Cypriot Tax Regime Most Attractive In Europe

by Ulrika Lomas, Tax-News.com, Brussels

23 February 2009

Cyprus has the most attractive tax regime in Europe, finds a recent KPMG poll of businesses across Europe.

Cyprus was rated as the most attractive tax regime (with the net attractiveness score of 90%), followed by Ireland, Switzerland and Malta. The net attractiveness score for Estonia was 71% and for Finland, rated number six, the net score was 66%. "As can be seen from the final ranking, smaller countries tend to have more attractive tax environments. In those countries, the state is more motivated to create a simple and efficiently managed tax system to attract investors", commented Joel Zernask, Tax Manager at KPMG Baltics AS.

The names of such large member-states of the European Union as the UK, France, Poland, Spain, Germany and Italy can be found in the lower part of the ranking table having received more negative scores than positive ones. The least attractive tax regime was that of Greece with the net attractiveness score as small as 14%.

According to Joel Zernask, the results of the survey indicate clearly that a low tax rate alone does not play a decisive role in making a tax regime attractive to businesses when the country's tax legislation is complex and unstable. For example, based on the opinions of local companies, Latvia and Lithuania were ranked only 16th and 17th although tax rates in those countries are lower than in most of other EU member states.

KPMG interviewed more than 400 tax professionals from companies across Europe. The survey also showed that businesses across Europe consider unattractive tax regimes as a serious hindrance to a company’s competitiveness in the EU market.

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