The agreement was signed in the Seychelles last week by the Seychelles' Minister for Economic Planning and Employment, Jacquelin Dugasse, and the Cypriot Minister for Finance, Michalis Sarris.

The agreement comes soon after the Seychelles signed a double taxation avoidance agreement with Belgium, and is being seen by the government of the Seychelles as providing for a second important avenue of investment from Europe to the Indian Ocean jurisdiction.

“The signing is for us in Seychelles very important as it provides the framework which will enable businesses in our two countries to exploit the business ties and cooperation which exist,” Minister Dugasse commented after the formalities had been completed.

The bulk of any new investment is expected to originate initially from Cyprus, but Dugasse argued that there is no reason why investors in the Seychelles could not also capitalise on the agreement.

Cyprus has also shown "keen interest" in starting negotiations towards a a Bilateral Investment Promotion and Protection Agreement.

The Seychelles has Double Tax Agreements in force with China, South Africa, Indonesia, Thailand, Oman, Malaysia, Namibia and Zimbabwe. Negotiations are said to have been concluded with Russia, Botswana, Vietnam, Malaysia, and Egypt.

Discussions are also underway with Tunisia, Cyprus, Malta, India and the Czech Republic.

The Government sees such treaties as being an important part of its scheme to develop as a key financial hub in the Indian Ocean, and is actively negotiating more treaties with a number of its trading partners.

Prior to the agreement, Cyprus had a network of 32 double tax agreements in place, covering 40 states, including all European Union members. Others have been signed but are awaiting ratification.