Accountancy Cyprus - No. 143 - March 2024

“My vision is the Treasury to be established as a modern, innovative, reliable and effective organization”

The Institute of Certified Public Accountants of Cyprus is proud to announce that the 3rd ICPAC Mediterranean Finance Summit, will take place on 23 & 24 of May 2024

The 2nd ICPAC Mediterranean Finance Summit in 2023 brought together top finance leaders and decision-makers to address practical challenges and solutions. Participants had the chance to learn about impactful strategies and technologies that can transform finance into a strategic partner for long-term economic success. The summit was a tremendous success with activities, keynotes, panel discussions, workshops, and networking opportunities.

The 3rd ICPAC Mediterranean Finance Summit promises further value & success!!!

Forward thoughts

Is it time to turn the page?

Dear colleagues and friends

The dawn of 2024 finds us laying down our hopes and expectations for a “better” year, for prosperity, for health, for tranquility, for personal and professional happiness and progress.

Habitually, these same wishes are expressed every year, however, considering that the last 3-4 years contained a level of uncertainty, difficulty and onus in various fields, then the welcoming wish for 2024 is not a mere cliché but rather a reasonable and genuinely sought after aspiration.

Looking into the new year, we do carry along the consequences of the war in Ukraine, the conflict in Gaza, the escalating tension in the wider Middle East area, the high cost of energy and quest for resources, the inflation and the increased cost of capital, the international trade competition and distortion, coupled by the political uncertainty that 2024 entails. The latter refers to the elections in our country for MEPs and the municipal authorities, the EU wide elections for the European Parliament and the changes in the EU Commission, and the political scenery in other highly influential countries such as the US and Russia for the presidential elections they have, without forgetting the situation in our neighbouring Israel. Inescapably, there may be significant alterations in the current state of political, geostrategic and social affairs, which will have an impact on our country as well, since some are happening in close vicinity.

On the other hand, we cannot just sit and wait for what is about to happen, especially if these are “household” matters. Hopefully, having learned from the lessons of the very recent past (although it may be still present), we need to proceed decisively and steadily towards the day after.

I guess that there should be a long list of items to be dealt with in the government’s agenda. The image and reputation of the country has been seriously tarnished lately, hence it requires an immediate “polishing” with the appropriate means of course, the financial services sector is still waiting for the introduction of a single oversight authority, the tax reform (or better, transformation, as we like to call it) is still at the infant stages, the introduction of the “green” taxes is also a serious factor to consider, the overall reform of the public sector apparently is not progressing as planned, the digital

transformation still has a long way to go to name a few. There are also many other significant matters that cater the attention of the State such as social matters and social cohesion, the illegal immigration problems, the combat against corruption and the need to install higher transparency levels, non-performing loans and foreclosures, as well as everything else that affects the economy in general. Of course, it must never slip our attention the efforts made and the political ploys being played, for the resolution of our national problem, relieving thus eventually Cyprus from the occupation and the military threats from Turkey.

The perils for the economy and the society of the country are not over yet. However, we have a duty to administer and manage the risks, the opportunities and the challenges. Mere expression of good will, political statements and declarations are surely not enough. There must be action, tangible evidence and determination by the government and the political establishment. There must also be a connection with the business sectors and economy stakeholders for enhanced cooperation, joint efforts, solid and robust planning and, ultimately, clear and identifiable targets, of measurable outcome. We need to witness more initiatives being taken and a closer consultation between all stakeholders. At this important milestone, it is up to the government to pave the way, to lead, to inspire...

The stakes are high, the road ahead is a long one. Unless we have a plan, unless we remain congruent and honest amongst us, unless we act upon meritocracy, transparency and utilization of the best minds and skills, unless we interpret and understand the broader geopolitical picture in a factual manner and refrain from long gone idealistic superstitions, 2024 will not be the game changing year we hoped for, but rather a sad procrastination of the previous ones.

So, if we do wholeheartedly wish to eventually turn the page and enter a new, more optimistic, prosperous, and rewarding era, we should rise up to the occasion. Cyprus and its people have many strengths and capabilities, with proven stamina and resilience. Potentially, the knowledge and the commitment are there, yet it is up to each one of us to exhibit the corresponding willpower and determination. It should not be difficult to turn the page, after all, it can be done though a single and simple action… 

Kyriakos Iordanou General Manager of ICPAC

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THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF CYPRUS

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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

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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

Irene Loizidou Head of Administration & Finance ICPAC

• AI - Time for action in the Hospitality Industry

Evita Giannouli Manager, Audit & Assurance services, EY Cyprus Member of the Hospitality Committee, ICPAC

• Benefits and Challenges in Implementing Lobbying Legislation

Dr. Nicolas Kyriakides Adjunct Faculty, University of Nicosia

• Transparent and Predictable Working Conditions of Employment Law of 2023 Xenios Mamas Senior Labour Relations Officer Department of Labour Relations Ministry of Labour and Social Insurance

• Cyprus Trusts: Adapting to a changing landscape

Stella Kammitsi Advocate – Legal

• The Importance of Continuous Professional Development for Investment Professionals

Constantinos Kourouyiannis CFA, Vice President of CFA Society Cyprus, Executive Director of Easternmed Asset Management Services

44 AUDIT & ACCOUNTING

• Cyprus Public Audit Oversight Board

Andreas Zachariades - Chairman Cyprus Public Audit Oversight Board

46 TAXATION

• The «new» 20% and 50% tax exemptions on salaried income

Cleri Evagorou Grant Thornton

• Revamping the Tax System

Interview by Philippos Raptopoulos and George Liasis

• DAC6 revisited through the prism of DAC8

Stavros Karamitros Manager, International Tax and Transaction Services (ITTS), EY

Cyprus

52

56

68

INVESTMENT & FINANCE RESEARCH

• Real Estate Tokenization: The Future of Investment in Property

Alexis Nicolaou Leader Distributed Ledger Technologies at Grant Thornton

Cyprus

• Research article on Gender Equality between Women and Men in the workplace of Cyprus compared with the EU

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

• Impact #1: Strong And Sustainable Accountancy Profession

• Impact #2: Strong And Sustainable Private And Public Sector Organizations

• Events

• International Foundation For Ethics And Audit (Ifea)

• International Ethics Standards Board For Accountants® (Iesba®)

SEMINAR

ICPAC: Successful conference which covered a wide range of current labour issues

The Corporate Social Responsibility Committee of the Institute of Certified Public Accountants of Cyprus (ICPAC) in collaboration with the Ministry of Labour and Social Insurance organized a successful conference which covered a wide range of current labour issues, such as equal pay and treatment of Men and Women in employment, the new Directive on pay transparency, the establishment of Labour Inspectorate as well as other labour topics and new applicable Legislation.

Mr. Dimitrios Chioureas, President of ICPAC’s Corporate Social Responsibility Committee and Partner at Grant Thornton Cyprus, pointed out in his welcome speech that we do not just meet as participants in a conference, but as champions for a change, united in our commitment for the removal of barriers that prevent the realization of equal opportunities to all. Moreover, he pointed out that gender equality is not only a moral imperative, but it is essential

for a prosperous and strong society. It is a cornerstone for innovation, economic growth and social harmony. In a world struggling for progress and equality, it is disappointing that the gender pay gap remains as a stark reminder of the work that still needs to be done. Our goal is to create tangible solutions that will pave the way to a future where no person faces discrimination based on his/ her gender. It is our collective responsibility to confront challenges head-on, promote dialogue and actions that will lead to a fairer future. The General Director of the Ministry of Labour and Social Insurance, Mr. Andreas Zachariadis, stated in his greeting that compliance with the labour legislation is a necessary condition for a prosperous labour market.

A modern working environment shall guarantee to every worker, conditions of equal participation in the labour

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ICPAC issues technical circulars for the technical support of its members.

The technical circulars of ICPAC aim at informing the members as regards changes or amendments of regulations and procedures relating to the accounting/auditing profession, which stem either from ambiguities or omissions that are identified during accounting or auditing work, or from harmonisation directives of the European Union for the accounting/ auditing profession.

Find the most recent technical circulars sent to the members below.

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Continuous Professional Development (CPD) is the learning and development activity that you will do throughout your ICPAC membership. CPD will provide you with the knowledge and skills required to perform your day-to-day job in your chosen professional role, as well as to enhance your employability for the future.

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Find our yearly «ICPAC action» booklet.

market, equal opportunities for development, equality in pay, a healthy balance between work and personal life, as well as protection against harassment of any kind.

He also reminded the commitment of the Government and specifically of the Ministry of Labour and Social Insurance for the continuation of cooperation with all parties involved, including the Institute of Certified Public Accountants of Cyprus (ICPAC), on the basis that professional accountants are often at the first line of dealing with a wide range of labour issues.

Specifically, the following topics were briefly presented:

(1) Establishment and operation of Labour Inspectorate

Mr. Andis Apostolou, Acting Director of the Department of Labour Relations and Supervisor of Labour Inspectorate, as well as Trade Union Registrar, stated that Labour Inspectorate has been operating since 2017 and is the appropriate authority in Cyprus for monitoring compliance of 30 Labour Laws and safeguards the employee rights through effective inspections.

Labour Inspectorate has ongoing communication, cooperation and collaboration with other departments of the Ministry as well as other Ministries and Authorities in order to coordinate efforts, share information and promote a fair, equal, qualitive and safe working environment in workplaces.

An important mission of Labour Inspectorate is to compact undeclared work and illegal employment, which is among the priorities of Cyprus government. Mr. Apostolou clarified that "undeclared work" means earnings relating to an employment or self-employed activity which have not been declared to the Director of Social Insurance Servicers in accordance with the current Regulations.

Mr. Apostolou additionally also mentioned that an important role of Labour Inspectorate is to monitor whether the general terms of employment of employees of all nationalities, are as prescribed by appropriate Law and procedures.

On a yearly basis, Labour Inspectorate contacts approximately 7.000 inspections and 16.000 employees are interviewed. The inspections are performed without

notice. Separate interviews are performed with the employees and the employers.

Labour Inspectorate carries out inspections both during public hours as well as outside public hours to all unoccupied areas of the Republic of Cyprus. The inspections are carried out either on the basis of a complaint through the Cyprus telephone line (77778577), or based on the annual program.

During the calendar year 2023, 748 complaints have been received for undeclared and illegal work as well as for violations of terms of employment.

An encouraging result of the efforts of Labour Inspectorate, is that based on the available statistics, there has been a reduction in undeclared work in Cyprus, from 14% in 2017 to 6% in 2023.

Labour Inspectorate has established on a permanent basis cooperation with social partners regarding information seminars and campaigns.

Moreover, Labour Inspectorate provides information, advice and training to employers and employees regarding the provisions of the laws. Also, Labour Inspectorate has excellent cooperation with Trade Unions and Employers' Organizations. Awareness campaigns are raised and various Brochures are issued.

(2) Transparent and Predictable Working Conditions of Employment Law of 2023 and Protection of Wages (Amending) Law of 2022

Mr. Xenios Mamas, Senior Labour Relations Officer at the Department of Labour Relations, presented two important legislations:

(a) Transparent and Predictable Working Conditions of Employment Law of 2023

The Law on Transparent and Predictable Working Conditions entered into force on 13.04.2023. The Law strengthens the employers’ obligation to provide information to employees regarding the basic employment terms. At the same time, through the new legislation, employees’ rights are enriched.

More specifically, the provisions regarding employees ‘s notification change in such a way that the time allowed for employers to inform them about the basic terms of employment is reduced from one month to seven days. In addition to that, employers must now inform their employees about each individual component of the remuneration (basic salary, allowances, overtime, etc.) and the payment method. Also, businesses have now the right for notifying their employees electronically.

In relation to the increase in workers' rights, the most important of these is the reduction of the duration of the probationary period, which, now, cannot exceed six months instead of two years. Also, employers who employ employees with unpredictable working schedule must provide the employees with information regarding the framework for this schedule and the guaranteed pay. By this means, their employees will know in advance what their employers expect of them. Also, parallel employment with two or more employers is allowed, provided that certain conditions stipulated by the Law are met. In addition, on-demand contracts (piece rate pay contracts) are limited only to cases of casual employment.

Based on the Legislation, employees who will work outside the Republic of Cyprus, the written terms of employment shall include the below information:

• The country(ies) in which the work will be performed and its expected duration.

• The currency in which the remuneration will be paid.

• Benefits in money or in kind, related with the work.

• Information on repatriation and if applicable, relevant terms.

Finally, the Legislation establishes an out-of-court mechanism permanent institutions for timely settling disputes arising from violations of the Law. A specific framework is also instituted regarding social dialogue through which the Law's implementation will be assessed.

(b)Protection of Wages (Amending) Law of 2022

The amending Law on the Protection of Wages 2022 came into force on 16.12.2022. The Law strengthens the legal framework regarding the protection of wages and at the same time, it enhances transparency in wages.

At first, it must be noted that the Law protects wage payment through the obligation of employers to pay wages by bank transfer or cheque. In this way, it is beneficial for both employers and employees since it is easy for each other to prove whether wages were paid or not. However, the Law covers some exceptions from the above obligation and, in specific cases, it allows for wage payment in cash. Such exception is the period required for opening a bank. Another exception covers the eventuality in which credit institutions refuse to open bank accounts to employees. Also, an exception is provided for when employees are paid on a weekly basis, given that this is provided for by a collective agreement or another signed agreement.

In relation to wages transparency, the Law enhances this by regulating an obligation for the employers to prepare and send payroll statements to all employees. Through this provision, employees will know details of their payments including their salary, deductions and employer's contributions.

Mr. Mamas clarified that according to the provisions of the law, the employers must keep records showing details of the gross and net salary of their employees, including any deductions over a 6-year period.

(3) Gender Equality in Cyprus compared with the EU

Ms. Niki Christofi, member of the Corporate Social Responsibility Committee of ICPAC and Business Mentor, presented equality statistics of Cyprus compared with the EU and pointed out that based on the Gender Equality Index, which is a tool that is used by the EU to measure equality in each Member State, significant progress of our Country is observed.

Despite the fact that Cyprus ranks 21st in the EU on the Gender Equality Index, in 2005 it had a score of 38.5 points out of 100, while in the year 2023 our Country had

achieved 60.7 points, almost twice. As publicly indicated by the European Institute of Gender Equality (EIGE), Cyprus is catching up and has grown more quickly over time than other countries, reducing the gap.

The reason that Cyprus has achieved a score of 60.7 out of 100, is mainly due to the fact that fewer Women in Cyprus are in leadership positions compared to Men. Also, Women spend much more time on housework and caring of children. Specifically, she mentioned the below:

During the coronavirus pandemic, 40% of all Women in Cyprus spent more than 4 hours caring for children/ grandchildren, compared to Men, whose corresponding percentage was 16%.

The share of Board Members in the largest quoted companies, supervisory boards, or boards of directors in Cyprus is 12% for Women and the remaining 88% relates to Men. Also, 14% of the Members of the Parliament in Cyprus relates to Women and the remaining percentage of 86% relates to Men.

With reference to the Public Service of Cyprus, Men predominate at the A14-A16 scale, with the percentage of 55%. It is noteworthy that in the year 2000, the percentage distribution of women in the Council of Ministers was 0%, in 2015 it was 8.3% and in 2023 it reached 35.3%. It is encouraging that while in 2006 the percentage distribution of Women Judges in Cyprus was only 34.4%, in 2023 it rose to 55.6%.

It is noteworthy that in the Education Service of Cyprus, Women predominate with a percentage of 75%, as 25% of the of Educators in Cyprus are Men.

Regarding the “Gender Pay Gap”, Mrs. Christofi pointed out that Cyprus has less gap compared with the EU.

Ms. Christofi informed the participants that based on the latest data available from the Statistical Service of Cyprus (CYSTAT), in the Accounting/ Audit Profession of Cyprus, Women are paid €30 less per month than Men. In Mathematicians and Actuaries, the gap amounts to €64, in the Legal profession the gap totals to €13 and to the Human Resource Managers the gap amounts to €201.

Ms. Christofi stated that according to research of the

International Labour Organization (ILO), it will take at least until the year 2086 to achieve pay equality around the world, with the current rate of progress.

Ms. Christofi especially thanked the Statistical Service of Cyprus (CYSTAT) for providing the statistical information for Cyprus.

(4) Presentation of the Law on equal pay between men and women and the new Directive on pay transparency

Ms. Yiota Kambouridou, Labour Relations Officer A' at the Department of Labour Relations made a presentation on the Law regarding equal pay between men and women for equal work or work of equal value.

During her presentation she mentioned that the principle of equal pay between men and women has been a priority at the EU level since 1957, when it was enshrined through the Treaty of Rome, and explained the main reasons why the gender pay gap persists to this day. Through her presentation, she emphasized that the principle of equal

pay does not only concern equal work, but also work to which "equal value is attributed” and explained the criteria provided by the Law for the purpose of comparing the value of work, which are among others: the qualifications, skills and experience required to perform the work, the degree of responsibility, the circumstances in which it is carried out and the effort it requires.

Referring to the most recent developments on the issue at the EU level, Ms. Kambouridou informed the participants about the new Directive (EU) 2023/970, the purpose of which is to strengthen pay transparency and which has a harmonization deadline of 7 June 2026. Specifically, she mentioned that through the Directive several obligations arise for all employers regardless of size, such as for example the obligation to have salary structures, to establish and use gender-neutral job evaluation and classification systems, to provide information to candidates for employment about the starting salary or its range and to make easily accessible to employees the criteria for determining pay levels.

She further noted that the Directive also provides protection to both job applicants and employees since it prohibits the employer from investigating in any way the salary history of the candidate, but also prohibits contractual terms that restrict employees from disclosing information about their pay. Finally, Ms. Kambouridou referred to the obligation of employers, who employ more than 100 workers, to provide the competent authority (the Department of Labour Relations) with indicators regarding the gender pay gap in their organization. These indicators shall be published by the competent authority in an easily accessible manner that allows comparison between employers, economic sectors and regions.

(5) Equal Treatment of Women and Men in matters of employment and occupation

Ms. Alexia Hadjikoumi, Labour Officer at the Department of Labour and Equality Inspector as appointed by the Ministry of Labour and Social Insurance according to the relevant Law (No 205(I)/2002), stated the role of the Department of Labour as the competent authority regarding the equal treatment in the employment between Women and Men. Specifically, the Department of Labour is actively taking all necessary measures to implement the national legislation on the enforcement of the equality principle and the promotion of equal opportunities for Men and Women in the workplace, vocational training, according to the Law on Equal Treatment between Men and Women in Employment and Vocational Training No. 205(I)/2002 as has been amended and is fully harmonized with EU directive 2006/54/EC (recast). Harassment and sexual harassment are contrary to the principle of equal treatment between Men and Women and constitute discrimination on grounds of sex under the above directive and of course under the harmonized law No 205(I)/2002.

The above legislation is directly related to the Maternity Protection Law since discrimination due to pregnancy or due to family status respectively against a working Woman constitutes direct sex discrimination and is also examined based on the provisions of the Equal Treatment of Men and Women in Employment and Vocational Training Law.

Any employee who may face any matter of sex discrimination or who may be a victim can submit complaint to the Equality Inspectors under the Equal Treatment for Men and Women in Employment and Vocational Training Law. This Law No.205(I)/2002 as has been amended, provides in Section 27 the way/ procedure of investigation a complaint by the Gender Equality Inspectors of the Ministry of Labour and Social Insurance. Specifically, the inspector will proceed with mediation between the complainer and the employer in order to resolve the issue. If an agreement is reached, the inspector will write a report and both parties will then sign it. If an agreement is not reached, a report will be drafted and it can be used before a Tribunal court.

(6)

National Certification Body for the Implementation of Good Practices on Gender Equality at the Workplace

Ms. Panayiota Arnou, Labour Relations Officer at the Department of Labour Relations of the Ministry of Labour and Social Insurance, presented the National Certification Body for the Implementation of Good Practices on Gender Equality at the Workplace. The National Certification Body operates under the Department of Labour Relations of the Ministry of Labour and Social Insurance. Its purpose, according to Ms. Arnou, is to certify companies and organizations that implement policies that ensure conditions of gender equality among their employees, equal opportunities in career progression and training, reconciliation of professional and private life, participation in human resources management issues, performance evaluation and remuneration of all employees irrespective of gender, as well as prevention and protection from harassment or sexual harassment.

Ms. Arnou stressed that the benefits of obtaining certification are multidimensional, not only for employees, but also for employers themselves. By integrating gender equality into the policies of a company, the processes of recruitment, evaluation, promotion, remuneration, training, etc. are strengthened, thus improving talent acquisition and retention of qualified employees.

