, the group companies would normally perform functions among themselves. (A list of intra-group services is provided in Annex 1 of the EU Joint Transfer Pricing Forum Guidelines on low value adding intra-group services.)