Doing Business 2020 Cyprus Economy Profile Cyprus Page 1 Doing Business 2020 Cyprus Economy Profile of Cyprus Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Cyprus About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Cyprus Ease of Doing Business in DB RANK DB SCORE Region Europe & Central Asia Cyprus Income Category High income 54 Population 1,189,265 73.4 City Covered Nicosia Rankings on Doing Business topics - Cyprus 21 29 31 50 50 75 71 80 125 142 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 92.0 64.2 78.4 67.9 60.0 76.0 85.5 88.4 48.6 72.5 Starting a Business (rank) 50 Getting Credit (rank) 80 Trading across Borders (rank) 50 Score of starting a business (0-100) 92.0 Score of getting credit (0-100) 60.0 Score of trading across borders (0-100) 88.4 Procedures (number) 5 Strength of legal rights index (0-12) 7 Time to export Time (days) 6 Depth of credit information index (0-8) 5 Documentary compliance (hours) 2 Cost (number) 5.6 Credit registry coverage (% of adults) 0.0 Border compliance (hours) 18 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 81.4 Cost to export Documentary compliance (USD) 50 Dealing with Construction Permits (rank) 125 Protecting Minority Investors (rank) 21 Border compliance (USD) 300 Score of dealing with construction permits (0-100) 64.2 Score of protecting minority investors (0-100) 76.0 Time to export Procedures (number) 8 Extent of disclosure index (0-10) 9.0 Documentary compliance (hours) 2 Time (days) 507 Extent of director liability index (0-10) 4.0 Border compliance (hours) 15 Cost (% of warehouse value) 0.9 Ease of shareholder suits index (0-10) 7.0 Cost to export Building quality control index (0-15) 11.0 Extent of shareholder rights index (0-6) 6.0 Documentary compliance (USD) 50 Extent of ownership and control index (0-7) 5.0 Border compliance (USD) 335 Getting Electricity (rank) 75 Extent of corporate transparency index (0-7) 7.0 Score of getting electricity (0-100) 78.4 Enforcing Contracts (rank) 142 Procedures (number) 5 Paying Taxes (rank) 29 Score of enforcing contracts (0-100) 48.6 Time (days) 137 Score of paying taxes (0-100) 85.5 Time (days) 1,100 Cost (% of income per capita) 116.6 Payments (number per year) 16 Cost (% of claim value) 16.4 Reliability of supply and transparency of tariff index (0-8) 8 Time (hours per year) 120 Quality of judicial processes index (0-18) 8.0 Total tax and contribution rate (% of profit) 22.4 Registering Property (rank) 71 Postfiling index (0-100) 74.5 Resolving Insolvency (rank) 31 Score of registering property (0-100) 67.9 Score of resolving insolvency (0-100) 72.5 Procedures (number) 7 Recovery rate (cents on the dollar) 73.8 Time (days) 9 Time (years) 1.5 Cost (% of property value) 7.7 Cost (% of estate) 14.5 Quality of the land administration index (0-30) 23.0 Outcome (0 as piecemeal sale and 1 as going 1 concern) Strength of insolvency framework index (0-16) 10.5 Page 4 Doing Business 2020 Cyprus Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is -Has between 10 and 50 employees one month after the commencement of operations, all of them received domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Cyprus Starting a Business - Cyprus Standardized Company Legal form Private Limited Liability Company Paid-in minimum capital requirement No minimum City Covered Nicosia Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Procedure – Men (number) 5 5.2 4.9 1 (2 Economies) Time – Men (days) 6 11.9 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 5.6 4.0 3.0 0.0 (2 Economies) Procedure – Women (number) 5 5.2 4.9 1 (2 Economies) Time – Women (days) 6 11.9 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 5.6 4.0 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 0.7 7.6 0.0 (120 Economies) Figure – Starting a Business in Cyprus – Score 76.5 94.5 97.2 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Cyprus and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 96.0: Greece (Rank: 11) 92.0: Cyprus (Rank: 50) 90.5: Regional Average (Europe & Central Asia) 88.8: Turkey (Rank: 77) 86.8: Italy (Rank: 98) 85.4: Bulgaria (Rank: 113) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Cyprus Figure – Starting a Business in Cyprus – Procedure, Time and Cost Time (days) Cost (% of income per capita) 6 4.5 4 Cost (% of income per capita) 5 3.5 4 3 Time (days) 2.5 3 2 2 1.5 1 1 0.5 0 0 1 2 3 4 *5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Cyprus Details – Starting a Business in Cyprus – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Reserve the company name and get initial approval from the Registrar of Companies 1 day EUR 30 Agency : Registrar of Companies and Official Receiver A standard form application for approval of name is submitted in person or by mail to the One Stop Shop Cyprus. It can also be submitted electronically to the Registrar of Companies and Official Receiver, through the E-filing website (https://efiling.drcor.mcit.gov.cy). The cost is EUR 30- which is EUR 10 compulsory and additional EUR 20 for expediting the procedure, which is optional. 