(7) Investment in Family

Ms. Konstantina Achilleos, Communications Officer at

ICPAC, stated that a woman, mother and professional, is faced with thousands of challenges every day. The roles that a woman is called to serve are not only complex but also extremely demanding.

Ms. Achilleos pointed out that the extend that someone can be successful, Woman or Man, depends on his/her personal characteristics and the way that the person takes advantage of the opportunities that he/she encounters along the way. However, the evaluation criterion of the success must be the same. Regardless of the gender, it should be based on objective criteria and measurable returns.

Ms. Achilleos, addressed at the Directors and Officers of the Ministry and stated “Claim and protect equality and any other benefit that can be given because the investment in the institution of the family, in the new generation and the children, is what will bring surplus profits in our country in the coming years.

(8) Gender Equality and Women's Entrepreneurship

Ms. Alexandra Theodorou, vice president of the Corporate

Social Responsibility Committee of ICPAC, presented Women's Entrepreneurship in Cyprus.

Ms. Theodorou pointed out that based on the latest statistics available from the Statistical Service of Cyprus (CYSTAT), out of 48. 270 self-employed Individuals working in Cyprus in all professions, 59% are Men and 41% are Women.

The Commissioner for Gender Equality announced a Νational action plan for women's entrepreneurship, recognizing that women who decide to start up their own businesses face more difficulties than male entrepreneurs.

In January 2024, the new national strategy for Gender Equality was presented and entered into force immediately and includes 13 topics and 66 actions. The 13 topics include subjects such as gender budgeting, work, social policy, health, justice, sports, innovation and digital transformation, decision-making positions and mass media.

Ms. Theodorou stated that 87% of women globally perceive adaptability as the most important success factor for their businesses' resilience. Women face challenges with optimism, despite the crises we are going through, such as wars and the COVID-19 pandemic.

Also, in the category of the biggest risks that women in leadership positions consider, inflation and recession are in first place, followed by the risk of a shortage to find talented human resources, and political instability.

The concept of Environmental, Social, Corporate and Governance (ESG) is gaining more and more value, and companies are emphasizing in sustainable and ethical business practices and their ability to generate value in the long-term period. 47% of women worldwide expect that the ESG factors will have a positive impact on corporate growth. The need for reporting and transparency in its implementation is also increasing with 67% of women globally stating an increased demand for ESG reporting and transparency from stakeholders. 

The Institute of Certified Public Accountant had a productive meeting with the Ministry of Energy, Commerce, and Industry to discuss various issues including companies’ law, financial reporting, and energy-related matters. Both parties agreed to continue and strengthen their cooperation.

The Institute of Certified Public Accountant met with the Minister of Justice and Public Order to discuss transparency, anti-corruption, lobbying laws, and support against financial crime. Cooperation between the Ministry and ICPAC will continue and be strengthened.

MEETING WITH THE INDEPENDENT AUTHORITY AGAINST CORRUPTION

Following the meeting on 23/02/2024 at the offices of the Independent Authority against Corruption, after the necessary documents were signed, the Institute of Certified Public Accountant was informed that it has been officially registered in the Register of Representatives of Special Interest Groups and has received the registration number (A.M. E 012)

Acting within the framework of its social and environmental sensitivity, ICPAC held a tree planting event on 18 February 2024 in Plati, Aglantzia area. The event was successfully organized by the CSR Committee of the Institute, in association with Aglantzia Municipality and the organization “Together Cyprus” and was dedicated to members and their children.

INTERVIEW BY THE ACCOUNTANT GENERAL MR ANDREAS ANTONIADES

“My vision is the Treasury to be established as a modern, innovative, reliable and effective organization”

My vision is the Treasury to be established as a modern innovative, reliable, and effective organization, supporting the public financial management and the public procurement, whilst contributing to public accountability, rational decision making, the combat against corruption and to delivery of services of value.

Mr Antoniades explains how he plans for the transition into the IPSAS standards by the Treasury of the Republic.

The main axis for priority for turning the vision into realistic goals include the simplification of the regulatory framework, the digitalization of processes and the focus on compliance with results.

The interview of him is as follows:

How do you feel about the new role you have taken on?

I feel honoured to be appointed as Accountant General by the President, heading the Treasury of the Republic. At the same time, I translate my appointment to an obligation for selfless provision of services, strong commitment, impartial dedication and hard work to produce tangible results for the benefit of our citizens.

I consider as the main weapons to fulfill my obligation my relevant academic knowledge and professional expertise, as well as my 25 years of professional experience in the private sector, in the public sector in Cyprus and in the EU institutions. But, most importantly, the trust I have on the most valuable “asset” of our organisation, our management and staff.

My intent is to demonstrate the abilities of a leader, and not of a boss, better serving the public interest rather than servicing the Government.

What are your priorities for 2024 and for the following years?

My vision is the Treasury to be established as a modern, innovative, reliable and effective organisation, supporting public financial management and public procurement, and contributing to public accountability, and rational decision making, combating corruption and to service delivery.

The main axes to turn the vision into realistic goals that bring outcomes are the simplification of the regulatory framework, the digitalisation of processes and balancing focus on compliance with results. Our strategic plan comprises both short-term actions and medium-to-long-term projects.

Short-term actions (the so-called ‘early winners’) for 2024 include rationalisation of the regulatory framework governing public financial management, enhancing the automatic sending of information to our stakeholders, strengthening of transparency in public procurement and smart preparation for tender competitions.

The main projects of our organisation are the professionalisation in public procurement, the upgrade/ replacement of information systems serving public financial management and the transition to accrual accounting. For the achievement of the Treasury’s goals, we work as a team together with the Deputy Accountant General, in full cooperation with our senior management and the rest of our staff which comprises not only of accountants but includes other supporting staff such as clerical, administrative, police staff etc, totaling approximately 700 persons.

How do you see the cooperation with the Government, the Ministry of Finance and other government officials?

The Treasury of the Republic is an independent office, not a mere

ministrial department, which directly reporting to the Minister of Finance. As Accountant General, I am accountable to the Council of Ministers, and since every decision has its financial aspects, I have been establishing cooperation for supporting all Ministries and Deputy Ministries across the Government. In addition, we completed in 2023 the positioning of professional accountants in every ministry/ deputy ministry who function as CFOs. They head the Financial Services Directorates which include Treasury’s staff who combine the information they gather with business objectives to deliver constructive advice at the highest level.

But the main field of our responsibilities, being supporting public financial management, is derived from the Constitution and is relevant to the economic, fiscal and budgetary policy formulation, implementation and monitoring. Besides, our Proposals to the Council of Ministers are very often submitted by the Minister of Finance. Therefore, my cooperation with the Minister of Finance and the Director General is very close and fruitful. However, our duties as Treasury are not restricted to our constitutional ones but extended through legislation or Council of Minister decisions, covering the wider public sector, as well. One example is public procurement where, as the Competent Authority, the legislative and regulatory framework we have established covers semi-government and other public organisations, including local authorities. Therefore, our cooperation with wider public sector officials is also key.

How do you intend to handle the transition of the Treasury of the Republic to IPSAS standards?

The transition to accruals accounting through the adoption of International Public Sector Accounting Standards (IPSAS) is a major reform for the Treasury of the Republic, as it involves the introduction of new policies, procedures, and digital tools, as well as multiple changes in the modus operandi of the Treasury’s activities. In order to manage the transition to IPSAS, the Treasury put in place a detailed Action Plan and a dedicated team of highly qualified and experienced individuals, responsible to implement all necessary policies, processes and tools that will allow the implementation of the Action Plan and the adoption of accruals accounting principles. We have also set-up a Technical Committee with representatives from the Ministry of Finance, the Internal Audit Office and the Statistical Service (and the National Audit Office as observers), which monitors the progress of the accrual project team, ensuring that the activities undertaken are in line with the approved Action Plan.

To facilitate the collection of the financial information, the accruals project team developed an innovative digital tool for the collection of relevant information from the Central Government and established internal and external trainings on IPSAS, and on the

Treasury’s new accounting policies. At the same time, we have been operating an internal helpdesk. To enable the move towards accrual accounting and the preparation of the Consolidated financial statements, the Treasury is also in the process of procuring a financial reporting and consolidation tool, which is planned to be implemented by the end of 2025.

How does the Treasury of the Republic proceed with the transition process to accruals accounting?

In the process of transitioning towards accruals accounting, the Treasury has already accomplished a number of significant milestones. More specifically , we have:-

(i) introduced new accounting policies aligned with accrualsbased IPSAS;

(ii) identified, catalogued, and measured, in line with IPSAS, the Government’s tangible and intangible assets and liabilities;

(iii) introduced a methodology to measure the impairment of Financial Instruments, in line with IPSAS 41;

(v) prepared, since 2020, an unofficial Opening Balance Sheet which is rolled over on an annual basis; and

(iv) prepared template financial statements on an accrual basis. According to the current timeline for the introduction of accrual accounting, we aim to prepare the first Unofficial Separate Financial Statements for the Year End 2025. I am confident that the transition will be effectively managed despite its difficulties and complexities, leading to the successful adoption of the accrual basis for accounting, in line with IPSAS standards.

What are your views of the prospects for the economy and the State’s financials capabilities?

The global economy has been suffering from the recent geopolitical and other crises such as the COVID-19 pandemic, the sanctions against Russia in the wake of the invasion in and the recent war in Gaza, adversely impacting inflation and the interest rates, disrupting global supply chains, halting tourism activities etc. It is not difficult to predict the future. The prediction is that it is unpredictable. Therefore, from the EU perspective, as President Macron said, “We can no longer depend on others to feed us, care for us, inform us, finance us”.

In line with the EU Fiscal Governance reforms, we should focus on the effective implementation of projects under the Cyprus Recovery and Resilience Plan which bring sustainable benefits for the economy and society, aiming to support digital, green and inclusive growth.

Furthermore, the national budgetary framework needs to follow a new strategic approach, by shifting from the incremental to the zero-based approach. I consider that the addition of more flexibility in our chart of accounts, the emphasis on high-value

added spending in combination with challenging past practices, and the rationalisation of budgetary expenditure constitute solid steps for the way forward.

The above would assist in better managing unexpected situations and addressing new challenges that will arise.

As an ICPAC Member who has also served as vice-chair of ICPAC’s Public Sector Committee, what do you consider the role of ICPAC. Ηow would you like your cooperation with the Institute to be?

It has been a privilege to serve ICPAC’s Public Sector Committee. The profession has a significant role to play in the public sector and I believe ICPAC’s contribution could be of vital importance to achieve this. The guidance and the supervision ICPAC is providing to its members, who amount few hundreds and are positioned as

Who is who

Andreas Antoniades was appointed Accountant General on 4 August 2023. Previously, he was a Director of Financial Services in the Treasury of the Republic and was positioned as Head of Accounting and Financial Management of the Ministry of Finance since April 2023.

He is a chartered accountant, member of the Institute of Chartered Accountants in England and Wales (ICAEW) and member of the Institute of Certified Public Accountants of Cyprus (ICPAC) since 2002. He was the Secretary and, later, ViceChairman of the Public Sector Committee of the ICPAC during the period from 2006 to 2010.

He holds a degree in Economics (BA Honours), majoring in Accounting and Finance, as well as a Master's degree in Business Administration (MBA with Merit). In 2010, he obtained a professional education certificate in Public Financial Management from the Harvard Kennedy School, after getting a full scholarship from the US Fulbright Scholarship Commission. He has 25 years of experience in the private sector, in the public sector in Cyprus and in the EU institutions. He worked in a big audit firm in Cyprus for a period of six years and has been serving the public sector from various positions associated with public financial management since 2004.

During the period from 2010 to 2016, he offered his services to the European Court of Auditors in Luxembourg, as attaché and, later, as Head of Cabinet of the Cypriot Member, Mr Lazarou S. Lazarou, whose main responsibility was the audit of the reliability of the accounts of the European Union, as well as the public governance of the European Commission.

senior staff in the public sector, towards the continuous professional development program and training, ensures that they follow a professional path which:-

(i) is up to date with all recent developments;

(ii) is complimentary to the role of the government as an employer; and

(iii) requires them to adhere to ethical standards necessary to exercise public management in a fair manner.

In my opinion, the cooperation between the two organisations is sound, with a positive contribution to serving the public interest. However, there is always room for further improvement. This could be achieved by regular updates on the profession’s recent developments, the common preparation of training material and the issue of publications, exchanging views on enhancing the provision of services to our stakeholders. Our cooperation could take the form of a Memorandum of Understanding. 

EU Emissions Trading System

In January 2024, maritime activities will be included in the EU Emissions Trading System, or ETS. This effectively means shipping companies will need to pay for at least a portion of greenhouse gas emissions generated during voyages to and from the EU.

In addition to underlying costs related to effective compliance with the EU ETS, new policies and procedures may need to be implemented, in addition to a dedicated carbon management function.

If the shipping industry were a country, it would be the world’s sixth-largest greenhouse gas emitter. However, when it comes to existing national and subnational carbon pricing regimes, very few address emissions from maritime operations. Where emissions are addressed, it’s in connection with inland voyages. Domestic compliance carbon markets are unlikely to mirror the EU ETS and require maritime operations to bear the associated cost of emissions.

Instead, carbon pricing for the maritime industry is set to be regulated at a global level under the framework being developed

by the International Maritime Organization.

Predicting Carbon Pricing Measures

In July, during the 80th session of the Marine Environment Protection Committee, the IMO confirmed its intention to implement global carbon pricing for the shipping industry. The policy is expected to be finalized in spring 2024, adopted in autumn 2025, and take effect in 2027.

Several countries, market participants, and international organizations have developed and submitted policy proposals to the IMO. Proposals range from a global shipping capand-trade system (advocated by Norway), to a carbon tax-like mechanism proposed by three different interest groups (Japan, Marshall Islands and Solomon Islands, and the International Chamber of Shipping).

All these proposals involve part of the funding going directly toward rewarding low or zero-emissions ships and voyages. There are significant differences in the level of detail between the proposals, the design and complexity of the schemes, and suggested (if any) amount of the levy.

The IMO can implement one or a combination of these measures. It also could formulate a different design that might not even involve emissions trading or a carbon tax, such as mandatory energy efficiency standards enforced by tradeable certificates, as proposed by the US.

Aviation’s Head Start

When considering what the maritime industry might do, it’s worth looking again at the aviation industry. A global carbon pricing regime has existed for the aviation sector since 2016, namely the Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA. Participation in the scheme will become mandatory for flights, with very few exceptions, starting in 2027.

This system doesn’t put a price on carbon per se, but instead requires airlines to offset their emissions through the purchase of credits. One credit represents one metric ton of reduced or removed carbon dioxide or other greenhouse gas equivalent, and the underlying activity can take place outside of the aviation value chain.

CORSIA maintains a list of the types of credits that it will recognize per compliance period in relation to their issuing body, which can be either a public or private entity: for

Simos Simou

Senior Manager, Indirect and Environmental (incl. ETS & CBAM) Taxes – Tax Transformation & Controversy | EY Cyprus

example, a national government such as China’s GHG Voluntary Emission Reduction Program, or a private standard such as the gold standard and Verra. As long as credits are considered eligible, the price at which they were acquired isn’t relevant. This provides regulated entities with a significant level of control over the ultimate compliance costs, but in parallel, compels them to enter and operate in a new marketplace dedicated to carbon offsets.

Unlike the EU ETS, this market has a global reach with little or no regulatory oversight. However, this is expected to change. More countries are starting to make policy interventions, and a global carbon market framework is emerging under the Paris Agreement. It remains to be seen whether the IMO will follow the lead of CORSIA and include offsetting in its carbon pricing design.

Contacts:

Kyriakos Christodoulou Partner, Shipping Leader | EY Cyprus

How Much Is at Stake

The three carbon pricing design options outlined above—cap-and-trade, tax, and offsetting—can lead to vastly different levels of financial exposure. If the IMO opts for a carbon tax or levy, levels can be set as desired, and some proposals are reaching new heights ($637 per metric ton by 2040 in Japan).

For emissions trading schemes, authorities have some influence over the price and can introduce corrective measures, such as with price floors and ceilings. But the marketplace essentially determines the price, and as of September 2023, the EU ETS price is approximately $90. In voluntary carbon markets, the cost of an offset is the result of its attributes, including geography where the project was developed, type of technology, and standard that issued the offset.

Eleni Sofocleous Partner, Shipping Tax Leader | EY Cyprus

In a recent report, the World Bank indicated that carbon pricing in international shipping could raise between $1 trillion and $3.7 trillion by 2050, and that this revenue should support shipping decarbonization, enhancing maritime transport infrastructure and broader climate aims.

Regardless of the route chosen by the IMO, it’s essential for shipping companies to understand the role of carbon markets— especially the role they can play in reducing the emissions footprint of voyages as “companies want to buy decarbonized shipping now.”

Trading in carbon offsets requires careful consideration and understanding of their complex legal, tax, and accounting nature, how policy trends impact their monetary value, public perception of offsets, and the potential related mandatory and voluntary claims. 

Simos Simou Senior Manager, Indirect and Environmental (incl. ETS & CBAM) Taxes – Tax Transformation & Controversy

| EY Cyprus

ICPAC looks ahead into 2024

BY KYRIAKOS IORDANOU, GENERAL MANAGER ICPAC

It is undisputable that the past few years have been unprecedentedly difficult and demanding for everybody; for the economy, businesses and households, as well as for our profession, accountancy and audit firms and obviously for ICPAC itself.

Apart from the effects of the Covid-19 pandemic, which is still lurking, the challenges to the economy from increased inflation and the ramifications of the war in Ukraine, plus the recent one in neighboring Gaza (Israel), the abrupt change of the business landscape in the services sector due to the "de-Russification" of our economy on the one hand, and the imposition of sanctions and restrictive measures, on the other, we had been called to deal with a number of important issues concerning the domestic market and the society.

ICPAC devoted and still allocates a substential proportion of its time and resources assisting the State in the latter’s development and growth activities, and in actions to further strengthen the regulatory compliance framework, making thus every possible effort to support the country’s good reputation and image and, of course, those of our professional sector.

Given these developments, we found ourselves caught amid an inescapable vicious circle with high inflationary trends, with expensive cost of money and energy, with increased prices for goods and services, with a reduction in the purchasing power of wages and with many open projects by the State relevant to our profession, for which, unfortunately, we do not seem to have a clear picture yet.

At the same time, as a country, we have the obligation to comply and focus on various Directives and initiatives emanating from the European Union, such as the green and circular economy, the management of environmental resources and long-term sustainable development.

All the above, coupled by social changes and the economic/fiscal capabilities of the State, advocate towards the revision of our longstanding living norms and habits, about the way we traditionally operate and perceive things, leading to an inevitable adaptation to the new realities.

The same stand for us at ICPAC as well.

2024 finds us at the forefront of further strengthening our own infrastructure and means, so that we will be ready to serve to the best possible extent the goals of our Institute and of our members.

Hence, our core goals and priorities for this year, inter alia, include:

1. our transition into new digital platforms and functionalities, aiming at simplifying and automating many of the current processes,

2. the continuation of the resourcing of ICPAC's operational team, thus serving members,

students and stakeholders more responsively,

3. the better execution of ICPAC's roles both as a Professional Accountancy Organsation and as the competent authority for the institutional responsibilities entrusted to it,

4. the submission of proposals, suggestions and solutions to the State, the Government and the House of Representatives for strengthening and improving the country's economy in general, as well as for the more effective and leaner operational environment for businesses and for our members,

5. the enhancement of the cooperation with all productive stakeholders of the economy, institutional bodies and academic institutions, public and private sector, by undertaking new initiatives and actions, both in and outside Cyprus,

6. the continuous training, development and support to our members, through educational activities, updates, publications and circulation of information material, as well as through specialized support arrangements for technical issues (help-lines),

7. promoting and supporting the interests of our profession, its reputation, its credibility and prospects,

8. improvement of ICPAC’s corporate governance framework by adopting best international practices,

9. safeguarding the public interest and the reputation of the country as a reliable and attractive international business destination.

Particular emphasis is expected to be placed this year on the following areas:

• Intensified and broader promotion of the accountancy profession, its role in the business scenery, and the contribution that

our members and their firms have in the economy. Sadly, we have been recently witnessing a tendency for sidelining ICPAC and targeting professional accountants, ignoring the fact that, ultimately, they are actually the necessary conduits between businesses and employees with the State, such as the tax authorities, social insurance services, vat, and various other governmental departments, and the banking institutions.

• The attraction of new students and trainees to the accountancy profession, an area of primary concern for ICPAC as it touches upon the future of the profession. Significant work is already being done at schools and universities thereon, in cooperation with accountancy firms.

