Christoforos Ioannou: The reform constitutes a crucial step in modernising Cyprus’ tax framework

Christoforos Ioannou, General Manager of the Cyprus Fiduciary Association (CYFA), has shared his insights on the future of Administrative Services, the evolving regulatory landscape, Cyprus’ international reputation and the opportunities that lie ahead for ASPs.

From the impact of proposed tax reforms to the challenges posed by geopolitical uncertainty, he outlines how CYFA is working to support its members and foster a modern, transparent and competitive business environment.

The fiduciary profession is changing rapidly. What do you anticipate as the next big shift for Administrative Service Providers (ASPs) and how can Cyprus position itself as a leader in the sector?

The ASP industry in Cyprus has been evolving due to changes with its clientele, sanctions, the offering of new services, increased regulatory requirements and the digital transformation. Even though no major changes are expected, the next big challenge will concern actions that need to be taken for the industry to adapt to the new business era.

Additionally, social and governance factors will probably play a more prominent role in administrative services. Cyprus can position itself as a leader by investing in developing clear and robust frameworks that align with international standards and by promoting the jurisdiction as a transparent and innovative business hub. Collaborating with regulatory bodies and professional associations will be key in navigating this transformation.

You’ve previously spoken about the decline in Cyprus’ reputation as a business hub due to its tarnished image. What specific measures do you believe need to be implemented to rebuild trust and confidence, both locally and internationally?

To rebuild trust, Cyprus must adopt a multi-faceted approach, focused on transparency, regulatory compliance and strategic communication. This could involve launching public awareness campaigns to highlight positive developments within the country’s financial and business sectors and encouraging public-private partnerships to promote the consistent application of best practices.

It is equally important to showcase the success stories of reputable businesses operating in Cyprus, as a means of countering past negative perceptions and restoring confidence. Aligning with EU and global standards will also be key to this effort. Cyprus already possesses several advantages that can help reverse reputational damage and further strengthen its standing as an international business centre.

I firmly believe that, with our professional expertise, technical know-how and strong entrepreneurial drive, we are well-positioned to continue advancing for the benefit of the country’s economy.

ASPs face increasing costs relating to compliance and regulation. How do you see firms in the industry managing these challenges, and what role can CYFA play in supporting its members?

Firms are addressing compliance challenges through a multi-pronged approach. They are investing in technology to automate compliance processes, reduce the risk of human error and improve efficiency, while some are consolidating their operations, with smaller firms merging with larger ones to benefit from shared resources and enhanced capabilities.

Strong emphasis is being placed on staff training, ensuring that professionals stay updated on regulatory changes and that proper compliance systems and governance are in place. CYFA plays a crucial role by advocating for proportionate regulation to reduce the administrative burden, facilitating discussions with industry stakeholders to ensure the practical implementation of laws, providing training and supporting firms in adopting best practices.

Dealing with compliance management is not an easy task and it requires huge efforts and commitment. However, it appears that the industry has realised the potential benefits of adopting a compliance culture and is working towards achieving this goal.

On the issue of consolidation, do you foresee this benefiting smaller firms, or will it be primarily advantageous to larger, more established ASPs?

While consolidation offers advantages such as cost-sharing and improved operational efficiency to all firms, regardless of size, it is usually more likely to favour the more established firms. They have the financial strength to absorb compliance costs, invest in technology and expand globally.

At the same time, smaller firms have every opportunity to benefit through their engagement with larger firms and the forging of strategic alliances, by specialising in niche services that enable them to differentiate and by leveraging technology to streamline operations and reduce costs.

How do you view the recent proposed tax reforms?

They constitute a crucial step in modernising Cyprus’ tax framework, ensuring that it remains competitive while aligning with international standards. Key elements appear to include adjustments to Corporate Tax (potential changes aimed at reinforcing Cyprus’ status as a prime business destination), stronger anti-avoidance measures (bringing the system in line with EU and OECD regulations to enhance transparency and prevent tax abuse) and investment incentives (targeted measures to attract high-value foreign investment, particularly in innovation-driven sectors). In my opinion, striking the right balance is critical as overly aggressive tax hikes or stringent regulations could erode Cyprus’ competitive edge, discourage FDI and stifle economic growth.

On the other hand, well-structured incentives and tax adjustments could strengthen the country’s position as a leading business hub. The Government must ensure that reforms are not only compliant with international standards but also foster a stable, simple and predictable tax environment that will support and allow long-term economic expansion.

To what extent do you expect the creation of a Single Supervisory Authority to be effective in the supervision of the Administrative Services sector in Cyprus?

The Administrative Services industry is undoubtedly one of the country’s main economic pillars and has been a driver of growth for decades. It is also currently one of the few industries that is so heavily regulated, with firms facing very strict compliance frameworks and controls by their respective regulators.

The discussion around a Single Supervisory Authority, its effectiveness and/or whether this is the best way forward is anything but straightforward. Moreover, a substantiated response cannot be adequately provided as the Government has yet to outline concrete plans or reveal how such an Authority will function in practice.

Any proposal should, in principle, aim at harmonising supervision in line with MONEYVAL’s recommendations, apply to all sectors of the economy covered under AML Laws and enhance regulatory oversight without limiting growth. Furthermore, its effectiveness will depend on key factors such as clear mandates, adequate resources and collaboration with industry stakeholders to identify viable improvements.

How do you anticipate US President Donald Trump’s policies and broader geopolitical shifts impacting the business community in Cyprus?

Geopolitical shifts, including US policies under Trump, trade wars and EU-US relations, can affect Cyprus in several ways. Among others, the impact on the financial sector could come through increased restrictions and compliance challenges while FDI could be affected by altering global investment flows, impacting our country’s role as a business hub.

Therefore, as the world is currently experiencing great uncertainty, it is vital for Cyprus to identify ways of mitigating risk, diversifying its economic partners, strengthening EU ties and positioning itself as a stable investment destination. I believe that Cyprus can successfully overcome any turbulence that may arise.

What are the specific goals you’ve set for CYFA in the coming years, and what steps are you taking to achieve these objectives, while fostering collaboration with other industry bodies?

CYFA’s primary goals centre on advocacy, raising industry awareness, sector development and education. Its key objectives include strengthening collaboration with regulators and other industry stakeholders to help shape effective policies, while also enhancing public awareness and ensuring the long-term viability of the sector. A major focus is the international promotion of Cyprus as a reputable hub for financial and corporate services.

At the same time, CYFA is encouraging digital transformation within the ASP sector to drive greater efficiency and regulatory compliance. Supporting its members through targeted training and knowledge-sharing initiatives is another key pillar.

To achieve these goals, we are actively pursuing strategic partnerships, advancing member interests, collaboration and continuous dialogue with industry stakeholders to cultivate a robust and competitive administrative services sector.

The CYFA Board:

Pictured from left to right are: Costas Christoforou (President,) Antonis Pantechis (Member,) John Diola (Member,) Elina Kythreotou (Adminstrator,) Tasos Michael (Member,) George Hadjipavlou (Member,) Andreas Mercouri (Treasurer,) Anna Charalambous (Member,) Charalambos Nicolaides (Member,) Marina Pittalis (Vice-President) and Polis Themistokleous (Member). There are also four board members not included in the photo: Andreas Marangos (Secretary,) Andrea Kalorkoti (Member,) Constantinos Meivatzis (Member) and Melina Karaolia (Member).

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