2 Prepare the Memorandum and Articles of association by a Lawyer 1 day EUR 1,000 Agency : Lawyer The Registrar of Companies has no standard form for the Memorandum and Articles of association. The Companies Law provides a general template applicable for any kind of activities. It is a statutory requirement to have lawyers prepare the Memorandum and Articles of Association, who must also sign the relevant declaration. Since 2016, the Companies Law provides a standard form of Memorandum which includes objects for general purpose companies which facilitates the process of preparing the Memorandum of new companies. As for the Articles, it may be necessary to include tailor-made provisions, to reflect any agreement between the shareholders. 3 Register the company at the Registrar of Companies and Official Receiver 2 days EUR 205 registration fees Agency : Registrar of Companies and Official Receiver + EUR 60 for filling The following documents can be submitted either by hand or online, certified by a registered accompanied documents + advocate/lawyer in the Republic of Cyprus: EUR 220 for the i) Declaration form (ΗΕ1, a affidavit (sworn) statement of the lawyer and signature from the Certificates (optional) Registrar of the District Court); ii) Form concerning the registered office address (HE2); iii) Details regarding the directors and secretary (HE3); iv) List of persons who consent to act as directors of the public company (HE5, in case of a public company); v) Original or scanned copy of Memorandum and Articles of Association (by law must be written by a approved/registered lawyer); vi) One Stop Shop Application Cover for Legal Entities Registration (applicable for submission to One Stop Shop); vii) Fee of €105,00, plus €60,00 for filling the accompanied documents, plus an optional €100,00 for accelerated procedure (payable in cash, cheque or bank transfer). Please note that One Stop Shop accepts only applications with acceleration fees and the One Stop Shop Application Cover for Legal Entities Registration is to accompany the above-mentioned application. Upon completion of the registration the "Certificate of Incorporation" is issued. Upon request, and payment of the amount of €220,00, the following certificates and/or certified copies can be issued: (1) A certificate of the Shareholders; (2) A certificate of the Directors and Secretaries; (3) A certificate of the Registered Office; (4) A certified true copy of the Memorandum and Articles of Association; (5) A certified copy of the Certificate of Incorporation. 4 Register at the Tax Department for Tax and VAT and obtain a Tax Identification Number 1 day no charge Agency : Tax Department Starting July 1, 2014, the Tax Department was formed which integrated the Inland Revenue Department and the VAT Services. When registering at the Tax Department the Taxpayer must file in: - Form T.D.2001- Registration of a Taxpayer, to obtain a TIN (Tax Identification No). (Form T.D.2001 is available online at www.mof.gov.cy under Forms , Other Forms, Registration of Taxpayer) - Form T.D.1101 - only if the taxpayer wants to activate TIN for VAT purposes The registration at the Tax Department can be done in person or online. Online registration would require an e-signature and is available at http://www.businessincyprus.gov.cy/mcit/psc/psc.nsf/All/749FC411823BDD31C225785600375018 ?OpenDocument Page 8 Doing Business 2020 Cyprus 5 Register for Social Contribution at the Ministry of Labor, Welfare and Social Insurance 1 day (simultaneous with no charge Agency : Ministry of Labor, Welfare and Social Insurance previous procedure) Registering for the Social Contribution at the Ministry of Labor can be done online at: www.businessincyprus.gov.cy. where the company should file in the following documents, according with the Social Insurance Law 59.I/2010: -Form Y.K.A. 1-001 to register as an employer; -Form Y.K.A. 5-018 to confirm the beginning of employment of each employee; -Form Y.K.A. 1-021 for the online contributions payment; -Form Υ.Κ.Α. 1-006 for employers who will use a computerized system to pay their employess; -Form Y.K.A. 1-005 for employers who request certificate of exemption from the obligation to pay contributions for the Central Holiday Fund and will provide full paid annual leave to their employees; -Form Y.K.A. 1-003 to declare the recruited employees; -Form Y.K.A. 1-008 which must be filed if an employee was never registered with the Social Insurance The original copies of these forms have to be sumbitted at the offices of the Social Insurances. Meanwhile, the payment of the fees can be done online at https://www.pay.sid.mlsi.gov.cy/sisweb3/index.jsp. Takes place simultaneously with previous procedure. Page 9 Doing Business 2020 Cyprus Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures The warehouse: that can be fully completed online are an exception to this rule - Will be used for general storage activities, such as storage of books or stationery. • Procedure is considered completed once final document is received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control after construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 10 Doing Business 2020 Cyprus Dealing with Construction Permits - Cyprus Standardized Warehouse Estimated value of