• The promotion of matters relating to small and medium companies and accountancy firms, something which is closely tied with the current EU Directives.

• The simplification of various processes and procedures, especially in the public sector, aiming at alleviating the administrative burden from the business and enhance efficiency and functionality in the execution of the many obligations of professional accountants.

• To highlight weaknesses and areas that need improvement and/or correction in the social, economic and state environment, by submitting proposals to the Government and wherever else deemed appropriate, while claiming the role and the voice that corresponds to our profession, with special reference to the following:

• The Tax Transformation

• The implementation of a single overarching authority covering the whole

of the financial services sector for the AML and Sanctions compliance

• The attraction of foreign direct investments and value adding international businesses to Cyprus

• The implementation of the “Green Transition” and the goals set in the Recovery and Resilience Plan

• The upgrading of the country’s competitiveness

• The further improvement, and where needed the reform, in the legislative framework relating to our profession, such as the Auditors Law, the Companies Law, the Tax Laws, the Insolvency Laws etc

• Areas fortifying the combat against economic crime and corruption, and of course, enhancing transparency and accountability.

In addition to the above list, the main strategic objectives and planned activities for 2024 cover the following:

1) the preparation of a Cyprus-based financial reporting standard for Small and Medium Enterprises,

2) supporting and assisting in the implementation of the strategic planning for the long-term development of the economy ("Vision 2035"), prepared by the Cyprus Economy and Competitiveness Council,

3) the Directives and Regulations of the European Commission concerning our profession and the economy of the country in general, e.g. on tax, corporate, institutional, compliance and anti-money laundering issues,

4) the wider regulation and monitoring of related professional activities, as evidenced by the implementation of European Directives,

5) the EU Green Deal and issues related to the profession since the adoption of the Corporate Sustainability Reporting Directive (CSRD),

6) in conjunction with the above, issues related to the United Nations Strategic Development Goals (17 SDGs), sustainable development and the ESG triptych in general,

7) the tightening of relations and coordination between ICPAC with other economic and social actors, both in and outside Cyprus, particularly with Accountancy Europe and IFAC,

8) strengthening its role as a competent supervisory authority,

9) the enrichment of educational activities towards its members, at the most

competitive cost,

10) increasing ICPAC's extroversion and promoting the accountancy profession in secondary and tertiary education schools,

11) the safeguarding of the public interest through ICPAC’s Code of Ethics and the principles of transparency and objectivity.

Our commitment is to remain a primary stakeholder for the economy. We do aspire to work closely with the business community and all other institutional bodies and the State. ICPAC continues to operate within the framework of cooperation, mutual respect and constructiveness, with objective and wellmeant motives. Thus, we move forward into 2024, underscoring however that, when and where required, we will act with dynamism, determination and boldness to defend and supports the interests of the society, our members and our profession.

In relation to the wider politico-economic developments in the international space for 2024, our initial estimates indicate a rather demanding year, with many challenges and relative uncertainty. These concerns rest in the escalation of warfare activities in the Middle

East, the trade hurdles encountered, the maritime hazards, the surging cost for goods transported via ships, and the unpredictable results in the forthcoming elections in the EU for the European Parliament, the US, Russia, India and other important actors. Cyprus being a small and open economy, is susceptible to influences from abroad. Moreover, there is still plenty of room for improvement in the domestic market and public processes, with the much-needed reforms still appearing to be a farfetched goal!

With the developments that revolve around us, the accountancy profession is changing gears, entering a new phase. The continuous improvement and upgrading of all of us, from whichever capacity we work, is a sine qua non.

Having in mind the above, as well as the wider challenges of the economy and the geopolitical landscape, ICPAC reiterates its commitment to the continuous advancement of the services provided to its members, to the growth of the Institute as an organization, to the progress of the economy and to the service of the public interest in general. 

ICPAC Consultation Paper on Financial Reporting Standard for small-sized entities

The International Financial Reporting Standards (IFRS) Accounting Standards have been adopted for all companies in Cyprus since 1981. However, the fact that small-sized entities (SEs) need to comply with the requirements of full IFRSs is burdensome and costly. Following a series of discussions and research conducted by the Institute of Certified Public Accountants of Cyprus (ICPAC), ICPAC’s Council considers that a local accounting framework (GAAP) should be developed for SEs to reduce the financial reporting burden for the preparers of the financial statements, their auditors but also for the users of these financial statements such as banks, tax authorities, regulators as well as suppliers, customers, employees.

Although ICPAC is not a standard-setter itself, through its capacity as the sole accounting member body in Cyprus, it has initiated the project to develop a GAAP for SEs.

To move towards the use of a standard for SEs, Cyprus needs to:

1. Transpose in the Companies law, Cap.113 the articles of the EU Accounting Directive 2013/34/EU (Directive), which provides the legal framework for single company and consolidated accounts for undertakings based in the EU, not already transposed.

2. Develop a local financial reporting framework. ICPAC considers that the basis to draft the standard should be the extant version of the IFRS for SMEs Accounting Standard, as issued by the IFRS Foundation.

3. Identify incompatibilities between the Directive and IFRS for SMEs and make relevant changes to the standard to result to compatibility amongst the two (this is a requirement by the European Commission).

COMING UP

4. Perform other changes in the Companies Law Cap. 113 and other laws, i.e., identification and change of articles which refer to the IFRS Accounting Standards to denote the permission for use of a local GAAP.

5. Draft a new law which will be describing the terms of references of the standard-setter of the simplified financial reporting framework and which we will be adopting the local GAAP.

INVITATION TO COMMENT

ICPAC issued a Consultation Paper and seeks views on the draft Financial Reporting Standard for SEs in Cyprus. ICPAC has also developed the Basis for Conclusions which accompanies, but it is not part of, the Consultation Paper. It summarizes the considerations of ICPAC when developing the Consultation Paper and explains the changes made. ICPAC invites comments on this Consultation Paper, particularly on questions 1-15. Questions should be responded to after reading the Basis for Conclusions of this Consultation Paper and the proposed standard as stipulated in the Consultation Paper. Respondents need not comment on all questions in this Invitation to Comment. Deadline

The comment letter period is open until 31 May 2024.

IFRS FOR SMES ACCOUNTING STANDARD

The decision to use the IFRS for SMEs Accounting Standard lies on the fact that it is a self-contained accounting and reporting standard drawn from full IFRS. Compared to full IFRS it is approximately 250 pages vs 3000 approximately of full IFRSs and requires approximately 10 per cent of the full

IFRS disclosures (consistent with the Directive which requires even less disclosures). It focuses on the information needs of lenders, creditors and other users of SME financial statements who are interested primarily in information about cash flows, liquidity and solvency.

Cyprus is an international business and financial centre of credible standing and is sensitive to foreign investments, to anti money laundering procedures and to transparency. Having an internationally recognised standard while avoiding disproportionate administrative burdens on small undertakings meets such concerns.

Scope

ICPAC, following discussions with relevant stakeholders, proposes:

• Small-sized companies to be under the scope.

• Permission of small-sized subsidiaries of large groups to use the local GAAP.

• Medium-sized companies to not fall under the scope.

• Entities, irrespective of the size, regulated by the Central Bank of Cyprus, the Cyprus Securities and Exchange Commission and the Superintendent of Insurance (except from brokers) to not fall under the scope as these are considered as publicly accountable entities.

Changes to IFRS for SMEs Accounting Standard (2015)

The IFRS for SMEs consists of the Preface, 35 Sections and Appendices. The Preface and Section 1 Small-sized entities have been revised completely to reflect the requirements of the Directive and national specificities. Sections 2-35 and Appendices have been changed only where deemed necessary and can be traced in track changes in the Consultation Paper. 

ICPAC trans a series of presentations with the aim of raising awareness about this consultation paper, explaining the work that has been done and responding to any questions.

Eleni Ashioti

ICPAC Head of Technical and Professional Matters

A single oversight authority for financial services from an innovation perspective

Nicos G. Sykas Strategy, Innovation and Communication Consultant

In the new era of exponential risk and interconnected crises, accountants are assuming broader responsibilities, becoming strategic advisors, resilience managers, startup consultants, data analysts, and technology enthusiasts.

Kyriakos Iordanou, General Manager of the Institute of Certified Public Accountants of Cyprus (ICPAC), suggests the creation of a single oversight authority for financial services in order to strengthen the operational resilience of the financial services sector in Cyprus. I fully support ICPAC’s timely initiative and I briefly outline below a new multitool that can foster resilience in the public and private sectors.

One of the biggest obstacles to innovation is that nonlinear, multidimensional problems are approached in a linear manner. The new dynamic tool I propose provides a solution to this challenge.

After many years of research, I developed a new cross-cutting tool which, among other can contribute to:

1. Managing known unknowns (currency risk, supplier default, compliance risk, accidents, fire, bad weather) and unknown unknowns (terrorist attacks, pandemics, natural disasters, financial crises).

2. Maximizing: a) Returns of public and private investments and b) the impact of EU Research & Innovation.

3. Tackling nonlinear, multisource multilayer problems (cancer, Alzheimer’s disease, climate crisis, biodiversity loss, inequality, erosion of democracy etc.).

4. Building social, economic and environmental resilience.

Nassim Taleb, in his book ‘The Black Swan – The Impact of the Highly Improbable’ indicates that ‘Indeed, the

notion of asymmetric outcomes is the central idea of this book: I will never get to know the unknown since, by definition, it is unknown. However, I can always guess how it might affect me, and I should base my decision around that […] This idea that in order to make a decision you need to focus on the consequences (which you can know) rather than the probability (which you can’t know) is the central idea of uncertainty […] As it happens, many rare events yield their structure to us: it is not easy to compute their probability, but it is easy to get a general idea about the possibility of their occurrence. We can turn these Black Swans into Grey Swans, so to speak, reducing their surprise effect.’

Taleb points out that because Black Swan events are impossible to predict due to their extreme rarity yet have catastrophic consequences, it is important for people to always assume a Black Swan event is a possibility, whatever it may be, and to plan accordingly in order to avoid it or to develop strategies to manage its consequences.

For extremely rare events the standard tools of probability and prediction such as the normal distribution do not apply since they depend on large population and past sample sizes that are never available for rare events by definition. Reliance on standard forecasting tools and extrapolating using statistics based on observations of past events can fail to predict and potentially increase vulnerability to Black Swans by propagating risk and offering false security. Black Swan events can cause catastrophic damage to an economy, and because they

cannot be predicted, can only be prepared for by building robust systems. The antifragile is immune to prediction errors and protected from adverse events.

Fragility is quite measurable, risk not so at all, particularly risk associated with rare events. It is much easier to understand if something is harmed by volatility –hence fragile– than to forecast harmful events, such as oversized Black Swans. Instead of trying to anticipate low-probability, high-impact events and predict failure and the probabilities of disaster, we should instead focus on exposure to failure and reduce our vulnerability to them (be prepared) – making the prediction or non-prediction of failure quite irrelevant. We cannot calculate the risks of consequential rare events and predict their occurrence; but we can modify our exposure to them.

When someone has more upside than downside in a certain situation, he is antifragile and tends to gain from volatility, randomness, errors, uncertainty, stressors and time. And the reverse. Innovations can benefit from randomness more than they can be hurt by it. Antifragile risk taking is largely responsible for innovation and growth.

The new approach to the innovation process outlined briefly in the current article is presented analytically in practical step-by-step Guide I have prepared which, among other includes:

1. A pioneering ‘Resilience Toolbox’ that describes a total of 137 new tools, frameworks, mechanisms, creativity techniques, methods and standards that can help public and private companies and organizations, communities and all products and services modify their exposure accordingly in order to exploit positive asymmetries (be open to opportunities) and avoid negative asymmetries (decrease exposure to catastrophic dangers). The detection and exploitation of positive asymmetries captures exponential multiplicative returns whilst the avoidance of negative asymmetries lessens potential damage and eliminates the risk of ruin.

2. Application examples of this novel nonlinear innovation framework in 56 different sectors combined with:

a) Strategy canvas and templates,

b) creativity (nonlinear thinking) workshop,

c) innovation resilience test,

d) strategies for branding and differentiation and

e) guidelines for risk and uncertainty analysis. 

Bridging the Expectation Gap: Gen Z and the Attractiveness of the Accountancy Profession

It is an indisputable fact that the professional accountants’ world has entered into a new era of realignment in a framework full of challenges, with the need of attracting highquality professional accountants ranking amongst the top challenges and concerns for Professional Accountancy Organisations (PAOs) across the globe.

Generation Z (Gen Z) holds several misconceptions regarding the accountancy profession which, along with other generation characteristics, act as deterrents for them from making such career choice. Misconceptions, especially amongst high school students, include characteristics attached to the accountancy profession which depict typical professional accountants through a sphere of stereotypes portraying them as boring individuals hidden in stacks of papers, pushed to perform uninteresting administrative work with no real engrossment embedded into it. This apparent conclusion derived from presentations delivered by the Institute of Certified Public Accountants of Cyprus (ICPAC) to high school students across Cyprus, over the last two years. Interestingly enough, this finding is also supported by a recent research conducted in the UK on behalf of Grant Thornton UK LLP exploring Gen Z’s view of accountancy as a career, which identified that more than half of the responders (53%) “think accountants sit at desks all day.”

The challenge that PAOs encounter is attempting to beat these stereotypes and finding new ways of promoting the profession, whilst constructively informing the new generation of what professional accountants really do in this fast-changing world we live in, bridging at the same time the undeniable expectation gap that exists.

The Institute of Certified Public Accountants of Cyprus (ICPAC) places particular importance on stressing the comparative advantages that a Professional Accountant enjoys, including the employability in all sectors of the business spectrum, the advanced career opportunities available both locally and abroad (easier international mobility) and the option of becoming part of a highly digitalized setting. Such comparative advantages provide them with the opportunity of getting at the

Efi M. Marcou Head of Learning and Development ICPAC

epicentre of world developments where diversity, inclusion and sustainability shape a culture-based environment led by people for the people, within which moral and social aspects do have a real purpose.

The latter elements are of paramount importance to Gen Z, stemming out of this generation's identity which has been shaped primarily by the digital age, the climate change and the global concern attached to it, the total shift and repositioning of the entire financial landscape, and the pandemic of Covid-19.

Following a firm strategic commitment from its Board, ICPAC has clearly classified the issue of Attractiveness of the Profession as one of strategic importance. As such, resources have been allocated to this area of focus, which has been embedded in the daily operations with the implementation of a series of actions, targeting tertiary/ secondary education, and the general public as a whole.

Indicative Actions include:

• The signing of MoUs with Universities and other Learning Institutions,

• Involvement in research work performed by related University Departments

• Consultation with Learning Institutions on their curricula

Open Info Days with presentations and orientation to potential students and parents

• Participation in career fairs and other similar events

• Building of awareness amongst career advisors especially within high schools

• Promotion of the profession’s activities through publications, social media and other digital channels

• Round Table discussions

• Surveys / Questionnaires and more

In this so-called “war for talent”, PAOs need to embrace all relevant stakeholder groups involved and reflect on their needs and requirements for social impact. More importantly, they ought to become more visible and accessible to the new generation via the same channels that Gen Z itself has clearly defined as the way forward in this world of digital transformation we live in.

* The article was published also by Accountancy Europe in November 2023

Bridging the expectation gap: Gen Z and the attractiveness of the accountancy professionAccountancy Europe 

ICPAC’s accreditation with the «Sound Industrial Relations:2014 (SIR2014)» standard

ICPAC has been honored with the Standard «Sound Industrial Relations:2014 (SIR2014)» accreditation on the 19th of December 2023, following the evaluation performed by the Quality Assurance Committee of the Cyprus Employers & Industrialist Federation (OEB).

Irene Loizidou Head of Administration & Finance ICPAC

The Standard which falls within the framework of the «THALIA 2021 -2027» Cohesion Policy Program, is co-funded by the Republic of Cyprus and the European Social Fund of the European Union.

The SIR 2014 contributes positively to our organization’s prospects, mainly in the areas of the labour law compliance, as well as in the attraction and retention of suitable human resources. The accreditation reinforces ICPAC’s objectives, considering that ICPAC’s human capital is its most valuable asset, along with its members and students.

The Standard aims at improving the understanding of labour legislation and the incorporation of tried and tested best practices, such as the promotion of good working relations, health and safety at work, equal opportunities, application of the Cypriot Labour Law and environmental management.

ICPAC’s vision, “A model professional body, recognized by the state and the society as the primary stakeholder for the accountancy profession and the economy in general, instilling confidence, credibility and value.”, is based on the concepts of integrity, credibility, professionalism, assurance, and competence. This accreditation is in line with our vision and would act positively to our credibility to provide consistency and premium quality both to our employees and to third parties.

Further, the accreditation communicates the embedded quality values to our employees and associates in a wide range of categories, such as environmental management, health and safety and quality management processes. ICPAC through this accreditation, is signifying to its interested parties (internal and external) that is willing to operate within a set framework to achieve its business

objectives, correlating to a better final product, lower risk and improved business processes.

OEB and ICPAC share a long duration of partnership and cooperation on subjects that both parties have interest and understanding (since 2019 when ICPAC become a member of OEB and before under an MOU agreement).

The accreditation process entailed:

(a) internal examination of the opportunities and risks of this accreditation,

(b) internal assessment of the maturity and completeness of the Risk Management System, the number of outsourcing activities and the number of physical locations,

(c) placement of application and supporting documentation as per OEB’s specifications.

(d) approval of the application (based on specific criteria and ICPAC’s commitment to the implementation of the project for the accreditation)

(e) preparation of a diagnostic report by the Advisory team of OEB indicating the readiness and capability of ICPAC to proceed with the accreditation procedure,

(f) performance of a final inspection visit and a preparation of an evaluation report

(g) acceptance and confirmation of the evaluation report by ICPAC,

(h) communication of the decision for a positive recommendation.

(i) receival of accreditation letter / certificate

ICPAC, throughout this process, was able to:

(a) developing a framework with documentation needed (policy statements, safety risk assessment system, health and safety signage and implementation of emergency

preparedness procedures etc.)

(b) training employees on subjects covered by the standard (first aid, health and safety training, equal opportunities at workplace training, etc.)

(c) incentivizing employees through the assignment of special responsibilities

(d) remediating non-conformities where applicable,

(e) implementing requirements identified through the initial assessment process and

(f) managing time to ensure that the procedure did not take too long and laid within the normal time limits.

The Accreditation is valid for 5 years. ICPAC can update its procedures during the five years period and apply for renewal of its certification.

The “Sound Industrial Relations 2014” Standard is not a stand-alone process. ICPAC in order to complete the requirements of this specific standard satisfied that the following were in place:

1. Quality Management Systems (QMS)

2. Corporate Governance

3. Risk Management System

4. Management Responsibility

5. Resource Management

6. Understanding, cooperation, and commitment from all the people within the organization

7. Cooperation of third parties that might be involved in the process.

8. Measurement, Analysis, and Improvement

Although, the whole process of certification involved cost, commitment, training and studying, the benefits derived from the accreditation, compensate our organization in:

• Strengthening, normalizing, and tightening the relations between employer and employees, through a better implementation of the labour legislation with a consequent increase in productivity.

• Building a Healthy and Safe environment for the employees.

• Establishing wellbeing among the organization.

• Reinforcing environmental management.

• Ensuring compliance of our organization with labor, health and safety and environmental legislation.

• Supporting our organization to manage their labor costs within the framework of the law and to secure jobs.

• Increasing productivity through the reduction of costs.

• Improving the image of our organization in matters of labor relations, health and safety and environmental management and sustainability.

• Boosting team and equal opportunity culture.

• Removing discrimination and harassment.

• Amplifying support to working parents and modernizing working conditions. 

AI - Time for action in the Hospitality Industry

Climate change, environmental reporting, the geopolitical unrest in Eastern Europe and Middle East and the technological advancements are some of the main developments of recent years that changed the business world and there doesn't seem to be any indication of stabilisation in the foreseeable future. Tourism is one of the most affected sectors. With the wounds from pandemic still fresh, the challenges that hotels and other hospitality businesses are facing are a lot. While the focus needs to stay in the future, the lessons learnt should be a guide for the next steps. Being proactive and alert, understanding the organisation’s performance, innovate and easily adapt to changes are essential elements of a modern and forward-thinking business. With this goal in mind, taking advantage of technological advancements, like AI, for automating processes and processing information could be widely beneficial. KPIs are widely used by hotels to measure operational and performance efficiency and make strategic decisions. Integrating advance analytics, automations and real time monitoring can elevate the results of the benchmarking exercise and give the entities the competitive advantage which is of great importance. KPIs are also essential measurements in the context of climate change as they can measure environmental impact,

Eleni Ashioti

Head

Evita Giannouli Manager, Audit & Assurance services, EY Cyprus Member of the Hospitality Committee, ICPAC

of Technical and Professional Matters of ICPAC

track progress towards sustainability goals and facilitate informed decision making. With the new CSRD requirements coming into force, the need for companies to understand their environmental footprint is inevitable. The information to be reported needs to provide a comprehensive understanding of the corporate, environmental, and social impact of the company, inside out and outside in, and

therefore the data that needs to be collected and processed is massive. Technology can provide holistic solutions by automating the process of collecting, processing, and reporting sustainability related data, making the process more efficient and accurate and ensuring compliance with all relevant reporting requirements.

