After the 2013 banking crisis and the scrutiny on Cyprus’ business deals with Russia, Cyprus now comes under peer review as per the Financial Action Task Force (FATF) an initiative established by the OECD.
Cyprus’ first peer review took place in 2013 and the OECD published its supplementary report in October 2015 called “phase 2”. Peer reviews are renowned for their no nonsense approach to tax reporting. Even if a company is 100% compliant in most areas, non-compliance for only one area means getting an overall score of being entirely non-compliant.
In 2013, Cyprus was found to be fully compliant in five areas, largely compliant in one and partially compliant in two. However it was rated “non-compliant” overall because it failed on two categories:
Availability of accounting information.
Access to such information.
In 2015, Cyprus rating was upgraded to “largely compliant” overall as a result of an overhaul of the Registrar of Companies and now remains fully compliant in seven out of ten areas and mostly compliant in the remaining three sections.
Government officials have not reported this improvement and the changes have remained out of the media. Perhaps because the term “largely compliant” still doesn’t instil the confidence that perhaps it should. The best way to gain trust is to come clean about any shortcomings and take steps to improve it.