warehouse EUR 1,160,732.50 City Covered Nicosia Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 8 16.2 12.7 None in 2018/19 Time (days) 507 170.1 152.3 None in 2018/19 Cost (% of warehouse value) 0.9 4.0 1.5 None in 2018/19 Building quality control index (0-15) 11.0 12.1 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Cyprus – Score 88.0 0.0 95.3 73.3 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Cyprus and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 75.9: Bulgaria (Rank: 43) 73.8: Turkey (Rank: 53) 69.5: Greece (Rank: 86) 69.0: Regional Average (Europe & Central Asia) 68.3: Italy (Rank: 97) 64.2: Cyprus (Rank: 125) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 11 Doing Business 2020 Cyprus Figure – Dealing with Construction Permits in Cyprus – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 500 0.4 0.35 Cost (% of warehouse value) 400 0.3 Time (days) 0.25 300 0.2 200 0.15 0.1 100 0.05 0 0 1 2 3 4 5 6 *7 *8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 12 Doing Business 2020 Cyprus Figure – Dealing with Construction Permits in Cyprus and comparator economies – Measure of Quality 16 14.0 14 13.0 12.0 12.1 11.0 11.0 Index score 12 10 8 6 4 2 0 Cyprus Bulgaria Greece Italy Turkey Europe & Central Asia Details – Dealing with Construction Permits in Cyprus – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request copy of the site plan 1 day EUR 2 Agency : Department of Lands and Surveys This document is required in order to prepare the application for the Town Planning Permit. 2 Apply for the town planning permit at the Town Planning Department 90 days EUR 4,125 Agency : Town Planning Department In order to apply for this permit, BuildCo must submit the following information: • Land title (must not be older than 6 months, and copy must be submitted) • Site plan, which indicates the plot boundaries and access • Spatial plan, which indicates the position of the building and any existing buildings or any buildings to be demolished • Plans, sections and elevations which show the use of the building, internal dimensions, the type of construction, and accessibility provisions • Relevant application form • Copy of architect's valid membership in Cyprus Technical Chamber • Photos of the site 3 Apply for building permit at the Municipality of Nicosia 100 days EUR 3,983 Agency : Municipality of Nicosia The application should be accompanied by the following documents: • Original and recent two sets of architectural plans signed by the owner of the immovable property and the responsible architect/civil engineer; • Original and recent two sets of topographical plans signed by the responsible architect/civil engineer; • Original and recent title of deeds or bank certificate regarding mortgaged property; • Original town planning permit as issued by the Town Planning Department; • Original and recent certificate of incorporation of company (for legal entity); • Original and recent certificate of registered office address (for legal entity); • Original and recent certificate of directors and secretary for legal entity); • Original and recent certificate of shareholders for legal entity); • Original and recent certified copy of memorandum and articles of association (for legal entity); • Original and recent proxy statement for the company's representative (for legal entity); • Declaration of the responsible architect/civil engineer; • Certificate by the Cyprus Scientific and Technical Chamber regarding the architectural works, civil engineering works, and authorization of responsibility; • Application fee (by cash or check) depending on the type of development (see Regulation 62 of the Streets and Buildings Regulation); • Three extra sets of architectural drawings, one extra set of sewerage drawings and one extra set of plans and sections (to be sent to the Fire Department, Sewerage Department and Electricity Authority to receive their consent). The Municipality will share the application with several local agencies for clearance and approval (telecom, sewerage, public works, archaeological department and fire brigade). 4 Apply for final approval and final inspection 75 days EUR 199 Agency : Municipality of Nicosia 5 Receive final inspection and obtain certificate of final approval 1 day no charge Agency : Municipality of Nicosia Staff from the Municipality will visit the construction. During the inspection they will verify if the construction was completed in compliance with the original construction plan. Inspectors will also verify if the building is in compliance with security regulations. The certificate of final approval is issued after the final inspection and is necessary for the registration of the new building (update of the land title). Page 13 Doing Business 2020 Cyprus 6 Update land title 240 days EUR 115 Agency : Department of Lands and Surveys Application package includes: • Certificate of registration (title) of the property • Building permit with all plans and terms attached • Certificate of approval of building This procedure is required in order to sell property and use property as collateral. This procedure can take between 6 to 8 months and sometimes up to 2 years. 