Benefits of AI and digital transformation go beyond this as they can drive greater business outcomes by using intelligent systems that improve revenue and occupancy rates, increase productivity, and optimise resources, while reducing costs. Technology advancements are also a potential solution to the industry’s most persistent problem, labour crisis, which brings major disruptions in hotels’ operations, eventually leading to declining profits and customers’ satisfaction. AI and other technologies like robotic process automations could take over repetitive tasks allowing staff to focus in providing high end quality services to guests and enhance their experience, and at the same time attract and retain staff by offering better wages, due to costs saving, by making job descriptions and responsibilities more interesting, by providing more development opportunities and by overall improving the staff levels of satisfaction. The adoption of these technologies can have a positive impact on seasonality issues including staffing shortage, mainly during peak periods, unpredictability and fluctuation of revenue, planning obstacles and operational challenges.

The dynamism that describes this sector must be used as a roadmap by companies for future changes. Building solid foundation will be the key to eventually stand out by combating future uncertainties and overcoming barriers. It is time for hotels’ culture and leadership philosophy to make a 180 degree turn and alter their mindset to firstly consider challenges as opportunities and consequently adjust future plans, budgets and forecasts to incorporate innovation, education, recruitment of skilled personnel and the use of professional advice and input. Companies in the industry have no choice but to accept that are currently in an act now or regret later situation, and later is not thar far away 

Benefits and Challenges in Implementing Lobbying Legislation

Throughout history, people have endeavoured in one way or another to influence political decisions in their favour. To achieve their purpose and influence decision-makers, they employ lobbying, which today, when properly regulated, is a legal and accepted tool in many democratic systems. Legislative efforts to control lobbying typically include a clear definition of what lobbying is. In these efforts, lobbying is often defined as the deliberate effort to influence public authorities and decision-making bodies to promote a specific viewpoint or interest. An undisputed but overly broad definition was provided by the European Commission in 2006: "all activities carried out with the aim of influencing the shaping of policies and decisionmaking processes of [European] institutional bodies."

Lobbying in Cyprus

On February 17, 2022, the House of Representatives passed the "Transparency in Decision-Making Processes and Related Matters Law of 2022 (Law 20(I)/2022)," aiming to establish a framework for transparency concerning involvement in decision-making processes regarding matters related to executive or legislative authority, in order to prevent the creation of conditions that allow or facilitate the occurrence of corrupt acts. According to the legislation, those wishing to participate in decision-making processes are required to register in a relevant lobbyist registry. After their scheduled meeting with any government official, they must submit a report to the Independent Authority against Corruption. Additionally, government officials are obliged to submit a communication form to the competent authority regarding any scheduled meeting with a representative of an interest group.

On April 6, 2023, the House of Representatives passed the "Regulations on Transparency in Decision-Making Processes and Related Matters of 2023 (S.I. 118/2023)," which aimed to explain the Lobbyists' Registry and the processes for collecting, processing, using, disclosing, accessing, maintaining, and deleting personal information and data for the purposes of implementing the legislation regulating lobbying in Cyprus. On

CONCLUSION

November 27, 2023 -although the legislation should have been fully implemented since January 1, 2023- the Independent Authority against Corruption began accepting applications for registration in the Lobbyists' Registry. More recently, according to an announcement issued on February 7, 2024, it decided to fully enforce all provisions of the law on March 1, 2024, when all obligations of both officials and lobbyists will be simultaneously enforced. In the United States, lobbying regulation began in 1876 in the House of Representatives, with the mandatory registration of interest representatives with the House Secretary. Pressure exertion regulations and investigations by the House Judiciary Committee progressed intermittently throughout the first half of the 20th century. Congress imposed some pressure exertion restrictions on specific industries with registration provisions attached to the Merchant Marine Act of 1936 and the Foreign Agents Registration Act of 1938 (22 U.S.C. §§ 611 to 621). In 1946, Congress passed the Federal Regulation of Lobbying Act (Title III of the Legislative Reorganization Act of 1946) (the "1946 Act"). After a period during which reforms were considered but not enacted under the 1946 Act, and following increased pressure for improved regulation stemming from the Watergate scandal, Congress enacted the Lobbying Disclosure Act of 1995 (2 U.S.C. §§ 1601-14) (the

"LDA"), replacing the 1946 Act.

Lobbying in the EU

The regulation and registry of interest groups in the EU stem from the interinstitutional agreement of May 20, 2021, between the European Parliament, the Council of the European Union, and the European Commission, which makes mandatory the already established registry. The agreement aims to "strengthen a common transparency culture and set high standards for transparent and ethical interest representation at the EU level." The agreement describes extensive activities covered by mandatory registration, including organizing or participating in meetings and events, contributing to consultations, and conducting research. Primarily, it excludes activities of public authorities, including diplomatic missions and embassies, of third countries. This exception came to public attention this year through the "Qatargate" scandal, where Qatari officials, not obligated to adhere to lobbying rules, are alleged to have attempted to influence European Parliament decisions in favor of Qatar. In response, there have been calls for reform of the EU interest representation regulation, including reforming the code of conduct, replacing the advisory committee, including government officials of third countries in registration requirements, and additional resources allocated for enforcement of the regulatory system.

Regulated lobbying activities are necessary for the decision-making process, as they ensure that proposed new policies or reforms reflect the needs and opinions of citizens. In a truly democratic society, lobbying is the means that facilitates citizen participation in the decision-making process, thus enabling a participatory and vibrant democracy. The recent approval of legislation and regulations for lobbying in Cyprus is expected to assist in regulating and improving the professional activity of lobbyists, as is the case in many advanced democracies. 

Dr. Nicolas Kyriakides Adjunct Faculty, University of Nicosia

Transparent and Predictable Working Conditions of Employment Law of 2023

The Law on Transparent and Predictable Working Conditions entered into force on 13.04.2023. The Law strengthens the employers’ obligation to provide information to employees. At the same time, through the new legislation, employees’ rights are enriched.

Xenios Mamas Senior Labour Relations Officer Department of Labour Relations Ministry of Labour and Social Insurance

More specifically, the provisions regarding employees ‘s notification change in such a way that the time allowed for employers to inform them about the basic terms of employment is reduced from one month to seven days.

In addition to that, employers must now inform their employees about each individual component of the remuneration (basic salary, allowances, overtime, etc.) and the payment method. Also, businesses have now the right for notifying their employees electronically.

In relation to the increase in workers' rights, the most important of these is the reduction of the duration of the probationary period, which, now, cannot exceed six months instead of two years. Also, employers who employ employees with unpredictable working schedule must provide the employees with

Protection of Wages (Amending) Law of 2022

information regarding the framework for this schedule and the guaranteed pay.

By this means, their employees will know in advance what their employers expect of them. Also, parallel employment with two or more employers is allowed, provided that certain conditions stipulated by the Law are met. In addition, on-demand contracts (piece rate pay contracts) are limited only to cases of casual employment.

Finally, the Legislation establishes an out-ofcourt mechanism permanent institutions for the timely settlement of disputes arising from violations of the Law.

A specific framework is also instituted regarding social dialogue through which the Law's implementation is assessed.

The amending Law on the Protection of Wages 2022 came into force on 16.12.2022. The Law strengthens the legal framework regarding the protection of wages and at the same time, it enhances transparency in wages.

At first, it must be noted that the Law protects wage payment through the obligation of employers to pay wages by bank transfer or cheque. In this way, it is beneficial for both employers and employees since it is easy for each one of them to prove to the other wage payment or not. However, the Law covers some exceptions from the above obligation and it allows for wage payment in cash. Such exception is the period required for opening a bank. Another exception covers the eventuality in which credit institutions refuse accounts for employees. Also, exception is provided for when employees are paid on a weekly basis, given that this is provided for by a collective agreement or other signed agreement.

In relation to wages transparency, the Law enhances this by regulating an obligation for the employers to prepare and send payroll statements for all employees. Through this provision, employees will know details of their payments including their salary, deductions and employer's contributions. 

Cyprus Trusts: Adapting to a changing landscape

Cyprus journey on trusts began in 1959 with the enactment of its first Trust Law, Cap 193 which was one of the first laws adopted by Cyprus with its independence from the Crown and which was modelled on the English Trustee Act of 1925. Being a common law jurisdiction and an ex-British colony, the Cyprus legal framework governing trusts developed in a combination of the English Law principles of Equity and the statutory law.

Stella Kammitsi Advocate – Legal Advisor

In the years that followed, Cyprus despite its political hurdles, has evolved into an international business centre, and this had led to the enactment of the International Trust Law in 1992 (“CIT Law”), to which certain amendments were made in 2012 and 2013. This was a game-changing move for the island to attract high-net-worth clients mainly from civil law jurisdictions.

In 2017, Cyprus ratified the Hague Convention on the law applicable to trusts and their recognition. Additionally, as a member of the European Union, Cyprus is subject to various EU regulations including the Brussels IV regulation concerning crossborder matters of succession within the EU, and the Brussels I on jurisdiction and the recognition and enforcement of judgements. These international and EU legal instruments play a crucial role in governing issues related to trusts, succession, and enforcement of judgements in cross-border situations.

During this past decade the landscape of estate planning, including wills and trusts, has become increasingly complex due to several factors. The evolving nature of family structures, global mobility, the digital revolution in asset holding, are just a few examples of the factors contributing to the challenges faced by practitioners in this filed. All these entails increased reporting and regulation requirements in different jurisdictions and with different compliance obligations and tax implications. In this dynamic environment practitioners play a crucial role in helping clients navigate the complexities and collaboration with legal professionals, tax experts and financial advisors is essential for ensuring compliance with diverse legal requirements and meeting the evolving needs of the clients.

Succession means different things to different generations and different cultures. Professional advisors need to be kept informed of the technological wave as private wealth business and assets of trusts is increasing in digital platforms and digital assets. The new generation beneficiaries, especially Gen Z and Gen Alpha (i.e. those born or to be born between 2010 and 2025) are in a different mindset and there are practical realities to consider. The critical question is whether the advisors will be able to assist in the administration of those assets and provide proper succession-planning advice. For example, recent cryptocurrency crashes have highlighted some of the hidden risks.

Creating a trust extends beyond wealth planning, safeguarding assets against frivolous third-party claims and paving the way for the next generation on succession. It involves examining the specific needs and circumstances of each client, his domicile

and residency, location of assets, tax implications, possible application of foreign law in asset management and transfer, divorce situations, second marriages, children from different marriages, pension planning, the interplay between common law and civil law, as well as cultural and religious considerations in jurisdictions where practices like polygamy and same sex marriages are permitted. Guidance is essential for clients for making decisions on critical aspects such as the type of trust, its duration, governing law, powers reserved by the Settlor and to which extent (ensuring that it will not end up being a sham trust), the governing law of the trust, potential forced heirship claims and how to avoid them, effect of any prenuptial and postnuptial agreements, clawback provisions regarding lifetime gifts, wills vis-à-vis inter-vivos trusts and testamentary trusts. Practitioners need to diligently obtain clear and precise instructions from the settlor and translate them into a meticulously drafted trust deed. Additionally, a comprehensive letter of wishes should be developed, leaving no room for ambiguity regarding who should benefit from the trust and precisely how the trust should be administered.

Recent geopolitical happenings and events have significantly impacted the trust sector on a global scale, Cyprus being particularly affected: an ever-evolving regulatory landscape showing no sign of slowing down with an increasing emphasis on transparency and exchange of information,

EU Sanctions, complex financial landscape. Consequently, compliance responsibilities have become more burdensome for both trust practitioners and clients alike. Professional are required to meet higher standards which necessitates an elevated level of professionalism and expertise.

One of the most significant developments concerning trusts in Cyprus and the EU revolves around the mandatory registration of Ultimate Beneficial Owners (“UBOs”) for legal entities and trusts in accordance with the Fourth and Fifth Anti-Money Laundering Directives. However, there remains uncertainly regarding the registration of UBOs for trust at the Cyprus Companies Registrar as well as the criteria for establishing “legitimate interest” to access this information. In a pivotal decision in November 2022, the Court of Justice of the European Union declared that unrestricted access to beneficial ownership registers is “invalid” as this interferes with the privacy and personal data protection rights of beneficial owners. Consequently, several EU countries including Cyprus, have restricted public access to their registries.

Regrettably, Cyprus has encountered further substantial challenges in the past year, with negative reputational effects like linking Cyprus trusts to issues such as tax evasion, violation of sanctions, money laundering and overall illegitimate business practices. However, this portrayal does not accurately represent the reality. Cyprus stands out as one of the few European countries that has

embraced the concept of trust for over a century with well drafted laws. The island holds a distinctive place for international trusts and being home to an experienced and properly regulated local community of professionals. As professionals it is imperative that we work towards enhancing Cyprus’ reputation on crucial international standards including regulation, transparency, and tax certainty. Cyprus already possesses a robust legislative and regulatory framework, providing a secure and trustworthy environment for trust and it is imperative that we continue to build upon this foundation.

The increasing interest among professional in Cyprus seeking advancements in trust law is a strong indicator of the ongoing growth and progression of the trust industry within the country.

STEP fulfils a crucial role in assisting its members in enhancing their expertise and knowledge in trusts, providing training, and facilitating additional qualifications. It further serves in raising awareness about the specialised nature of trust and estate planning work and places great emphasis in keeping practitioners, being STEP member, up-to-date with the latest industry developments. The history of STEOPglobal and STEP Cyprus is a testament to what can be achieved when a few people have a vision for pulling together the right professional community for dealing with this specific filed of law and tax on estate planning and trust. 

The Importance of Continuous Professional Development for Investment Professionals

The CFA Institute, a US-based institution which administers the Chartered Financial Analyst (CFA) Program and awards the CFA Charter to successful candidates, has established the Code of Ethics and Standards of Professional Conduct (“CFA Code and Standards”).

Constantinos Kourouyiannis

CFA, Vice President of CFA Society Cyprus, Executive Director of Easternmed Asset Management Services

Since their creation in the 1960s, the CFA Code and Standards have been considered the most comprehensive and widely accepted measure of ethics in the investment profession, globally. Since the beginning of the year 2024, a new Standard on “Competence” has been introduced, which emphasizes the importance for investment professionals to act, maintain and improve their professional competence and support other investment professionals in improving their competence as well. This article examines the importance of Professional Competence in the investment industry, how investment professionals can enhance their professional development, the role of employers and some best practices they can apply. The article also outlines some actions taken by the CFA Institute and the CFA Society Cyprus, which represents and supports local CFA Charterholders, for the continuous professional development of investment professionals.

The aim of the Code of Ethics is to set the key principles of conduct the CFA Institute expects from its members and CFA Program candidates, whereas the Standards outline professional conduct that constitutes fair and ethical business practices. By including “Competence” as a new Standard of the revised CFA Code and Standards, the CFA Institute acknowledges that continuous professional development is not only a tool for career advancement but also a fair and ethical business practice of investment professionals like other duties under the Standards of Professionalism, Integrity of Capital Markets, Duties to Clients, Duties to Employers, Investment Analysis, Recommendations and Actions and Conflict of Interest.

Investment professionals often change roles and responsibilities as they progress in their career, and require new or

different knowledge, skills and abilities. Furthermore, new concepts are introduced in Finance, such as Data Science, Artificial Intelligence, Blockchain and Cryptocurrencies, ESG and Sustainability, which are essential in forming the future of Finance. In this context, investment professionals should maintain and improve their competency by taking the necessary actions for their career and professional development. This may be achieved by attending seminars, webinars and conferences, studying to obtain professional certifications and designations in the area of their work or even through self-study of professional articles and publications.

The CFA Institute has recently made a remarkable contribution to the community of investment professionals by launching the CFA Institute Research and Policy Center with four thematic areas: Capital Markets, Technology, Industry Future and Sustainability. In addition, it has offered a comprehensive Digital Member Experience for CFA Charterholders, which includes, inter alia, Practical skills modules, such as Financial Modeling and Programming in Python, access to the Financial Analysts Journal and Ethics Learning Lab, Career resources and access to key datasets (including Morningstar, MSCI Indexes and FactSet).

As CFA Society Cyprus, we also support the continuous professional development of our members. In recent years, we have established partnerships with local educational and professional training institutions and offered to our members eLearning training courses, which fulfils the requirements of Cyprus Securities and Exchange Commission (CySEC), the local supervisory authority of investment and fund management companies, for continuous professional training. This initiative has been appreciated and

endorsed by our members, since a significant number of CFA Charterholders are currently working in the investment services and fund management sectors in Cyprus and are registered in the corresponding registers of CySEC. The online courses offered to our members span across a wide range of topics, including Funds Regulations, MiFID, AML, Compliance, Risk Management, ESG, Market Abuse, Best Execution, Corporate Governance, Business Ethics and Blockchain. Apart from CySEC requirements, these courses also qualify for the requirements of the CFA Institute Professional Learning Program.

Employers and HR department of investment companies also have an important role to play in the continuous professional development of their employees, by offering incentives and rewarding those, who are passionate and committed to continuous learning and development. There are plenty of good practices for employers: (1) Setting measurable targets to employees for professional learning based on their duties and responsibilities, (2) Developing an internal professional learning program (similar to the one introduced by the CFA Institute), which will offer the opportunity to employees to record the courses and seminars they attend, as well as articles included in their self-study, (3) Allocating to employees a certain budget and study leave for continuous professional development, (4) Ensuring that the continuous professional learning is an integral part of employees’ appraisal, (5) Encouraging employees to undertake various volunteering roles and activities that improve their leadership and other interpersonal skills.

Soft skills are also essential for continuous professional development, especially for professionals working in teams, facing clients, or holding managerial positions in their organizations. Some of the most important soft skills for professional success are communication skills, leadership and management skills, emotional intelligence, teamwork, project management and negotiation skills. There is a plethora of available courses that aim to provide a theoretical background on how to develop these skills, but the most practical and effective way is volunteering. As CFA Society Cyprus, we offer many

volunteering opportunities to our members, which contribute to the development of their leadership and other interpersonal skills. Nevertheless, the most important incentive for our members is the opportunity to utilize their knowledge and professional expertise by offering to society at large.

All accomplishments and successful initiatives of our Society are supported by the volunteer work and engagement of our members. As CFA Society Cyprus, we have developed four committees:

(1) The Advocacy Committee, which aims to advocate expertise in the local investment community and promote high ethical standards across the investment profession by providing advice on financial policies and regulations, (2) The Research Challenge and University Relations Committee, which strengthens relations with local universities, as well as aims to provide training, mentoring and realworld experience in financial analysis and equity valuation to university students by organizing the local CFA Institute Research Challenge competition (3) The Financial Literacy Committee, which aims to build

and promote financial literacy by engaging CFA Charterholders to deliver presentations on basic financial topics to lyceum students of public and private schools, and

(4) The Diversity, Equity and Inclusion (DEI) Committee, which aims to raise awareness on gender and other biases in the workplace and investment industry by organizing various events and providing consultation on policy matters.

In a nutshell, professional competence is not just a tool for career advancement, but it is an ethical duty for investment professionals, who should invest in their continuous professional development and remain current in a fast evolving and dynamic working environment. In other words, this ethical duty should be applied in their business practices. Continuous professional development should target both knowledge and practical skills relevant to the duties and responsibilities of the investment professional, as well as interpersonal skills, such as leadership, project management, and empathy, which may be developed by undertaking various volunteering activities. 

Cyprus Public Audit Oversight Board

Self-regulation or Public-regulation?

This has been a major point for public and heated debates and academic work since the development of professional bodies decades ago. Both sides have arguments in favor and against their position. But big corporate failures during the last financial crisis highlighted the weakness of the self-regulation model and led to the need to revisit this dilemma. Rapid advances in technology, the increase in the number, size and complexity of both the markets and organizations in a fastmoving globalized world made it clear that self-regulation for almost all professions was no longer adequate, neither at national nor at international level. Thus, the political decision taken was to transfer powers and responsibilities from traditional self-regulatory bodies to government bodies and to some extent to international bodies. These changes affected the local audit profession too. The Cyprus Public Audit Oversight Board (“CyPAOB”) was established as the ultimate national regulatory authority for the audit profession in Cyprus by the Auditors Law of 2017 (L.53(I)/2017) pursuant to the corresponding European Audit Directive and Regulation for the public interest entities. CyPAOB was the evolution of the initial Cyprus Public Audit Oversight Commission, established in 2011. In essence, CyPAOB is a European Union’s institution and is a member of the Committee of European Auditing Oversight Bodies (“CEAOB”) with active participation and contribution, as well as a member of the International Forum of Independent Audit Regulators (“IFIAR”).

CyPAOB exercises public oversight on all statutory auditors and all statutory audit firms licensed to carry out the statutory audit of the financial statements of any entity registered in the Republic subject to such supervisory audit. Therefore, it has ultimate responsibility for supervising:

1. the approval and registration of statutory auditors and audit firms in the Public Register;

2. the application by statutory auditors and audit firms of standards on professional

ethics, internal quality control of statutory audit firms and statutory audits,

3. the continuous education of statutory auditors,

4. the quality assurance systems of statutory auditors and audit firms; and

5. the procedures for disciplinary investigation and referral of statutory auditors and statutory audit firms to disciplinary proceedings

The above tasks are carried out via the members of the Board of CyPAOB, its management team and staff, as well as with the services procured from subcontracted reviewers. In addition, within the context of the Auditors Law, CyPAOB cooperates closely with the Institute of Certified Public Accountants of Cyprus (“ICPAC”), as the only Recognized Supervisory Body pursuant to article 113 of the Law, through a delegation agreement, with which CyPAOB delegated the allowable tasks by the Law to ICPAC. This delegation agreement was initially signed in 2017 and was subsequently revised in 2020. It is worth mentioning that CyPAOB maintains the absolute responsibility of monitoring and supervising audit firms of public interest entities, as well as, has an oversight role over the functioning of the audit committees of the public interest entities. For the latter, compliance control and where necessary the imposition of administrative

CyPAOB is governed by a board of seven members, appointed by the Council of Ministers. The current composition of the board has been appointed on 28 June 2023 for a six-year term, as follows:

• Andreas Zachariades – Chairman

• Christos Karoulas – Vice-Chairman

• Stelios Kountouris – Member

• Vicky Aristidou – Member

• Ioanna Achilleos – Member

• Demetris Georgiades – Member

• Marios Neoptolemou – Member

Andreas Zachariades

Chairman Cyprus Public Audit Oversight Board

sanctions is assigned by the Law to other competent bodies, such as the Central Bank of Cyprus, the Cyprus Securities and Exchange Commission and the Superintendent of Insurance Companies.

The Law also provides for an independent Disciplinary Committee, comprising a Chairman and two members, of proven reputation, ethos, credibility and professional caliber. The Disciplinary Committee is responsible to follow up on the proceedings of the Board of CyPAOB and to carry out its disciplinary function on statutory auditors and audit firms, as stipulated in the Law.

The main objectives of the Board are to further develop and enhance the audit profession in Cyprus, through the application of the audit, assurance and quality control standards, coupled by the simultaneous application of the Code of Ethics for Professional Accountants, as issued by the IESBA. The ultimate objective is to ensure that the financial information provided by the entities and audited by the statutory auditors are presented in a true and fair manner, enhancing thus the credibility and accuracy of the financial information, the transparency

of the processes and maintaining quality and public trust to the audit profession. This undoubtedly will have a direct positive footprint on the economic activity of the country. CyPAOB’s role will also supplement and support functions of other institutions within the Republic, such as, those of the Registrar of Companies, the Tax Department and the Central Bank, thus assisting in the proper, efficient and effective functioning of the banking, commercial and financial sectors in Cyprus. In other words, CyPAOB is one of the links in the financial ecosystem chain that can facilitate the proper functioning and growth of the economy in general.

Hence the role of CyPAOB is much more than that of a regulatory authority, it involves instilling trust and credibility in the financial reporting ecosystem and transparency and independence in the work performed by the statutory auditors.

As a newly appointed board, the goals set for CyPAOB for the near future include, inter alia:

• the effective monitoring reviews and other inspections on statutory auditors and audit firms, thus enhancing the quality of statutory audits and, consequently, the quality and

credibility of the audit profession in Cyprus;

• the effective imposition of punitive and disciplinary measures through a robust and timely process, for breaches of the Auditors Law;

• the wider cooperation with corresponding authorities in the EU and third countries, enriching thus the knowledge, expertise and capacity in executing its supervisory role;

• the closer cooperation with other regulatory authorities in Cyprus in the financial services sector, the insurance sector and the listed entities sector;

• closer cooperation with governmental authorities and professional organisations; and

• the active participation in the affairs of CEAOB, IFIAR and other similar international organisations.

• the proper and adequate staffing and resourcing of CyPAOB;

As CyPAOB is gradually sufficiently resourced in terms of people, knowledge, competencies and hardware, and given the work done so far, I remain confident that it will meet successfully the challenges ahead, servicing the audit profession, the economy and the public interest in the best possible way. 

The «new» 20% and 50% tax exemptions on salaried income

By broadening the tax exemption eligibility, Cyprus strategically aims to attract top talents from around the world. It has shown itself to be one of Europe’s most dynamic markets for talented professionals from all over the world. The generosity of these tax incentives is only a sample of the island’s commitment to fostering a dynamic and inclusive, growth-oriented economy. By doing so Cyprus is positioning itself as a preferred destination for dynamic companies and their highly skilled employees. With these additional incentives, a more inclusive version of the 20% and 50% exemption schemes has been introduced. These tax breaks have been designed especially for high income earners.

Cleri Evagorou Senior Manager, Tax Services Grant Thornton Cyprus

Eleni Ashioti Head of Technical and Professional Matters of ICPAC

By extending the 50% income tax exemption, we are moving from Article 8 (23) to 8 (23A)

Under Article 8 (23) (A) of the Income Tax Law, a 50% income tax exemption was previously granted to individuals who were not residents of Cyprus for 10 years prior to their employment in Cyprus. However, as of 1 January 2022, a ‘new 50% exemption’ on remuneration has been introduced for “first employment” exercised in Cyprus by individuals whose remuneration exceeds €55.000 annually, previously being €100.000 annually. Individuals should not be residents in Cyprus for a period of at least 15 consecutive years immediately prior to their employment in Cyprus. In practical terms, this means that individuals can now benefit from the 50% income tax exemption if they were not residents of Cyprus for 15 consecutive years before starting their employment in the Republic, whether it is with a Cyprus resident employer or a non-Cyprus resident employer.

The employment should commence after 1 January 2022.

An employee is considered as exercising “first employment” in Cyprus if they did not exercise any salaried services (including occasional employment) in Cyprus, either for a local or a foreign employer, for a 15-year consecutive period immediately prior to the aforesaid employee taking up employment in Cyprus.

The exemption will apply once in each individual’s lifetime for a period of 17 years.

Individuals whose employment began prior to 1 January 2022 may also be eligible to transition into the new 50% exemption, subject to the following conditions:

• They were eligible for the 50% exemption under the provisions of Article 8(23) of the Income Tax Law.

• They were initially employed in Cyprus between 2016 and 2021 with an annual remuneration exceeding €55.000.

• They commenced their first employment in Cyprus between 2016 and 2021 with an annual remuneration below €55.000, and within 6 months from the date of the new 50% exemption (26 July 2022) their remuneration exceeded €55.000.

The transition period starts in year 2022 and continues for 17 years from the year of employment.

This amendment further develops Cyprus's position as a destination for international professionals but also for expats who can now enjoy 50% income tax exemption for an extended period. The transition period provides the opportunity to those who started their employment before the new amendment came into effect to also benefit from the new 50% exemption.

With the new amendment the definition of "commencement of first employment in Cyprus" is defined as when an individual initially performs salaried services in Cyprus, either for a resident or non-resident employer, without considering occasional full or part-time employment in Cyprus for a period that does not exceed a total of 120 days in a tax year.

Previously, the “first employment’ was defined as the first time an individual worked as an employee in Cyprus. Shrot term or occasional work for periods not exceeding 120 days during a tax year was not considered as "first employment." With the new definition of first employment, the qualifying period for the 50% exemption is now extended to 15 consecutive years of non-residency in Cyprus before starting employment. This change significantly expands the opportunities for employees to benefit from the 50% income tax exemption.

The New 20% Tax Exemption - From Article 8 (21) to 8 (21A)

Starting from July 26, 2022, Cyprus introduces a new 20% income tax exemption under article 8 (21) A of the Income Tax Law, with a maximum annual limit of €8.550. This exemption applies to the first employment that begins on or after this date and lasts for seven tax years, with the following conditions:

• The employment must be carried out within Cyprus;

• Individuals must not have been a resident of Cyprus for at least 3 consecutive tax years immediately before starting their employment;

• They must have been employed outside of Cyprus by a non-resident employer.

A significant advantage is that both exemptions, 20% and 50%, do not require neither the individual nor the employer to be a Cyprus tax resident.

An individual can only claim one of the two exemptions. Individuals who were not Cyprus residents for 15 consecutive years and qualify for the income level can claim the 50% exemption. However, the 20% exemption comes in handy for individuals who do not meet the 50% exemption criteria, ensuring they still benefit from a tax advantage for up to 7 years.

Finally, yet importantly, individuals that do not meet the conditions to transition into the “new 50% exemption” but who are eligible to benefit under the previous 50% or 20% exemption may continue to benefit from the previous exemptions for any remaining period. The previous exemptions were available for a total period of ten years for the 50% exemption or five years for the 20% exemption, respectively.

Reviewing the ‘new’ 20% and 50% exemptions we can see that the intentions of the Cyprus government to attract foreign companies willing to relocate their headquarters/offices to Cyprus and bring along skilled personnel is a win-win arrangement. Cyprus targets to companies that are willing to create substance to contribute to the economic growth of the country. These companies can bring their key personnel along who will benefit from the favourable income tax exemptions. Further to the foreign individuals the big stake is also to bring back Cypriot professionals who excel in their field but choose to live and work abroad. The tax exemption is an additional incentive among others to achieve their relocation. Reflecting on the return of many expats lately, well renowned doctors, researchers, entrepreneurs, and many others, we can only conclude that these exemptions are successful incentives not only for companies to attract skilled professionals but also for the economy at large. 

Revamping the Tax System

Tax experts Philippos Raptopoulos and George Liasis, the respective Committee Heads of Tax Planning & Policy and VAT at the Institute of Certified Public Accountants of Cyprus (ICPAC), discuss how the upcoming and long overdue overhaul of the country’s tax system should facilitate the Government’s ambition to create a modern, resilient and green economy.

Ever since Cyprus’ accession to the EU in 2004, the country’s tax framework has remained static, despite back-to-back macroeconomic tremors, from the financial shock in 2013 to the supply chain crunch catalysed by the COVID-19 restrictions and then to recent record-high inflation. Emerging economic models, notably the rise of platformisation - digital platforms facilitating transactions and interactions between users - that are controlling an increasing slice of the global economy also underscore the urgency for new tax strategies. Against this backdrop, Cyprus’ tax architecture not only breeds inefficiencies but also threatens the country’s competitive edge in the era of green economies. To rectify the situation, Nicosia has pledged a comprehensive overhaul within the next two years. In the meantime, the Economics Research Centre of the University of Cyprus (CypERC) has been enlisted by the Ministry of Finance, in tandem with industry bodies like ICPAC, to structure the blueprint of the new integrated tax system, slated to be completed by March 2024.

Cyprus is in the process of revamping its tax regime. How should the new tax framework align with the country’s aspirations outlined in the ‘Vision 2035’ strategy to foster a sustainable and green economy?

Philippos Raptopoulos: One of the three pillars of ‘Vision 2035’ focuses on developing an innovative, resilient, and diversified economy. At the same time, it aligns with the energy transition goals and strives to become a true green economy. The tax reform should aim precisely at this goal by providing incentives for green investments and sustainable business operations, offering tax credits for adopting

green practices and technologies, as well as imposing taxes on activities with high carbon footprints. With green tax neutrality and ‘the polluter pays’ as corner- stones, any new pieces of taxation should be adequately accompanied by counter- measures. A focus on renewable resources, energy storage, vulnerability subsidies and sustainable finance can be incorporated into the upcoming tax reform. Any generation of green tax revenues can be injected into reducing other tax burdens where environmentally friendly activities are observed. With the introduction of sustainability- led tax reform, new processes will have to be devised for the efficient collection, handling and management of new taxes and respective deductions. An upgraded system of tax administration and justice will also be needed to address the resolution of potential tax issues and taxpayer disputes. continuous focus on its enhancement, the Tax Department is surely moving in the right direction, showing what dedication, perseverance and good management can bring. We need, nonetheless, to start considering additional uses of technology and processes for better data analysis, quality audits and better coordination between departments. Examples from other countries can shed light and guide us through this. A final point I would like to touch upon concerns tax jus tice, which of course is not restricted to the Tax Tribunal and the Courts but starts within the Finance Ministry and the Tax Department itself. Although it is not part of the upcoming tax reform, modernising the tax justice experience of taxpayers will also enhance the image and perception of the country.

What key adjustments should be incorporated into the planned tax reforms

Eleni Ashioti Head of Technical and Professional Matters

Philippos Raptopoulos

Eleni Ashioti Head of Technical and Professional Matters of ICPAC

George Liasis

to effectively cater to the needs of the services industry?

Philippos Raptopoulos: The planned tax reform should include certain adjustments that will firstly enhance the simplification of the compliance procedures and the streamlining of administrative tasks, allowing the industry to concentrate on growth rather than being slowed down by a procedural burden. Also, tax credits can be provided for investments in employee training and upskilling, which can support the further digitalisation of the services industry. It might serve a dual purpose as it can facilitate the retention of older employees, thereby addressing the challenge of workforce scarcity. Tax reform should also focus on opening new markets for the Cyprus services industry, like markets that focus on renewable energy and circular economy initiatives. There is, for example, a growing global demand for energy-efficient products and green construction materials. Cyprus can incorporate tax incentives into the planned reform, such as accelerated or increased depreciation or even notional tax deductions for attracting companies that work on the

research and development of such products and technologies.

Considering the substantial VAT revenue losses among EU Member States and the complexities faced by businesses, particularly SMEs and cross-border companies, what modifications are essential to modernise VAT for the digital era?

George Liasis: According to the 2022 VAT Gap report, member states lost €93 billion in VAT revenues in 2020, and there are various reasons for that. Indeed, it is a valid question on how to be more practical, especially against the backdrop of the EU ViDA (VAT in the digital age) initiative. ViDA is a series of measures aiming to modernise and make the VAT system work better for businesses and be more resilient against fraud by embracing and promoting digitalisation and addressing VAT challenges raised by the development of the platform economy. It will involve three main reforms.

Firstly, the Digital Reporting Requirement, which moves away from the current system of recapitulative statements

reporting and moves to a somewhat realtime transaction-by-transaction system, whereby businesses will need to report B2B intracommunity transactions two days from the issuance of a standardised e-invoice. The second reform relates to new rules for the platform economy, starting from short-term accommodation and passenger transport. Currently, the interpretation of the rules is complex and not uniform among member states - the UK is also struggling with these provisions. We do have guidance from important decisions at the EU Court of Justice, such as the Fenix/ OnlyFans case, giving us the analysis on a ‘deemed supplier approach’.

However, more clarity and uniformity are needed, and the new rules aim to rectify this issue. The last reform is the introduction of a single VAT registration aiming to capitalise on the success and extend the application of the current one-stop-shop schemes. These reforms will surely shake up the VAT landscape, aiming to reduce or even eliminate lost VAT revenues. Affected businesses will need to stay alert for these upcoming developments. 

DAC6 revisited through the prism of DAC8

The Directive on Administration Cooperation (“DAC”)1 has been amended multiple times since 2011 to allow for the automatic exchange of information across multiple fields of taxation.

The Council of the European Union (“the Council”), on 16 May 2023, held an Economic and Financial Affairs Council (“ECOFIN”) meeting where the European Union (“EU”) finance ministers reached political agreement (general approach) on a compromise text for the Directive on administrative cooperation implementing the Organisation for Economic Co-operation and Development's (“OECD”) rules on reporting for crypto assets and amendments to the Common Reporting Standard (“CRS”)

On 24 October 2023, the EU Official Journal published Council Directive (EU) 2023/2226 of 17 October 2023 amending Directive 2011/16/ EU on administrative cooperation in the field of taxation (“the Directive” or “DAC8”). It will enter into force on 13 November 2023. EU Member States shall transpose the Directive by 31 December 2025 and shall be applicable from 1 January 2026 with certain exceptions.

According to the preamble of the Directive, the reinforcement of the provisions of DAC regarding the information to be reported or exchanged was crucial to adapt to new developments of different markets and thus effectively tackle tax fraud, tax avoidance and tax evasion schemes identified. Another main reason for the “birth” of DAC8 was the need for the information communicated under DAC to be effectively used by the competent authorities of the EU Member States for the assessment, administration and enforcement of taxes covered under its scope, through the implementation of an effective mechanism to ensure the use of such information for risk assessments, tax audits and other tax-related enforcement measures.

It is worth noting that specific emphasis is given to the need for the aforementioned mechanism of the EU Member States to include or maintain the following enforcement

measures:

a) the requirement for the EU Member States to continue keeping records of the information exchanged for a minimum retention period not shorter than 5 years In Cyprus, this also includes/extends to the obligation for intermediaries and relevant taxpayers to keep proper books and records as a proof of compliance with their reporting obligations under DAC62 (the minimum retention period is 6 years from the end of the year to which the reportable cross-border arrangement relates)3; and

b) the requirement for all EU Member States to lay down specific sanctions/ penalties for the proper enforcement of the national rules implementing the Directive on mandatory automatic exchange of information reported by reporting crypto assets service providers and to ensure that such penalties are effectively implemented. DAC8 introduces not only reporting obligations regarding crypto assets but also amendments to the overall DAC framework. That being said, and as part of the reinforcement of the provisions of DAC to adapt to the new era of digital economy and crypto assets, it is important to recognise the interrelation of DAC8 with all previous parts of the DAC chain and especially DAC6.

This becomes obvious through the following amendments that DAC8 introduces to the DAC6 framework: DAC8 extends the use of information received by automatic exchange beyond the taxes covered by DAC6, i.e., direct taxes, to value added tax (VAT), indirect taxes, custom duties, and non-tax purposes when it concerns anti-money laundering and countering terrorism financing.

• A Tax Identification Number (TIN) reporting obligation is introduced by DAC8

Eleni Ashioti Head of Technical and Professional Matters of ICPAC

Stavros Karamitros Manager, International Tax and Transaction Services (ITTS), EY Cyprus

to governments for DAC6, among other DAC Directives, for taxable periods starting from 1 January 2028. As such, the TIN of individuals and entities, previously being an optional piece of information in DAC6 reports4, should now be included in the exchange of information on reportable cross-border arrangements.

The disclosure of TIN will increase the access of the competent authorities of the Member States to such data and thus assist in the effective application of enforcement measures at a national level. On this respect, an EU TIN verification tool will be developed by the EU Commission to enable automated, electronic verification of the TIN provided by a reporting entity or taxpayer by the EU Member States for the purpose of automatic exchange of information.

• Following the European Court of Justice judgement in Case C-694/205, the notification obligation of lawyers/law firms which are bound by the Legal Professional Privilege (LPP) of their clients and are thus exempt from the obligation to disclose a reportable cross-border arrangement to the tax authorities, should now only refer to the relevant taxpayer/client and not to other intermediaries other than their own client. This is because the obligation of LPP-exempt lawyers/law firms to notify any other intermediary infringes the right to respect for communications between lawyers and their clients provided for in the European Charter of Fundamental Rights6

This may have the following implications for Cypriot lawyers/law firms who are actively exercising the law profession in Cyprus and are thus covered by the LPP of their clients being therefore exempt from the obligation to disclose reportable cross-border arrangements to the Cypriot tax authorities:

1. First of all, it has now become even clearer, as explicitly mentioned in the preamble of the Directive, that EU Member State lawyers/law firms can be considered as intermediaries (primary or secondary), thus having an obligation not only to notify the relevant taxpayer/ the client about their reporting obligations in a timely manner, but also to report an arrangement to the tax authorities, if the

2. In those cases where the Cypriot LPPexempt lawyer/law firm will not be the only external intermediary of the relevant taxpayer/client, i.e., other qualifying intermediaries will also be involved in the arrangement and will thus have an obligation to disclose the arrangement in Cyprus depending on their role and knowledge threshold, this will relieve LPP-exempt lawyers/law firms from the requirement to notify anyone else than their own client.