7 Request and obtain sewerage connection 10 days EUR 100 Agency : Nicosia Sewerage Board 8 Request and obtain water connection 10 days EUR 2,439 Agency : Nicosia Water Board BuildCo must apply in person but the forms can be downloaded online. BuildCo must submit the following along with the application: building permit, property deed and topographic plan. Takes place simultaneously with previous procedure. Page 14 Doing Business 2020 Cyprus Details – Dealing with Construction Permits in Cyprus – Measure of Quality Answer Score Building quality control index (0-15) 11.0 Quality of building regulations index (0-2) 1.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 0.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 1.0 house engineer; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency; Yes, in-house engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 0.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use No party is held liable 0.0 (Latent Defect Liability or Decennial Liability)? (0-1) under the law. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 2.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering; Being a registered architect or engineer. What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 2.0 2) years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer. Page 15 Doing Business 2020 Cyprus Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours • Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. - Tariffs effective in January of the current year are used for calculation of the price of electricity for • Regulatory monitoring of utilities’ performance (0–1) the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 16 Doing Business 2020 Cyprus Getting Electricity - Cyprus Standardized Connection Name of utility Electricity Authority of Cyprus (EAC) Price of electricity (US cents per kWh) 19.1 City Covered Nicosia Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 5 5.1 4.4 3 (28 Economies) Time (days) 137 99.6 74.8 18 (3 Economies) Cost (% of income per capita) 116.6 271.9 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 8 6.2 7.4 8 (26 Economies) Figure – Getting Electricity in Cyprus – Score 66.7 48.3 98.6 100.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Cyprus and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 86.1: Italy (Rank: 38) 84.7: Greece (Rank: 40) 84.5: Turkey (Rank: 41) 78.4: Cyprus (Rank: 75) 75.6: Regional Average (Europe & Central Asia) 55.1: Bulgaria (Rank: 151) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Cyprus – Procedure, Time and Cost Time (days) Cost (% of income per capita) 140 120 120 Cost (% of income per capita) 100 100 Time (days) 80 80 60 60 40 40 20 20 0 0 1 2 3 4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 17 Doing Business 2020 Cyprus reflected here, see the summary below. Figure – Getting Electricity in Cyprus and comparator economies – Measure of Quality 9 8 8 7 7 7 6.2 Index score 6 6 5 5 4 3 2 1 0 Cyprus Bulgaria Greece Italy Turkey Europe & Central Asia Page 18 Doing Business 2020 Cyprus Details – Getting Electricity in Cyprus – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application for electricity connection and await estimate 29 calendar days EUR 27,000 Agency : Electric Authority of Cyprus The customer can apply either in person (at any customer service location) or by email. The forms for the application are available on-line. Most of the applicants download the form on-line and apply in person since they can get a follow-up number. In the application, the customer needs to provide contact information, description of the location of the premise (land plot number), and provide a copy of the title deed or lease agreement. The customer will also need to explain the load requirements and justify the need for the requested load. Finally, they have to provide an expected time of connection. Usually, the customer applies for the connection just before starting the construction of the building since the process can take some time. 2 Await external inspection by Electric Authority of Cyprus 21 calendar days EUR 0 Agency : Electric Authority of Cyprus An inspector from the Electric Authority of Cyprus visits the premises to assess the connection costs and prepare an estimate. Someone from the applicant’s party is usually present during the inspection. After the external inspection by the utility, the inspector will prepare the “quotation of terms” (estimate). Before sharing the estimate cost with the customer, the Electric Authority of Cyprus submits the application for clearance and approval to several government authorities including: telecom, sewerage, public works, municipality, archaeological department and fire brigade. At this point the utility also obtains an excavation permit. After all these clearances are received, the utility will notify the client and provide him with the estimate. The estimate of the connection fees can be paid at any customer service of the utility. 3 Await completion of external works, meter installation and final connection 60 calendar days EUR 0 Agency : Electric Authority of Cyprus After the estimate is issued - and before the actual connection works can start - the Electric Authority of Cyprus arranges/prepares for the works. After the preparation and arrangement stage is over the Electric Authority of Cyprus completes the external connection works. 4 Sign supply contract with Electric Authority of Cyprus 1 calendar day EUR 76.12 Agency : Electric Authority of Cyprus The customer can schedule to sign the contract for electricity supply just before electricity is turned on. He/she needs to give 1 week notice and the contract is signed in 1 day. 5 Request and receive inspection of internal wiring and external works 26 calendar days EUR 0 Agency : Electric Authority of Cyprus An applicant can request an internal wiring inspection at any customer service of the utility. Inspectors from the utility evaluate compliance of the internal wiring with safety regulations. After the inspection, the inspector issues a certificate of compliance. During the inspection, the certified in-house electrician should be present. Typically, insurance companies in Cyprus will ask for a copy of this certificate before insuring any building. The electrician who did the internal wiring submits a signed notification to the utility upon completion in which they guarantee it has been carried out according to the regulations. During the inspection the utility also tests the external installation. The meter is installed at this point. Takes place simultaneously with previous procedure. Page 19 Doing Business 2020 Cyprus Details – Getting Electricity in Cyprus – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.6 System average interruption frequency index (SAIFI) 0.2 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 5.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online https://www.eac.com.cy/E L/CustomerService/Tariffs/ Pages/Tariffs.aspx Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 20 Doing Business 2020 Cyprus Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. - Has no occupants, and no other party holds a legal interest in it. • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 21 Doing Business 2020 Cyprus Registering Property - Cyprus Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 7 5.5 4.7 1 (5 Economies) Time (days) 9 20.8 23.6 1 (2 Economies) Cost (% of property value) 7.7 2.7 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 23.0 20.4 23.2 None in 2018/19 Figure – Registering Property in Cyprus – Score 50.0 96.2 48.8 76.7 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Cyprus and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 81.7: Italy (Rank: 26) 81.6: Turkey (Rank: 27) 75.8: Regional Average (Europe & Central Asia) 69.8: Bulgaria (Rank: 66) 67.9: Cyprus (Rank: 71) 46.9: Greece (Rank: 156) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 22 Doing Business 2020 Cyprus Figure – Registering Property in Cyprus – Procedure, Time and Cost Time (days) Cost (% of property value) 9 8 8 7 Cost (% of property value) 7 6 6 Time (days) 5 5 4 4 3 3 2 2 1 1 0 0 1 2 3 4 5 *6 7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 23 Doing Business 2020 Cyprus Figure – Registering Property in Cyprus and comparator economies – Measure of Quality 30 26.5 27.0 25 23.0 20.4 Index score 19.5 20 15 10 4.5 5 0 Cyprus Bulgaria Greece Italy Turkey Europe & Central Asia Details – Registering Property in Cyprus – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Search the property titles and check for encumbrances 1 day EUR 50; (EUR 20 is paid Agency : Department of Lands and Surveys for the property title search While this procedure is not required by law, it is common practice to perform due diligence before + EUR 30 is paid for the entering into this type of transaction. To request this information, the buyer requires an search of any authorization of the Seller. In practice the seller goes with the buyer to the Department of Lands encumbrances (i.e. and Surveys and requests the information on encumbrances on the property for the buyer. mortgages, memos, etc.) on a specific property) 2 Lawyer drafts the sale agreement 2 days EUR 750; (EUR 500-1000) Agency : Lawyer In order to prepare the sale agreement, the lawyer requires the following information: names of the parties, amount of transaction, object, bank loan information (if any), resolution of the assembly of shareholders and/or of the board of directors approving the transaction (in case of companies), any power of attorney granted to the representatives of the seller or the buyer, the memorandum and articles of association of the buyer and the seller, a certificate of directors and secretary of the buyer and the seller, a certificate of shareholders of the buyer and the seller and the certificate of registered address of the buyer and the seller. It is important to point out that the use of a lawyer is not required by law. The documents below are required by the lawyer when preparing the sale contracts: (1) Notarized Power of Attorney of the Company representatives (2) Notarized Minutes of the board of Directors (3)Memorandum & Articles of Association of the Board (4) Certificate from the Registrar of Companies as to the Directors Secretary