This will effectively decrease the administrative burden of identifying other intermediaries involved in the arrangement and the risk of incurring a penalty for no or delayed notification (which amounts up to EUR 20,000).

3. On the contrary, where the Cypriot LPP-exempt lawyer/law firm will be the only external intermediary of the relevant taxpayer/client, this may give

rise to additional administrative burden, as lawyers/law firms may typically be expected to proceed with the analysis and notification of their clients.

Lawyers/law firms in Cyprus may now be the only reference of the relevant taxpayer/client in terms of DAC6 advisory, in those cases where no other external intermediaries are involved in the arrangement, meaning that they should be sufficiently educated and “equipped” on DAC6 matters to satisfy the needs of their clients.

It remains to be seen whether the proposed amendments to the DAC6, among other DAC Directives, through the adoption of DAC8, will achieve the primary objectives of the European Commission. In the meantime, what should intermediaries and relevant taxpayers give particular attention to, is to be well prepared in view of potential audits or information requests of the tax authorities in the future, as the enforcement of the DAC Directives in the form of sanctions/penalties should be expected. 

1 Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC.

2 Interpretative Circular 55 – Administrative Cooperation in the field of Taxation/DAC6, 10 November 2011, par. 1(d).

3 Section 30(2), Assessment and Collection of Taxes Law N. 4/1978, as amended.

4 XSD User Guide, DAC6 Central Directory, 02/04/2021, Version 4.04 EN, page 25.

5 Case C-694/20, Orde van Vlaamse Balies and Others, 08/12/2022.

6 Article 7, Charter of Fundamental Rights of the European Union, 2012.

relevant taxpayer/client elects to waive the LPP.

Real Estate Tokenization: The Future of Investment in Property

Real estate tokenization is a modern way of investing in real estate. This revolutionary concept, made possible because of blockchain technology and smart contracts, has disrupted the traditional real estate industry by offering investors access to fractional ownership of a property.

Real estate tokenization converts the value of real estate into tokens stored on a blockchain, enabling digital ownership and transfer. These divisible tokens represent a fractional share of ownership stake in that real estate.

Despite universal globalization, the real estate market's main problem is that it is still not global. Mass buyers and investors generally look at the real estate market within their country or city. Accordingly, for real estate development companies and property owners, this means an artificial reduction in demand, limiting opportunities for growth in their business. Smart contracts and tokens come to solve these problems. Together, they erase boundaries for real estate transaction participants, reduce transaction costs, and open new opportunities for market participants.

A real estate token can represent, among other things:

• Ownership of part of a real property

• Ownership of the entire real property

• An equity interest in an entity that controls real property

• An interest in a debt secured by real property, or

• A right to share in the profits generated by real property

One of the first successful commercial real estate tokenization projects raised approximately US$18 million in 2018 through the issuance of Aspen Coins, where digital tokens represented fractional ownership of the luxury St. Regis Aspen Resort in Colorado, USA.

According to a recent study by the

international management consulting firm McKinsey & Company, $4T to $5T of tokenized digital securities could be issued by 2030

Finance Magnates, a multi-asset online trading knowledge hub, suggests that “Tokenization and digital assets' transformational capacity in transforming ownership and investment, paves the path for a more equitable, efficient, and integrated financial environment”.

How Does Tokenization Work?

There are three main phases of tokenization:

Phase 1 – Deal Structuring and Shareholders

Property owners decide the type of asset they wish to digitalize – they could either form a Special Purpose Vehicle (SPV), or a subsidiary created by a parent company to isolate financial risk. Shareholders may have various rights to dividends, equity shares, and partial governance depending on the asset’s location, expected funding, taxation structure, and type of investor.

Phase 2 – Selecting a Tokenization Platform

Property owners then choose from a range of platforms that create tokens. Tokenization platforms use blockchain technology to generate automated agreements highlighting transaction terms between buyers and sellers. These “smart contracts” are essentially codified rules and behaviours that follow the token throughout its lifecycle. Smart contracts are the bedrock

Alexis Nicolaou Leader Distributed Ledger Technologies at Grant Thornton Cyprus

of blockchain, and the reason blockchain is nearly impossible to change, hack, or cheat.

Phase 3 – Issuance, Regulation, and Distribution

During the Security Token Offering (STO), digital tokens are created and issued on blockchain in the form of regulated assets – like stocks issued on the stock market during an Initial Public Offering. Token issuance and distribution must meet certain regulatory standards, therefore a clear understanding of the regulatory framework is necessary to decide where the SPV should be set up.

BENEFITS OF TOKENIZATION

Additional Capital

Developers can tap into more capital at any stage of development through tokenization. By efficiently fractionalizing properties and reducing market barriers, developers facilitate greater market participation, which increases capital inflow.

Flexibility

Anyone can invest a certain amount and become a partial owner of a property and benefit from the potential profits. Moreover, tokens can be purchased and sold on secondary markets. The property owner can also sell some part of their assets by issuing tokens. Additionally, tokens can be exchanged like stocks, with their value fluctuating based on how the price of the property changes. Tokenization provides a benefit over crowdfunding because it gives

you immediate digital ownership, allowing you to sell at any time.

No geographic limits

Property tokenization, like any type of tokenization, eliminates barriers related to location. Nothing prevents you from buying a property on the other side of the world in the middle of the night. You can participate in and profit from the construction of resorts, housing estates, or rentals anytime and anywhere.

Ease and speed of investment

The most effective optimization of any activity is to limit unnecessary expenditures by acting within the legal framework. Blockchain technology enables this by removing barriers like notary fees and bank fees. This results in increasing the investor’s returns and shortening the process of raising capital by the entity managing the investment, which streamlines the entire process.

Investments made with tokens significantly reduce costs, but also give greater freedoms because you can buy a share in real estate and profit from it at any time. The whole process is automated and does not entail any unnecessary formalities. The right to the property is acquired through the purchase of a token, which does not require any changes to the real estate or mortgage records. Lower entry barrier and higher diversification

To date, investing in real estate has mostly been done with large sums of money.

Thanks to tokenization, however, you no longer must purchase an entire property. A particular property can be divided into millions of tokens. Due to the tokenization of assets, you can participate in a smaller shareholding structure such as distributed investing. Millions of dollars of investment capital are no longer required. It only requires a few dollars to buy a part of some real estate, resulting in a lower entry barrier for those with less capital.

This has to do with the diversification of your investment strategies and assets, too. Instead of only investing in a single property, you may consider investing in several properties by purchasing tokens in them to diversify your investment wallet. In this case, diversification also applies to various sources of revenue.

Efficiency

Tokenization is cheaper and more efficient because blockchain technology automates processes and cuts out middlemen. For example, tokenization does not involve agents and brokers who act as middlemen to real estate transactions. Accordingly, real estate tokens are cheaper because they do not capture the costs associated with lengthy document reviews and layered communication. Alternatively, the smart contracts on blockchain’s unalterable framework drive down fees and costs associated with traditional real estate.

The highest level of security

In addition to making transactions secure, tokenization also makes them transparent. Although new technologies often raise concerns, tokenization uses the highest security standards based on two pillars: tokens and blockchain technology. The first pillar promotes security because investment is assigned digitally to an investor and remains so until it is refunded or sold to someone else. This level of

security would not have been possible without the second pillar, which is the implementation of blockchain technology.

CHALLENGES TO TOKENIZATION REGULATIONS

Addressing regulatory uncertainties is of utmost importance to adopt tokenization on a larger scale. Accordingly, there is a growing consensus on the need for the development of a well-defined regulatory system for real estate tokens.

Generally, the tokenization of real estate will be considered a security but an analysis on each specific token should be considered at the outset. If the token is a security, the issuance of such a token will be subject to the applicable prospectus requirements or reliance on an exemption, such as the “accredited investor” exemption. In addition to the prospectus requirements, the issuer must consider the applicable registration requirements.

Lack of Public Awareness

The lack of public awareness of real estate tokenization poses another obstacle to adoption. Despite cryptocurrencies drawing much attention from the public in recent years, real estate tokenization remains largely unknown. The lack of public awareness may be attributed to minimal market participation by sophisticated parties like large real estate companies and investors. However, publicizing large-scale real estate token transactions demonstrates the advantages of tokenized real estate that could likely address this problem.

Volatility

Finally, the general volatility surrounding blockchain-based systems leads to hesitancy with investing. First, as an emerging market using developing technology, cryptocurrency has been a highly volatile investment. Second, the cryptocurrency market thrives on investors making speculative bets that prices will go up or down to make profits, and these bets lead to sudden market influxes and crashes. Third, most cryptocurrencies experience fluctuations because they are purely digital assets with no backing of physical commodities. However, real estate tokens are less susceptible to volatility because they are backed by physical properties. The benefits of real estate STOs compared to two existing structures – private real estate funds and real estate investment trusts (REITs)

Key pain points of private real estate funds:

• High investment ticket size and long lockup period, making these funds suitable only for institutions and/or ultra-high net worth individuals

• Distribution methods and secondary trading are administratively burdensome, resulting in little to no liquidity in secondary markets and operational inefficiencies.

Key pain points of REITs:

• High structuring costs and complexity

• Highly regulated and subject to significant limitations on investment scope

• More restricted than STOs given the limited flexibility for the portfolio components, nature of underlying asset and dividend distribution method.

Benefits brought by STOs:

• Low structuring costs and complexity

• Greater flexibility in terms of investments scope, portfolio components and nature of underlying asset

Enhanced liquidity with a lower investment ticket size and no mandatory lock-up periods, making it more accessible by a broader range of prospective investors

• Greater operational efficiency and liquidity through programmed distributions via smart contracts

In conclusion, real estate tokenization is expected to become a mechanism that will be both safe for investors and convenient for developers. Investors can access new investment opportunities because of the use of this technology. In turn, estate developers will not have to issue large amounts of bonds or other for financing new and running ongoing projects. Several legal and practical issues could dictate the success of tokenization. Accordingly, property owners should consult knowledgeable legal, securities, tax, accounting, and real estate professionals during the early stages of tokenization to minimize the risks and costs associated with navigating the novelty investment. 

Research article on Gender Equality between Women and Men in the workplace of Cyprus compared with

the EU

Equality between women and men is a fundamental value of the European Union (EU). Women and men shall have equal opportunities to thrive and succeed in the society and in the economy. According to the Article 8 of the Treaty on the Functioning of the European Union it is indicated that “in all its activities, the Union shall aim to eliminate inequalities, and to promote equality, between men and women”. 1

In order to ensure full compliance with the EU Law, the Member States are required to align their national legislation with all requirements of the EU directives.2 The European Commission has a crucial role in respect of monitoring the correct transposition and application of the Gender Equality and non-discrimination directives at the national level. The European Commission is entitled to initiate infringement proceedings against the Member States if they fail to transpose the EU directives into their national legal order or if insufficient or incorrect implementation has been done. The Commission may start enforcement action either in response to a complaint brought by an individual or on its own initiative.3

It is noted that the European Commission has Representations in all Member States. The Representation of the European Commission of Cyprus is located at the Nicosia district area and it acts as the “Commission’s voice” in Cyprus.4 It is further noted that the “European Semester” is the framework of the European Commission, for the observation and coordination of the economic and employment policies across the European Union and it also assesses progress towards the Europe Targets5

As of the 2019-2020 Semester cycle, the Semester country reports contribute to the monitoring of Gender Equality.6

The European Commission has issued on 5.3.2020 a Gender Equality Strategy for the years 2020-2025 which sets up the policy objectives as well as the key actions that shall be applied by the Member states, aiming at achieving a “Gender Equal Europe”.

Among its actions, the European commission calls on the Member States to develop and implement strategies to increase the number of women in decision making positions in politics and policy making. In addition, the European Commission is committed to increasing the participation of women in positions relating to Technology such as Information Communications Technology (ICT).7

It is worth mentioning that the 2021 report on “Gender Equality in the EU”, is the first report issued under the Gender Equality Strategy for the years 2020-

2025. The report evaluates the status that the EU and its Member States stand on Gender Equality. It also highlights the EU’s achievements and it gives inspiring examples from the Member States as well as EU funded projects.8

The “Gender Equality Unit” of the Ministry of Justice and Public Order of the Republic of Cyprus has the main responsibility for the formulation, coordination and implementation of the government policy on Gender Equality matters. It is important to note that it is publishing National Action Plans for the achievement of Gender Equality in Cyprus. The Cyprus National Action Plan that it is now in progress, covers specific actions with timeframes, that shall be applied up to the year 2023.9

It is noteworthy that the Cyprus Constitution contains a far-reaching equality provision which prohibits discrimination. With the accession to the EU, the Cyprus Constitution was amended in order to incorporate the supremacy of EU law over National law10. According to the Article 28 of the Constitution of the Republic of Cyprus, it is mentioned that all persons are equal, they shall be treated equally and shall enjoy rights regardless of the gender.11

It is further noted that the Cyprus Legislations have been harmonized with the EU Law/ Directives in order to

incorporate the provisions of Gender Equality and non-discrimination between women and men in the workplace. The key Cyprus Legislations that promote Gender Equality in the workplace, are the following:

• The Cyprus Law 205(I)/2002 on Equal Treatment between Men and Women in Employment and Vocational Training12 which is implemented and monitored by the “Department of Labour” of the Ministry of Labour and Social Insurance.

• The Cyprus Law 177(I)/2002 on Equal Pay between Men and Women for the Same Work or for Work to which Equal Value is Attributed13, which is implemented and monitored by the “Department of Labour Relations” of the Ministry of Labour and Social Insurance. Based on the Cyprus Legislations, women and men shall be treated equally at work, shall have equal training, development, promotion opportunities, as well as be remunerated (paid) equally for the Same Work (identical) carried out, or for work of substantially Equal Nature, or for work to which Equal Value is attributed.

According to the EU Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation, in order to assess whether workers are performing the “Same Work” or work of “Equal Value”, it should be determined whether, having regard to a range of factors including the nature of the work and training and working conditions, those workers may be considered to be in a comparable situation.14

Based on the Article 18 of the Cyprus law 177 (I)/2002, the criteria that are mainly considered for the comparison and the evaluation of the work that is performed by a Female Employee with the work that is performed by a Male Employee, in order to determine (any) discrimination in pay, are the nature of the duties, the degree of the responsibility that each individual has, the qualifications and skills, the seniority within the entity/ years of service, the physical or mental requirements of the work, as well as the conditions under which the work is performed.

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

It is clarified that the “pay comparison” is applied to Employees of opposite gender who either work within the same entity, or work within the same group of entities. It is further clarified that the pay comparison does not only include cash emoluments, but it also includes Benefit in Kind (BIK) emoluments that may be received directly or indirectly as a result of the employment.

It is further noted that the legislation provides for the prohibition of dismissal of the Employee, or any other adverse treatment by the Employer, as a reaction of a complaint filed by the Employee.

The Department of Labour as well as the Department of Labour Relations are raising awareness campaigns and they proceed with the issuance of guides, manuals and codes of practice.

Inspectors from the above-named departments are responsible for the inspection of the enforcement of the Cyprus legislations. They also deal with the investigation of complaints. Failure to comply with the provisions of the laws, may result to Court actions, fines up to €20.000 as well as imprisonment up to 3 years.

It is noteworthy that within its activities, the Department of Labour Relations has completed the implementation of the EU C0financed project named “Actions for reducing the gender pay gap”. The project consisted of a broad mix of measures aiming at combating the root causes that create and sustain the gender pay gap.

Among actions of this project, seminars have been provided with regards to the Equal Pay principles to Employers’ associations, to the Managerial staff of entities, Human Resource professionals, Lawyers, Accountants, Trade Union representatives, members of Professional bodies. Also, seminars have been provided for job evaluation tools as well as self-assessment tools.

In addition, seminars have been provided to Social Groups such as Career advice professionals (143), primary and secondary teachers (8.612) as well as parents (3.268) with the aim of eliminating the concentration of women and men at different occupational fields as well as the concentration of women at lower levels of the hierarchy.

Moreover, the department examined all Collective Agreements for the identification of (any) discrimination.

Furthermore, based on this project, an EU Tripartite Conference has been held on exchanging of best practices with Government officials, representatives of Trade Unions and Employers’ associations/organizations.

It is noteworthy that according to this project, 35 Individuals from 12 Cyprus private entities have been trained, are certified as “Consultants” and are authorized to provide consultancy services in Cyprus with regards to the Equal Treatment and Equal Pay principles.15

Evenmore, based on this project, a “National Certification Body “has been established in Cyprus which is chaired by the Permanent Secretary of the Ministry of Labour and Social Insurance that evaluates Cyprus entities with regards to the application of the “Equal Treatment and/or Equal Pay principles” in their working environment. According to the model of certification, the entities have the right to apply for two types of certifications namely (a) “Best Practice” for separate (individual) practices applied, and (b) “Equality Employer” for adopting a comprehensive system of promoting Gender Equality in their workplace. So far, 61 entities have been awarded in Cyprus. It is noted that following the certification decision, a special ceremony is organized by the Ministry of Labour and Social Insurance, during which the Minister awards prizes to the entities. Their award certification is published to the local media. Entities that have been awarded with a certification, are in an advantageous position with regards to their participation in public procurement tenders. They are also eligible to indicate the logo of the certification in their website/ email signatures.

Examples of good practices for which

Cyprus entities have been awarded with a certification, relate to, among others:

• Appointment of Equality Officers, or establishment of an Equality Committee within the entity with the participation of both male and female Employees.

• Applying a “Working Parents Scheme” under which parents have the right for flexible working arrangements after having children (before they reach 18 years of age), in respect of flexible working hours, reduced hours, compressed work week (reduced working days), tele-working.

• Extension of the conveniences provided by the law upon the mother's return to work from Maternity Leave, until the child becomes one year old (i.e., the right to work for one hour less during each workday without any reduction of salary).

• Complementing the Maternity and the Paternity Allowance up to the amount of their salary.

• Temporary movement of a pregnant Employee from a position that requires manual work or increased physical effort, to office duties. Moreover, special working facilities for the last month of pregnancy providing the right to work from home for several days during a week.

• Actions to increase the representation of women in the managerial/leadership positions of the entity.

• Actions to increase the representation of women in the technical departments of the entity with the offering of full time/part time positions as well as flexible working hours and recruitment of trainees.

• Providing mentoring to high performance

female Employees offering them experiences and opportunities for their personal development. Furthermore, organising workshops about “Women in Leadership”, addressed to female Employees in high level positions (or candidates to such positions) with the aim to improve their communication skills and upgrade their professional profile.

• First-day-of-school” (paid) leave granted to working parents in order to be able to accompany their children on the first day at the elementary school.

• Facilitation of participation of working parents in “Child Adaptation Programs” during the first week at kindergarten, without any reduction of salary for the hours of their absence from work.

• Establishing an on-line training platform within the entity, ensuring that every Employee, regardless of gender, family status, work duties or family responsibilities, has access to life-long learning.

• Offering summer school for the Employees' children, organised at the Employer’s premises (the cost being partly subsidized by the Employer), while providing creative time, education and entertainment to children.

• Granting part of the kindergarten/ nursery cost suffered by an Employee, on the proviso that the choice of school allows the response of the Employee to the Employer’s needs and ensuring the Employee’s execution of duties at work.16

Various Governmental Authorities in Cyprus promote Gender Equality. Specifically, the “Gender Equality Committee in Employment and Vocational Training” of Cyprus, has a supportive role for the enforcement of the Cyprus Law 205(I)/2002 on Equal Treatment between Men and Women in Employment and Vocational Training. Its duties are explicitly stated in the Article 23 of the Law. Among its duties, it proceeds with recommendations, it has a consulting, as well as an advisory role in policymaking. It prepares on a yearly basis an Action Plan for the following calendar year, which is included in its Annual Report that is publicly available. It is important to note that the Committee provides consultation and seminars to any interested person for the above-named legislation, as well as it provides guidance to Employers regarding drafting and applying a “Code of Conduct” in their workplace.