Shareholders (for Private Companies) and the registered address 3 File the contract at the Department of Lands and Surveys 1 day EUR 50 Agency : Nicosia District Lands Office The deposition of the contract of sale with the Department of Lands and Surveys is mandatory under The Contract Law, Cap.149 as amended (Law no.99(I)/2013) and applies to all sales contracts that are signed from the date of the entering into force of the law, 9th of September 2013 and onward. Furthermore, in pursuance with the Law No. 81 (I)/2011, the buyer is given 6 months from the date of signing the contract of sale to deposit it to the District Land Office of the district where the property is situated. The objective of this reform is to protect the parties’ interests, especially the buyer's in case of violation of the agreement. The deposit of contract serves the following objectives: 1) It prevents the seller from selling the same property twice. 2) If the seller does not perform his obligations ( i.e. he does not come to the land registry to transfer the property), the buyer can apply to the court which issues a decision requiring the Department of Lands and Surveys to transfer the property to the absence of the seller - what is called "specific performance" of the contract ( i.e. if the seller refuses or fails to comply with his contractual obligations). 4 Pay transfer Taxes 1 day EUR 2,228.96; (Stamp Agency : Tax Department duty as per following fee To transfer a title, a certification that all taxes have been paid is needed from the Tax Department. schedule: The Tax Department provides receipts for the proof of payment of (1) Stamp Duty (the Director of 0 - 5000 EUR - 0% which is also the Stamp duty Commissioner): Stamp duty is paid based on the purchase price; 5000 EUR - 170,000 and (2) Capital Gains Tax: The sale contract is filed for assessment of capital gains at the Tax Department. The market value of the property is determined by the Director of the Department of EUR=0.15% Lands & Surveys. CGT is imposed at 20% on gains from the disposal of immovable property. The over 170,000 EUR=0.2% taxable gain is calculated by deducting from the sale price the following: (a) Acquisition cost, or plus 150 EUR) market value at January 1st, 1980 if the asset was acquired before that date; (b) Expenses incurred to improve the property; and (c) Sale expenses, interest on loans and immovable property tax. 5 Obtain Sewerage Board Tax clearance 1 day no charge Agency : Sewerage Board The seller should apply and obtain a sewerage board tax clearance from the Sewerage Board office evidencing the sewerage board tax on the property to be sold has been paid. Page 24 Doing Business 2020 Cyprus 6 Obtaining the certificate of payment of municipal taxes (property taxes and refuse 1 day no charge collection fees) Agency : Municipality of Nicosia As part of the property transfer process, the seller is required to obtain a document from the Municipality of Nicosia certifying absence of any outstanding municipal tax obligations (property taxes and refuse collection fees). 7 Declaration of transfer of immovable property at the Land Registry and issuance of the new 2 days EUR 86,058.47; (The fees title deed charged by the Agency : District Land Office of Nicosia Department of Lands and As proposed by the Law No.81(I)/2011, the sale contract must be registered at the Land District Surveys for the transfer of office within 6 months after the signature of the contract. The change of ownership takes place immovable properly are as when the declaration of transfer is completed and the property is then registered in the name of the buyer at the Land District office. The original and the copy of the contract of sale must be duly follows: stamped. up to 85,000 EUR = 3% from 85,001 - 170,000 The buying Corporation is responsible of paying for the Transfer Tax based on the value of the EUR = 5% property as determined by the Director of the Department of Lands & Surveys. The fees charged above 170,000 EUR = 8%) by the Department of Lands and Surveyors for the transfer of immovable property are as follows: up to 85,000 EUR = 3% from 85,001 - 170,000 EUR = 5% above 170,000 EUR = 8% Documents to be provided to the Land District Office are as follows: (1) Completed Form N270 (Declaration of Transfer of Immovable Property). (2) The certificate of registration (title) of the immovable property, which is to be transferred (3) Completed Form N.313. (4) Proof of payment of all fees, charges and taxes payable for the property under transfer. (5) Immovable Property Tax and Capital gains tax (Receipts of payment for these taxes are obtained from the Internal Revenue Department) (6) Sewerage Board Tax (receipt obtained from the Sewerage Board) (7) Town rate (receipt obtained from the municipality in whose boundaries the property is situated) (8) Communal rate (receipt obtained from the community in whose boundaries the property is situated) The declaration of registration is done after the evaluator at the Registry assesses the value of the property, based on the amount stated in the sale agreement. If the assessed price is higher than the paid amount stated in the purchase agreement, an inspection will be conducted by staff from the land registry. This valuation is required in order to prevent fraud (i.e. state in the sale agreement a lower amount in order to pay less transfer fees). In case of properties that have an additional Value Added Tax cost on the selling price, then there is a full discount on the sum for title transfer, until 31/12/2016. In the rest cases the title transfer fees if paid prior to the 31/12/2016 then 50% discount is applicable. The changes are due to the amendment of the Transfer Fees Law, Cap. 219, L.115(I)/2015 Takes place simultaneously with previous procedure. Page 25 Doing Business 2020 Cyprus Details – Registering Property in Cyprus – Measure of Quality Answer Score Quality of the land administration index (0-30) 23.0 Reliability of infrastructure index (0-8) 7.0 Type of land registration system in the economy: Deed Registration System What is the institution in charge of immovable property registration? The Department of Lands and Surveys In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Fully digital 2.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Survey and Cartography Branches of the Department of Lands and Surveys In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Scanned 1.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Single database 1.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 2.5 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Only intermediaries 0.0 in the largest business city? and interested parties Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://portal.dls.moi.g ov.cy/en- us/pages/newdefault. aspx Government Gateway ( ARIADNI) Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable Yes, online 0.5 property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.moi.gov.cy /MOI/DLS/dls.nsf/dmlt ransfer_en?openform Government Gateway ( ARIADNI) Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, in person 0.0 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5 registration agency? Number of property transfers in the largest business city in 2018: 4215.0 Who is able to consult maps of land plots in the largest business city? Anyone who pays the 0.5 official fee Page 26 Doing Business 2020 Cyprus Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, online 0.5 Link for online access: http://portal.dls.moi.g ov.cy/en- us/Rights%20and%2 0Fees/PublishingIma ges/Pages/default/Ri ghts%20and%20Fee s.pdf Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, in person 0.0 if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 8.0 Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? Yes 2.0 Land dispute resolution index (0–8) 5.5 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Immovable Property (Tenure, Registration and Valuation) Law, Section 40 of Cap. 224 mentions the following: “No transfer of, or charge on any immovable property shall be valid unless registered or recorded in the District Lands Office.” Is the system of immovable property registration subject to a state or private guarantee? No 0.0 Type of guarantee: Legal basis: Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local Nicosia District Court businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 1 and 2 2.0 appeal)? years Page 27 Doing Business 2020 Cyprus Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 28 Doing Business 2020 Cyprus Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 29 Doing Business 2020 Cyprus Getting Credit - Cyprus Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Strength of legal rights index (0-12) 7 7.8 6.1 12 (5 Economies) Depth of credit information index (0-8) 5 6.7 6.8 8 (53 Economies) Credit registry coverage (% of adults) 0.0 24.0 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 81.4 41.7 66.7 100.0 (14 Economies) Figure – Getting Credit in Cyprus – Score 60.0 Score - Getting Credit Figure – Getting Credit in Cyprus and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 75.0: Turkey (Rank: 37) 72.2: Regional Average (Europe & Central Asia) 65.0: Bulgaria (Rank: 67) 60.0: Cyprus (Rank: 80) 45.0: Greece (Rank: 119) 45.0: Italy (Rank: 119) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 30 Doing Business 2020 Cyprus Figure – Legal Rights in Cyprus and comparator economies 9 8 7.8 8 7 7 7 Index Score 6 5 4 3 2 2 2 1 0 Cyprus Bulgaria Greece Italy Turkey Europe & Central Asia Page 31 Doing Business 2020 Cyprus Details – Legal Rights in Cyprus Strength of legal rights index (0-12) 7 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the Yes original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an No electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Cyprus and comparator economies 9 8 8 7 7 7 6.7 Index Score 6 5 5 5 4 3 2 1 0 Cyprus Bulgaria Greece Italy Turkey Europe & Central Asia Page 32 Doing Business 2020 Cyprus Details – Credit Information in Cyprus Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No No 0 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 540,380 0 Number of firms 132,091 0 Total 672,471 0 Percentage of adult population 81.4 0.0 Page 33 Doing Business 2020 Cyprus Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members. • Ease