Moreover, it accepts complaints by Individuals, which forwards to the “Chief Inspector” for the proper handling. Furthermore, it covers the Lawyer's costs for appeals to the Court, provided that there is sufficient and appropriate evidence based on the Inspector’s report, that gender discrimination existed, according to the provisions of the Law.17

In addition, the “Commissioner for Administration and the protection of Human Rights” of Cyprus (“Ombudsman”), acts as the Equality Body of Cyprus and has the jurisdiction to investigate, with out-of-court nature procedures, complaints of individuals who believe that they have unfavourable treatment in their employment 18 Also, the “Institution of Gender Equality” of

Cyprus, was established by the Presidency of Cyprus in the year 2014 and it is instructed according to a “Mandate “, to promote Gender Equality and eliminate the gender discrimination in Cyprus. It publishes on a yearly basis an Annual Report which states among others its actions taken, its goals, as well as its recommendations19 The Commissioner of the Institution, chairs the “National Mechanism for Women’s Rights” of Cyprus.20

The Institution, strongly recommends in its 2020 Annual Report issued in January 2022, that an independent “Deputy Ministry of Gender Equality” shall be established in Cyprus which shall be the coordinating mechanism of all Cyprus Governmental Authorities that promote Gender Equality and shall also strengthen the role of the Non-Governmental Organizations founded in Cyprus which have a vision at Gender Equality. This recommendation is based on a research study that had been assigned by the Presidency of Cyprus to an Expert.21

Various Non-Governmental Organizations which are non for profit, have been founded in Cyprus, with common aim, achieving Gender Equality. Specifically, the “Mediterranean Institute of Gender Studies “is working to promote the women’s rights and Gender Equality in Cyprus as well as across the EuroMediterranean region through transactional projects22

Moreover “Hypatia”, performs researches and is dedicated to monitor and develop policies promoting Gender Equality.23

Also, the “Cyprus Women’s lobby”, which is a member the European Women’s Lobby, is an umbrella organization. Its members are Non-Governmental Organizations promoting Gender Equality.24 It is also noted that the “National Anti-Poverty Network” of Cyprus, is a network of Non-Governmental Organizations, aiming at the eradication of Poverty and at the elimination of inequalities, including gender discrimination.25

Furthermore, “Fimonoi” promotes Gender Equality and aims at combating corruption. It is publishing on a monthly basis a Newspaper, namely “I apopsi mas/our opinion” at which women can express their opinions and recommendations on all current issues. Furthermore, representatives from Fimonoi organization attend on a regular basis workshops and congresses organized by the United Nations and the European Union.

Fimonoi represents Cyprus at the Whistleblowers International Network.26

It is important to acknowledge that the “European Institute of Gender Equality” (“EIGIE”) which is an autonomous body of the European Union27, has developed the “Gender Equality Index”, which is a tool that measures the progress of Gender Equality within the EU.28 The Index uses a scale of 1 to 100 points, where 1 is defined as total inequality and 100 is for total equality.29

According to the Gender Equality Index of the 2021 edition, the overall score of equality between women and men in the EU is 68 out of 100 points, which implies that the EU has a long way for reaching Gender Equality.30

Despite the fact that there have been small, steady gains of progress every year, with the current pace of progress, Gender Equality will be reached in approximately 60 years in the EU, unless strong measures are applied by the Member States. The coronavirus pandemic poses a threat to the progress.31

Moreover, the War between Russia and Ukraine has as a result not only Micro/Macro Economic massive adverse consequences, but also consequences in the Environment, Health, Culture, Society and in the Gender Equality.

The domains considered for measuring this overall score are “Work”, “Power”, “Knowledge”, “Time”, “Money” and “Health”. Although “Violence“ is also a domain, due to lack of comparable EU data within the Member States, it was not considered in the 2021 edition.32

None of the Member States has achieved full Gender Equality. Sweden and Denmark are the top performers according to the 2021 Gender Equality Index, followed by Netherlands and France. The Member States with the lowest scores are Slovakia, Romania, Hungary and Greece which has the last score.33 However, it is noteworthy that the Vice President of the European Parliament as from 18th January 2022, is a Greek woman.

Regarding Cyprus, with 57 out of 100 points, it ranks 21st within the EU34, nevertheless it cannot be underestimated its significant improvements during the past years, on the basis that since 2010, Cyprus’ ranking has improved by five places within the EU countries and its score was only 38,5 points out of 100, according to the 2005 Gender Equality Index35

Regarding domains relating to the workplace

and education, the below are indicated:

Cyprus performs well in the domain of “Money”, with 82,6 points out of 100 and it performs better in comparison with other Member States, exceeding the EU score by 0,2 points. The domain of “Money” measures gender inequalities in women’s and men’s economic situation as well as in access to financial resources. The income earned by women in Cyprus, is quite lower from the income earned by men. According to the “statistical service “of Cyprus (“CYSTAT”), the average gross monthly earnings relating to all occupations, from Employment Activity, earned by women and men in Cyprus for the third quarter of the year 2021, total to €1.764 and €2.074 and respectively.36

The domain of “Knowledge” measures gender inequalities in educational attainment, participation in education and training over the life course and gender segregation. According to the Knowledge indicators of the 2021 Index, the percentage of graduated women in Cyprus from tertiary education with regards to Universities and Colleges for Short-cycle studies, Bachelor, Master, Doctoral is 39% (at a total population of women), compared to Men that is 31% (at a total population of men), which implies that our women in Cyprus are very well educated. Moreover, the percentage of graduated women in Cyprus exceeds by 13% the percentage of graduated women in the EU. However, despite the overall growth of the Information and Communications Technology (ICT) sector in recent decades and the high

demand for Technology skills in the labour market, the percentage of graduated women in this field is low. As indicated in the 2021 report issued on “Gender Equality in the EU”, the percentage of female graduates in the EU in the ICT field at a total population of women and men, is just over 20%.37 Specifically, according to “Eurostat”, which is the statistical office of the European Union38, it is only 20,27%. Cyprus performs better than the EU, with the rate of 24,5%.39 The EU Digital Education Action Plan for the years 2021-2027 stresses the need to ensure that women are equally represented in digital studies and careers40. It is important to note that our Cyprus National Action Plan of Gender Equality for the years 2019-2023 has actions in order to encourage the participation of women in this sector. The “Human Resource Development Authority “of Cyprus (“ANAD”) has an important role on this matter.41 It is also noteworthy that according to the 2020 EU report issued with the subject “Digitalisation and the future of work”, Cyprus is among the six Member States that the score of women on Internet Skills, is higher than the score of Men. For further information, it is indicated that the other Member States are Finland, Slovenia, Lithuania, Latvia and Bulgaria.42

Cyprus performs also well in the domain of “Work”, with 70,6 points out of 100, slightly lower compared to the EU score of 71.6. The domain of “Work” measures the extent to which women and men can benefit from equal access to employment and good working conditions. According to the Statistical Service

of Cyprus, the number of unemployed women and men in Cyprus (from Employment/ Self Employed Activity) for the 3rd quarter of the year 2021, totals to 16.222 and 15.133 respectively. Furthermore, the number of employed men in all occupations exceeded women by 24.626. At this point, it is important to emphasize that the number of employed women in Cyprus at professional positions, exceeded men by 9.736.43

It is noteworthy that according to Eurostat, the percentage of employed women in Cyprus, in the year 2020, with Information Communications Technology (ICT) education, at a total population of women and men, is 27,5%. Although the percentage is low, it exceeded the comparable percentage of the EU, which is only 17,2%44

Despite the fact that there has been a significant improvement during the past years, gender inequalities are most pronounced in the EU in the domain of “Power”. The domain of “Power” measures gender inequalities in decision-making positions across the political, economic and social spheres. The relevant score of the EU is 55 out of 100 points. Cyprus ranks at the 24th position in the EU with 30 points out of 100. Although improvement is needed in this domain, Cyprus’ progress is substantial, as its score according to the 2005 Gender Equality Index, was only 10,4 out of 100. It is noteworthy that the balanced participation of women in decision-making positions is a priority under our Cyprus National Action Plan of Gender Equality for the years 2019-2023. The fact that the current

president of the House of Representatives of Cyprus is a woman as well as we have Cypriot women Minsters, implies that we follow the guidance given by the EU. Gender stereotypes, which are noticeable even in childhood, are a root cause of gender inequalities which affect all areas of the society.

The domain of “Time” measures gender inequalities in allocation of time spent doing care and domestic work as well as social activities. Cyprus scores at 51,3 points out of 100, compared to the EU score of 64,9. It is further noted that based on the indicators of this domain, the percentage of women in Cyprus doing cooking and/or household, every day is 81% (at a total population of women), compared to men of 27% (at a total population of men). Men shall assist women in family care tasks as well as in household work. On the basis that Cyprus’ score was only 28,6 out of 100 according to the 2005 Gender Equality Index, our Country has shown a great improvement.

Although not work related, it is noteworthy that Cyprus’ best performance in the 2021 Index of Gender Equality between men and women, is the "Access to Health Services” of the domain of “Health”. The score of Cyprus is 98.4 points out of 100, which implies that our women in Cyprus have equal access to health services.

It is crucial to mention that the impact of the coronavirus pandemic threatens the fragile gains achieved in the past. Women may be at risk of losing jobs as well as well as promotions to high level positions, due to care responsibilities. Thrilling at work while managing care responsibilities, is a challenge for women. Measures for working from home/tele-working and flexible working hours, are safeguard actions. Strong measures shall be applied by the policy makers during and after the pandemic.

It is relevant to note that although caring kids at home is unpaid work that is considered as “Social Care” for which its deemed fair value is not considered in Economic Indicators and Statistics, the “European Women’s Lobby”, which consists over 2.000 women’s non-governmental associations and is the largest umbrella women’s network in the EU, recognises the crucial role of “Social Care” of women in the Economy. Without “Social Care”, the Economy cannot survive, as the cared kids will be the future businessman and businesswomen leading the Economy. As a result, the unpaid “Social Care” is considered

as “Feminist Economics”.45

It is noted that since the 1960s, the European Union member countries have pooled resources together in order to finance projects that make a difference to the lives of European citizens.46 It is further noted that the leaders of all European Union countries, the European Parliament and the European Commission have agreed on a “Recovery Plan” in order to help repair the economic and social damage due to the COVID-19 pandemic. A total of €2.018 trillion shall rebuild a post-COVID-19 Europe. Part of this amount is allocated to Member States for Gender Equality matters.47

To conclude, a prosperous and social Europe depends on all of us and it is a joint responsibility. It requires cooperation, teaming, and action from everyone. We shall educate our children from early childhood, inspiring them that all individuals are equal. The teachers, the career advice professionals as well as the parents have an important role on this matter. Our aim and vision shall be making equality between women and men a reality for all Europeans and beyond. Companies, governments, organizations, institutions should be led both by women and men for successful leadership. Studies, researches and history show that women have the willingness and the capabilities. Gender Equality is a Human Right and it strengthens Democracy. Unfortunately, due to the continuing illegal occupation and control of 37% of the Cyprus territory by Turkey, it is not possible to apply the women’s rights and equality provisions in the whole territory.

Special thanks to the Statistical Service of Cyprus (CYSTAT), the Ministry of Labour and Social Insurance, the Representation of the European Commission of Cyprus, the Mediterranean Institute of Gender Studies, Eurostat, the European Institute of Gender Equality (EIGIE), the Institution of Gender Equality of Cyprus, the Gender Equality Committee in Employment and Vocational Training of Cyprus, as well as Fimonoi organization for providing valuable information and guidance. Also Special thanks to all Members of the Corporate Social Responsibility Committee of ICPAC for their support on this Article. 

Statistics

(A) Source: Gender Equality Index of the 2021 edition issued on 28.10.2021

(A)(i) Overall score of Gender Equality of Cyprus compared to the EU score, as well as to the score of other Member States (number of score 1 out of 100. It is clarified that 1 is defined as total inequality and 100 is for total equality).48

Abbreviations

European Union (EU) Denmark (DK) Greece (EL) Italy (IT) Luxembourg (LU) Austria (AT) Slovenia (SI) Belgium (BE) Germany (DE) Spain (ES) Cyprus (CY) Hungary (HU) Poland (PL) Slovakia (SK) Bulgaria (BG) Estonia (EE) France (FR) Latvia (LV) Malta (MT) Portugal (PT) Finland (FI) Czechia (CZ) Ireland (IE) Croatia (HR) Lithuania (LT) Netherlands (NL) Romania (RO) Sweden (SE)

to the 2021 edition49

For statistics that the percentage sums up to 100%, these relate to total population of women and men. For statistics that the percentage does not sum up to 100%, these relate to population of women (separately) and of men (separately).

Share of members of boards in largest quoted companies, supervisory board or board of directors (%)

CY-Women 13% 100%

CY-Men 87%

CY-Women 13% 100%

CY-Men 88%

EU-Women 30% 100% EU-Women 25% 100%

EU-Men 70% EU-Men 75%

Graduates of tertiary education including universities and colleges (%)

CY-Women 39% CY-Women €21.910

CY-Men 31% CY-Men €22.652

EU-Women 26% EU-Women €19.495

EU-Men 25% EU-Men €20.420

Share of board members of central bank (%)

CY-Women 13% 100%

CY-Men 88%

EU-Women 25% 100%

EU-Men 75%

Mean equivalised net income (income after tax and deductions)

CY-Women €21.910

CY-Men €22.652

EU-Women €19.495

EU-Men €20.420

(A)(ii) Statistics from the Gender Equality Index according

Duration of working life (years)

CY-Women 34

CY-Men 41

EU-Women 33

EU-Men 38

People doing cooking and/or household, every day (%)

CY-CY-Women 81%

CY-Men 27%

EU -Women 78%

EU-Men 32%

B) Source: 2021 Report on Gender Equality in the EU 50 Women in the EU spend 62 hours per week caring for children and 23 hours per week doing housework

The Goal is to achieve 50% parity of women in the EU in political decision-making positions, in line with the Substantial Development Goal on Gender Equality

(C) Source: Eurostat (Statistical Office of the European Union) 51

Full Time Employment Rate (%)

CY-Women 49%

CY-Men 62%

EU-Women 41%

EU-Men 57%

Workers doing sporting, cultural or leisure activities outside of their home, at least daily or several times a week (%)

CY-Women 10%

CY-Men 22%

EU-Women 27%

EU-Men 31%

34% of the Europeans believe that gender stereotypes are spread by advertising, while 33% of the Europeans say it occurs in the media

The EU 2021-2027 Digital Action Plan stresses the need to ensure that women are equally represented in digital studies and careers

The below statistics relate to a total population of women and men (100%).

Employed (Employees and Self Employed) Information Communications Technology (ICT) specialists by gender, year 2020 (%) 52

CY- Women 18,1 % 100%

CY-Men 81,9%

EU-Women 18,5% 100%

EU -Men 81,5%

Employed (Employees and Self Employed) persons with Information Communications Technology (ICT) education by gender, year 2020 (%) 52

CY- Women 27,5% 100%

CY-Men 72,5%

EU 27-Women 17,2% 100%

EU 27 -Men 82,8%

and colleges) with

(D) Source: Statistical Service of Cyprus (CYSTAT) 55

Number of Individuals Employed (Employees and Self-Employed) in Cyprus for the 3rd quarter of 2021 56 Individuals of all occupations

1 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12012E/TXT&from=EN

2 https://www.equalitylaw.eu/legal-developments/16-law/77-transposition-of-the-eu-directives-on-gender- equality-and-non-discrimination

3 https://www.equalitylaw.eu/legal-developments/16-law/48-application-of-eu-law

4 https://cyprus.representation.ec.europa.eu/about-us/our-role_en

5 https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/eu-economic-governance-monitoring-prevention-correction/european-semester_ en

https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/eu-economic-governance-monitoring-prevention-correction/european-semester/ european-semester-your-country/cyprus_en

https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/eu-economic-governance-monitoring-prevention-correction/european-semester/ european-semester-timeline_en

6 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52020DC0152&from=EN

7 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52020DC0152&from=EN

8 https://ec.europa.eu/info/policies/justice-and-fundamental-rights/gender-equality/gender-equality-strategy_en

9 http://www.mjpo.gov.cy/mjpo/mjpo.nsf/sectorgend02_el/sectorgend02_el?OpenDocument

10 https://www.equalitylaw.eu/downloads/5466-cyprus-country-report-gender-equality-2021-813-kb

11 The Constitution of the Republic of Cyprus (Το Σύνταγμα της Κυπριακής Δημοκρατίας), Article 28 available at http://www.cylaw.org/nomoi/enop/non-ind/syntagma/full.html

12 http://www.cylaw.org/nomoi/indexes/2002_1_205.html

13 http://www.cylaw.org/nomoi/indexes/2002_1_177.html

14 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32006L0054&from=EN

15 http://www.mlsi.gov.cy/mlsi/dlr/dlr.nsf/reductionofwage_en/reductionofwage_en?opendocument http://www.mlsi.gov.cy/mlsi/dlr/dlr.

16 http://www.mlsi.gov.cy/mlsi/dlr/dlr.nsf/nationalcertificationbody_en/nationalcertificationbody_en?opendocument

17 http://www.eif.gov.cy/mlsi/dl/genderequality.nsf/responsibilities_el/responsibilities_el?OpenDocument

18 http://www.ombudsman.gov.cy/ombudsman/ombudsman.nsf/page07_en/page07_en?opendocument

19 http://www.institutionforgenderequality.gov.cy/equality/equality.nsf/page03_gr/page03_gr?OpenDocument

20 https://domviolence.org.cy/%CE%B5%CE%B8%CE%BD%CE%B9%CE%BA%CF%8C%CF%82-%CE%BC%CE%B7%CF%87%CE%B1%CE%BD%CE%B9%CF%83%CE%BC%CF%8C%CF%82%CE%B3%CE%B9%CE%B1-%CF%84%CE%B1-%CE%B4%CE%B9%CE%BA%CE%B1%CE%B9%CF%8E%CE%BC%CE%B1%CF%84%CE%B1/

21 http://www.institutionforgenderequality.gov.cy/equality/equality.nsf/All/D22C379C3BC77BE5C22587BF00284196/$file/%CE%95%CE%A4%CE%97%CE%A3%CE%99%CE%91%20 %CE%95%CE%9A%CE%98%CE%95%CE%A3%CE%97%202020.pdf

22 https://medinstgenderstudies.org/

23 https://www.hypatia.org.cy/page2.html

24 https://www.womenlobby.org/Cyprus-Women-s-Lobby

25 https://www.eapn.eu/national-anti-poverty-network-cyprus-eapn-cyprus/

26 https://fimonoi.com/2022/01/28/to-idruma-fimonoi/

27 https://eige.europa.eu/about

28 https://eige.europa.eu/gender-equality-index/about

29 https://eige.europa.eu/about/projects/gender-equality-index-2021-focus-health

30 https://eige.europa.eu/gender-equality-index/2021

31 https://eige.europa.eu/in-brief

32 https://eige.europa.eu/gender-equality-index/2021/domain/violence

33 https://eige.europa.eu/gender-equality-index/compare-countries

34 https://eige.europa.eu/gender-equality-index/2021/country/CY

35 Refer at the comparative figures at: https://eige.europa.eu/publications/cyprus-gender-equality-index-2015

36 https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Flibrary.cystat.gov.cy%2FNEW%2FAV_MONTHLY_EARNINGS-Q103_321-EN-291221.xls&wdOrigin=BROWSELINK

37 https://ec.europa.eu/info/sites/default/files/aid_development_cooperation_fundamental_rights/annual_report_ge_2021_printable_en_0.pdf

38 https://ec.europa.eu/eurostat/web/main/about/who-we-are

39 Applied EU 27 data available at: https://ec.europa.eu/eurostat/databrowser/view/EDUC_UOE_GRAD02__custom_1949128/bookmark/table?lang=en&bookmarkId=26435820ff7e-4c5f-a23f-5bb4f3fc4ee7

https://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do

40 https://education.ec.europa.eu/tr/node/1518

41 http://www.mjpo.gov.cy/mjpo/mjpo.nsf/sectorgend02_el/sectorgend02_el?OpenDocument&ExpandSection=3#_Section3 https://www.anad.org.cy/wps/portal/hrda/hrdaExternal/!ut/p/z1/04_Sj9CPykssy0xPLMnMz0vMAfIjo8ziPTw8HD0s_Q383F3DjAwCLVydTV2CLY39XUz0w_Wj9KOASgxwAEcD_ YLsbEUAbztbrg!!/dz/d5/L2dBISEvZ0FBIS9nQSEh/

42 https://eige.europa.eu/publications/gender-equality-index-2020-digitalisation-and-future-work

43 https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Flibrary.cystat.gov.cy%2FNEW%2FLAB-LFS-Q321-EN-291121.xls&wdOrigin=BROWSELINK,at Clarification for the positions that are considered as “Professional Positions”, available at: https://www.cystat.gov.cy/el/Classifications

44 https://ec.europa.eu/eurostat/databrowser/view/ISOC_SKI_ITSEX/bookmark/table?lang=en&bookmarkId=c9885217-7410-463b-87c7-d8400f7dc437&page=time:2020

45 https://womenlobby.org/

https://womenlobby.org/IMG/pdf/purplepact_publication_web.pdf

46 https://cyprus.representation.ec.europa.eu/strategy-and-priorities/eu-budget-cyprus_en

47 https://cyprus.representation.ec.europa.eu/strategy-and-priorities/eu-recovery-plan_en https://ec.europa.eu/info/strategy/recovery-plan-europe_en

48 https://eige.europa.eu/gender-equality-index/2021/CY

49 Select each domain from the dropdown list available at: https://eige.europa.eu/gender-equality-index/2021/domain/work/CY

50 https://ec.europa.eu/info/sites/default/files/aid_development_cooperation_fundamental_rights/annual_report_ge_2021_printable_en_0.pdf

51 https://ec.europa.eu/eurostat/web/main/about/who-we-are

52 https://ec.europa.eu/eurostat/databrowser/view/ISOC_SKS_ITSPS__custom_1954599/default/table?lang=en

53 https://ec.europa.eu/eurostat/databrowser/view/ISOC_SKI_ITSEX/bookmark/table?lang=en&bookmarkId=c9885217-7410-463b-87c7-d8400f7dc437&page=time:2020

54 Applied EU 27 data available at: https://ec.europa.eu/eurostat/databrowser/view/EDUC_UOE_ENRT03__custom_1891517/bookmark/table?lang=en&bookmarkId=a25145a9f519-40d1-a340-290485fb79c2

55 https://www.cystat.gov.cy/el/KeyFiguresList?s=42

56 https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Flibrary.cystat.gov.cy%2FNEW%2FLAB-LFS-Q321-EN-291121.xls&wdOrigin=BROWSELINK,at

57 https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Flibrary.cystat.gov.cy%2FNEW%2FEARNINGS-ECON_ACT-A2010_20-EN-280921.xls&wdOrigin=BROWSELINK

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* IFAC Announces Plan to Revise International Education Standards for Sustainability Reporting and Assurance

— IFAC announced plans to revise the International Education Standards (IES) to bring greater focus to sustainability reporting and assurance competence and recognize the evolving role of professional accountants in this important area. IFAC anticipates launching a public consultation on proposed revisions to the standards in March 2024, marking a significant milestone for the global accountancy profession’s journey to advance sustainability disclosure standards that respond to the needs of investors and other stakeholders. As IFAC commits to revising the IESs, in partnership with the IFAC International Panel on Accountancy Education, it encourages professional accountants to seize the opportunity to enhance their sustainability knowledge and expertise.

* The Role Accounting Technicians Can Play in the Global Accountancy Ecosystem — Accounting Technicians (ATs) are part of the global accountancy profession, working across all sectors in financial management roles that are essential. For guidance on implementing an AT program, visit IFAC’s dedicated AT resource page!

• IFAC Offers Digital Access to International Accountancy Standards (IAASB, IESBA, IPSASB) – eIS; Accountancy Education (IES); and the Statements of Membership Obligations (SMOs). Explore the platforms & resources!

IMPACT #2: STRONG AND SUSTAINABLE PRIVATE AND PUBLIC SECTOR ORGANIZATIONS

• Professional Accountants’ Skillset Essential to Organizational Transformation — As businesses grapple with uncertainties and navigate the complexities of digital transformations, sustainability and climate transitions, organizational leaders equipped with the unique skill set of professional accountants in business (PAIBs) are essential. Informed by IFAC’s PAIB Advisory Group’s last meeting, a new article from IFAC details three paths through which professional accountants have led organizational transformation that can be a guide for PAIBs and businesses globally.

• Building Trust in Sustainability Reporting: The Urgent Need for Integrated Internal Control — IFAC has published Building

Trust in Sustainability Reporting: The Urgent Need for Integrated Internal Control to address the demand for high-quality sustainability reporting and to prepare professional accountants for mandatory international and jurisdictional reporting and assurance requirements. This analysis highlights how companies can integrate sustainability information within their existing internal control and governance frameworks. Professional accountants are ideally positioned to leverage existing internal control frameworks and apply them to sustainability information— enhancing both data quality and the connectivity of sustainability and financial reporting.

IMPACT #3: STRONG AND SUSTAINABLE FINANCIAL MARKETS AND ECONOMIES

• New IFAC and CPA Canada Report Explores the Central Role of Whistleblower Protection in Supporting a Speak-Up Culture and Championing Whistleblowers’ Protection | Publication d’un rapport de l’IFAC et de CPA Canada sur le rôle essentiel de la protection des lanceurs d’alerte dans une culture de prise de parole — In their new joint report, Understanding Whistleblower Protection: Laws, Practices, Trends and Key Implementation Considerations, IFAC and CPA Canada offer evidence-based research and practical perspectives on whistleblower protection legislation. The report, developed with contributions from the Whistleblowing International Network, provides professional accountancy organizations (PAOs), professional accountants, relevant authorities, and policymakers globally with insights on current issues in adopting and implementing whistleblower protection legislation, and key policy considerations to help ensure that local frameworks are fit for purpose.

• IFAC Supports New IAASB Audit Standard for Less Complex Entities and Encourages Jurisdictions to Consider Adoption — IFAC congratulates the IAASB on its new standalone standard for audits of less complex entities. The International Standard on Auditing for Audits of Financial Statements of Less Complex Entities, known as the ISA for LCE, is proportionate and tailored to the nature and circumstances of audits of smaller and less complex entities. Built on the foundation of the International Standards on Auditing (ISAs), it contains all the requirements necessary to obtain reasonable assurance. Now that the ISA for LCE has been issued, IFAC

encourages its member organizations to adopt or advocate for adoption of the ISA for LCE in their jurisdictions or promote voluntary use of the standard.

• IFAC Supports New ISSB Knowledge Hub — As the global voice of the accountancy profession, IFAC has supported the establishment of the International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline of sustainability disclosures—now endorsed by IOSCO and ready to be adopted and implemented around the world. The IFRS Foundation’s new Knowledge Hub is being launched to help fill the “knowledge gaps” which must be addressed in the short-, medium- and long-term to achieve the goal of a harmonized system for highquality sustainability-related financial information, a global baseline established via the ISSB Standards. Education materials, like the forthcoming IFRS Foundation e-learning curriculum and the content IFAC and others contribute to the IFRS Foundations new Knowledge Hub, will assist professional accountants, and others, in applying IFRS S1 and IFRS S2 and can provide a starting point for IFAC member organizations who plan to promote sustainability competency and learning amongst their professional membership.

• Pathways to Accrual – IFAC launched a digital platform, providing a central access point to resources helpful for governments and other public sector entities planning and undertaking a transition from cash to accrual accounting including adopting and implementing International Public Sector Accounting Standards (IPSAS). The platform will continue to improve and adapt with resources and feedback.

IMPACT #3: STRONG AND SUSTAINABLE FINANCIAL MARKETS AND ECONOMIES

IFAC’s News Page: Please save for your continuous reference IFAC’s news page. The news page will feature the latest updates and publications released by IFAC. IFAC’s Global Knowledge Gateway: Please save for your continuous reference IFAC’s Global Knowledge Gateway for insights, resources, and tools from leading voices in accountancy and business. New articles on the Gateway:

• Support is Strong for Speak-Up Culture and Whistleblower Protection at Meeting of Global Experts

• IFAC Technology Matrix

• The Uses of Artificial Intelligence for SMPs

• Navigating Transformation: The Impactful Leadership of Accountants

• Strengthening Accountancy and Improving Collaboration in Emerging Economies Through MOSAIC

• Understanding the Voluntary Carbon Markets

• Islamic Finance Showcases Opportunities to Achieve SDGs

• 3 Actions for Auditing Educators to Prepare for the Proposed New Sustainability Assurance Standard, ISSA 5000

• Women Take the Lead: Get to Know Accounting's Changemakers

EVENTS

IFAC’s Events Page: Please save for your continuous reference IFAC’s events page. The Events page will feature free events held by IFAC, the independent standard-setting boards, IFAC member organizations, and the Forum of Firms. If you have an upcoming event, you would like included on the Events page, please e-mail me.

INTERNATIONAL FOUNDATION FOR ETHICS AND AUDIT (IFEA)

International Foundation for Ethics and Audit (IFEA)

The International Foundation for Ethics and Audit (IFEA or the Foundation) is a non-profit organization that supports high-quality, international standard setting in ethics, audit,

and assurance in the public interest. The Foundation fulfills its mission through its two standard-setting boards, the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants.

• Questions & Answers on the International Foundation for Ethics and Audit — Stakeholders are encouraged to visit the IFEA’s website and Q&A to learn more about the Foundation.

INTERNATIONAL ETHICS STANDARDS BOARD FOR ACCOUNTANTS® (IESBA®)

News

• IESBA Announces Successful Completion and Approvals of Sustainability Exposure Draft And Tax Planning-Related Ethics Standard — IESBA completed and approved an Exposure Draft on Ethics and Independence Standards for Sustainability Reporting and Assurance and the final Ethics Standard for Tax Planning and Related Services. Other major achievements of the IESBA December Board meeting include the approval of an Exposure Draft on the Use of Experts and of the IESBA’s Strategy and Work Plan for 2024-2027.

* The IESBA voted and approved the proposed new International Ethics Standards for Sustainability Assurance (including International Independence Standards) (“IESSA”), and proposed revisions to the International Code of Ethics for Professional Accountants (“the Code”) on sustainability reporting. The Exposure Draft will contain proposed independence standards for use by all sustainability assurance practitioners regardless of whether they are professional accountants, and specific ethics provisions relevant to sustainability reporting and assurance. The IESBA intends to release the Exposure Draft in late January 2024.

* IESBA approved final revisions to the Code to address tax planning and related services. These revisions respond to heightened public concerns about ethical behavior in tax planning in light of highprofile revelations about tax avoidance schemes in several jurisdictions in recent years. Pending certification by the Public Interest Oversight Board (“PIOB”), the final pronouncement is expected to be issued by mid-April 2024.

• IESBA Staff Releases Q&As To Support Adoption And Implementation Of International Independence Standard On Group Audits — IESBA staff released a questions and answers (Q&A) publication on the pronouncement Revisions to the Code Relating to the Definition of

Engagement Team and Group Audits. The revisions to the Code address holistically the various independence considerations in an audit of group financial statements. The revisions also deal with the independence and other implications of the changes to the definition of an engagement team in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to align with changes to the definition of the same term in the International Auditing and Assurance Standards Board’s (IAASB) International Standards on Auditing (ISAs) and International Standards on Quality Management (ISQMs). The Q&A publication is designed to highlight, illustrate, or explain aspects of the revisions in the Code and is intended to complement the Basis for Conclusions for the final pronouncement. It will assist firms, national standards setters, and professional accountancy organizations in adopting and/or implementing the revisions.

• Now Available: IESBA Handbook 2023 Edition — IESBA released the 2023 Handbook of the International Code of Ethics for Professional Accountants (including International Independence Standards). This handbook replaces the 2022 edition and incorporates the following revisions: revisions relating to (a) the definition of engagement team, and (b) group audits; and the upcoming expiry of the “jurisdictional provision” addressing long association of personnel with an audit client. These changes are effective beginning on December 15, 2023.

* The back of the 2023 Handbook contains the IESBA-approved revisions to the Code, which are not yet effective. These revisions will become effective in December 2024 and include: revisions to the definition of a public interest entity (PIE); changes to the definitions of “audit client” and “group audit client” in the Glossary arising from the approved revisions to the definitions of

listed entity and PIE; and the technologyrelated revisions.

Effective Dates

• IESBA Strengthens and Clarifies Independence Requirements for Group Audits — IESBA released final revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to address holistically the various independence considerations in an audit of group financial statements. The pronouncement will be effective for audits of financial statements and group financial statements for periods beginning on or after December 15, 2023, with early adoption permitted.

• Public Interest Entities (PIE) related revisions — this pronouncement will be effective for audits of financial statements for periods beginning on or after December 15, 2024. Early adoption is permitted.

Visit IESBA’s dedicated Strengthening International Independence Standards webpage for further guidance and resources on NAS, Fee-related, and PIE revisions!

• IESBA Strengthens Global Ethics Standards To Respond To Transformative Effects Of Technological Innovation

— IESBA released final revisions to further increase the Code’s robustness and expand its relevance in a world being fundamentally reshaped by rapid technological advancements and accelerating digitalization. The revisions will guide the ethical mindset and behavior of professional accountants in both business and public practice as they take advantage of the opportunities created by technology and adapt to new technology. Revisions will be effective as of December 15, 2024. Early adoption is permitted.

Upcoming Meeting

• March 18—20, 2024

INTERNATIONAL AUDITING AND ASSURANCE STANDARDS BOARD (IAASB)

• IAASB Issues Guidance For Assurance Practitioners

When Citing IFRS Accounting Standards — IAASB has issued guidance to help stakeholders understand how to reference IFRS Accounting Standards to follow recent updates to the IFRS Foundation® Trade Mark Guidelines. The IAASB’s new guidance clarifies how auditors or practitioners should refer to the IFRS Accounting Standards in their reports. The alert also describes changes that the IAASB intends to make to future editions of the IAASB handbook to address existing references to the IASs and IFRSs.

• New Standard For Audits Of Less Complex Entities

Issued By IAASB — IAASB published the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities, known as the ISA for LCE. The ISA for LCE is a standalone global auditing standard designed specifically for smaller and less complex businesses and organizations. Built on the foundation of the International Standards on Auditing (ISAs), audits performed using this standard provide the same level of assurance for eligible audits: reasonable assurance. The standard is effective for audits beginning on or after December 15, 2025 for jurisdictions that adopt or permit its use. All supporting materials can be accessed on the IAASB website: iaasb.org/ISAforLCE. IFAC encourages our member organizations to consider translating the standard into local languages to support adoption and implementation.

• NEW IAASB RESOURCES ALERT: EXPLORE ISSA

5000 FAQ ON MATERIALITY — As part of its intensive outreach campaign across the globe, the IAASB has heard requests from a range of stakeholders to provide additional information on materiality matters to better help them navigate the recently proposed International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. Accordingly, a comprehensive set of Frequently Asked Questions (FAQs), The Application of Materiality by the Entity and the Assurance Practitioner, has been developed. The comment period for proposed

ISSA 5000 was open until December 1, 2023.

• New Edition Of The IAASB Handbook Now Available On The IAASB Website & For Print Orders — The IAASB has released the 2022 edition of the Handbook of International Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements. Volumes 1, 2 and 3 of the handbook can be downloaded from the IAASB website, where users can also order print copies of the three-volume handbook. The vendor for the e-International Standards (eIS) online platform is experiencing technical difficulties in finalizing the IAASB eIS handbook. In the interim, please refer to the PDF versions of the handbook. We apologize for any inconvenience caused.

Effective Dates

• IAASB Quality Management Standards — effective date was December 15, 2022. Explore more on the Quality Management Standards by also accessing IFAC’s dedicated Quality Management page to view articles, webinars, videos, implementation guides and more resources!

• International Standard on Auditing 600 (Revised) — effective for audits of group financial statements for periods beginning on or after December 15, 2023. The Basis for Conclusions and a Factsheet are available to support implementation.

Upcoming Meeting

• March 18—21, 2024

INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS BOARD® (IPSASB®)

News

• IPSASB eNews December 2023

• Worldwide Search Launches For Volunteer Members

To Serve On The IPSASB — A worldwide search has launched for volunteers to serve as members on the International Public Sector Accounting Standards Board (IPSASB). The initial-term of service for these volunteers will span three years, commencing on January 1, 2025. Candidates will ideally have a public sector background, with experience in standard setting and/or sustainability reporting. Out for comment now, the IPSASB’s draft Strategy and Work Program 20242028 proposes a shift from developing new standards towards maintaining the IPSAS suite of standards and embeds the Board’s work in public sector sustainability reporting. Volunteers who can contribute to the changing scope and focus of the Board’s work are especially sought. English proficiency (both written

and oral) is essential, as this is the language in which the IPSASB operates, although nominations from jurisdictions where English is not the predominant language, are encouraged. Nominations from all regions of the world are encouraged, with a particular emphasis on qualified candidates from both Asia and Europe. The deadline for submitting applications is January 31, 2024. Please see the Call for Nominations for more details and information on how to apply.

• IPSASB Issues IPSAS 49, Retirement Benefit Plans

— IPSASB has issued International Public Sector Accounting Standard® (IPSAS®) 49, Retirement Benefit Plans. IPSAS 49 establishes comprehensive accounting and reporting requirements for the financial statements of retirement benefit plans, with participants comprising current and former public sector employees and other eligible members. The new pronouncement will bring increased transparency and accountability to these

public sector entities, ensuring they can fulfill their obligations to employees and other eligible participants who are members of the retirement benefit plan. The effective date of IPSAS 49 is January 1, 2026, with earlier application permitted.

• IPSASB Issues Updated Chapters of Conceptual Framework — IPSASB has published an updated chapter of its Conceptual Framework, which establishes the concepts that are applied in developing IPSAS and Recommended Practice Guidelines (RPGs) and are applicable to the preparation and presentation of public sector entities’ general purpose financial reports. The updated chapter, Chapter 3, Qualitative Characteristics, completes the limited scope project to improve its Conceptual Framework for Financial Reporting by Public Sector Entities, which also included: Chapter 5, Elements in Financial Statements and Chapter 7, Measurement of Assets and Liabilities in Financial Statements. To access the updated Conceptual Framework chapters, the summary At-a-Glance document, webcast and a related Staff Questions and Answers document visit the IPSASB website.

• IPSASB Consults On 2024-2028

Strategy and Work Program — IPSASB has opened a consultation to hear stakeholder feedback on its proposed strategy and work program for the next five years. The IPSASB’s work during 2019-2023 has addressed key gaps in the IPSAS literature which now allows for a rebalancing of its Financial Reporting Work Program towards the maintenance of IPSAS. The IPSASB proposes to put a post-implementation review process in place and to establish an Application Panel to support not only existing IPSAS users, but the much larger group of stakeholders expected to be using the IPSASB Standards by 2030. The new strategy assumes that the IPSASB moves ahead with its decision to develop International Public Sector Sustainability Reporting Standards, an initiative begun in 2023 to help equip governments and other public sector entities to provide better transparency, accountability, and comparability of their efforts to combat the climate crisis and other sustainability challenges. To access the Consultation and its summary

At-a-Glance document, or to submit a comment, visit the IPSASB website. Comments are requested by February 15, 2024.

• IPSASB Begins Development of Climate-Related Disclosures

Standard for The Public Sector — Following a scoping and research phase, the IPSASB has decided to move forward with the development of a public sector specific Climate-Related Disclosures standard and has published a project brief for this major new piece of work. Reporting on climate change is one of the most important issues in sustainability reporting, which also encompasses environmental, social and governance issues.

Open for Comment

IPSASB Consults On 2024-2028 Strategy and Work Program — IPSASB has opened a consultation to hear stakeholder feedback on its proposed strategy and work program for the next five years. To access the Consultation and its summary At-a-Glance document, or to submit a comment, visit the IPSASB website. Comments are requested by February 15, 2024.

Effective Dates

• IPSAS 47, Revenue; effective January 1, 2025 (Earlier application is permitted)

• IPSAS 48, Transfer Expenses; effective January 1, 2025 (Earlier application is permitted)

• IPSAS 45, Property, Plant, and Equipment; effective January 1, 2025 (Earlier application is permitted)

• IPSAS 46, Measurement, effective January 1, 2025 (Earlier application is permitted)

• IPSAS 44, Non-current Assets Held for Sale and Discontinued Operations; effective January 1, 2025 (Earlier application is permitted)

• IPSAS 43, Leases; effective January 1, 2025 (Earlier application is permitted)

• IPSAS 49, Retirement Benefit Plans, effective January 1, 2026 (earlier application is permitted)

Upcoming Meeting

• March 12—15, 2024

IFRS Foundation

View the IFRS Foundation’s monthly summaries here.

JOIN ICPACS Mentors' Programme

ICPAC, always a pioneer and close to its members, is continuing with great success to offer the Mentors' programme. This innovative, professional development programme, assists in offering different perspectives in our challenging profession, enables new opportunities to be explored and builds strong relationships amongst members. Through participation in this programme, both Mentors and Mentees will gain great benefits. 26 experienced Mentors from the profession in various industries are participating in the programme and will be happy to share their knowledge, expertise and support to Mentees who register.

The Mentors' programme is offered to ICPAC's members for FREE. For more information and registration, please scan the QR code below:

VISION

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A model professional body, recognized by the state and the society as the primary stakeholder for the accountancy profession and the economy in general, instilling confidence, credibility and value”