of shareholder suits index (0–10): Access to internal - Has not adopted bylaws or articles of association that go beyond the minimum requirements. corporate documents; Evidence obtainable during trial and allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0–20): Sum of the - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and extent of shareholders rights, extent of ownership and control directors that approved the transaction. and extent of corporate transparency indices • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 34 Doing Business 2020 Cyprus Protecting Minority Investors - Cyprus Stock exchange information Stock exchange Cyprus Stock Exchange Stock exchange URL http://www.cse.com.cy Listed firms with equity securities 66 City Covered Nicosia Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Extent of disclosure index (0-10) 9.0 7.5 6.5 10 (13 Economies) Extent of director liability index (0-10) 4.0 5.0 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 7.0 6.8 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 6.0 3.4 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 5.0 3.7 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 7.0 4.1 5.7 7 (13 Economies) Figure – Protecting Minority in Cyprus – Score 76.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Cyprus and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 76.0: Cyprus (Rank: 21) 76.0: Turkey (Rank: 21) 74.0: Bulgaria (Rank: 25) 70.0: Greece (Rank: 37) 66.0: Italy (Rank: 51) 61.0: Regional Average (Europe & Central Asia) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 35 Doing Business 2020 Cyprus Figure – Protecting Minority Investors in Cyprus and comparator economies – Measure of Quality Cyprus 7 4 9 5 6 7 Bulgaria 7 2 10 4 6 8 Greece 6 4 9 6 5 5 Italy 7 4 7 4 5 6 Turkey 6 5 9 6 6 6 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 Europe & Central Asia 4.1 4.8 7.2 3.6 3.4 6.8 0 5 10 15 20 25 30 35 40 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 36 Doing Business 2020 Cyprus Details – Protecting Minority Investors in Cyprus – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 9.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of directors 2.0 excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) Yes 1.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 4.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 7.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? No 0.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 6.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 5.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Page 37 Doing Business 2020 Cyprus Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? Yes 1.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 7.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 38 Doing Business 2020 Cyprus Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured • Collecting information, computing tax payable at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 39 Doing Business 2020 Cyprus Paying Taxes - Cyprus Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Payments (number per year) 16 14.4 10.3 3 (2 Economies) Time (hours per year) 120 213.1 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 22.4 31.7 39.9 26.1 (33 Economies) Postfiling index (0-100) 74.5 68.2 86.7 None in 2018/19 Figure – Paying Taxes in Cyprus – Score 78.3 89.1 100.0 74.5 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Cyprus and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 86.6: Turkey (Rank: 26) 85.5: Cyprus (Rank: 29) 77.9: Regional Average (Europe & Central Asia) 77.1: Greece (Rank: 72) 72.3: Bulgaria (Rank: 97) 64.0: Italy (Rank: 128) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 40 Doing Business 2020 Cyprus Figure – Paying Taxes in Cyprus and comparator economies – Measure of Quality 120 100 100 Index score 74.5 76.7 80 71.2 68.2 60 52.4 40 20 0 Cyprus Bulgaria Greece Italy Turkey Europe & Central Asia Page 41 Doing Business 2020 Cyprus Details – Paying Taxes in Cyprus Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Social insurance 1.0 jointly 62.0 7.8% gross salaries 8.80 Corporate 1.0 online 23.0 12.5% taxable profit 7.58 income tax Social cohesion 0.0 jointly 2% gross salaries 2.26 fund Redundancy fund 0.0 jointly 1.2% gross salaries 1.35 Interest tax 1.0 30% Interest income 0.77 Capital Gains Tax 1.0 20% capital gains 0.71 Industrial training 0.0 jointly 0.5% gross salaries 0.56 fund Municipal taxes 1.0 professional tax fee schedules 0.14 of EUR 1,454 + municipality license fees of EUR 171 Sewerage duty 1.0 0,52% on the market value of 0.08 value of the real estate immovable property as at 1/1/2013 Refuse collection 1.0 EUR 630 fixed fee 0.05 duty Municipal 1.0 various rates market value of 0.03 property tax real estate Fixed annual fee 1.0 EUR 350 fixed fee 0.03 on companies registered in Cyprus Vehicle tax 1.0 EUR 400 0.03 Fuel tax 1.0 EUR 0.45 per fuel consumption 0.00 small amount liter Employee labor 0.0 jointly 0 to €19,500 @ gross salary 0.00 not included contributions 0%, 19,501 to €28,000 @ 20%, €28,001 to €36,300 @ 25%, €36,301 to €60.000 @ 30%, over €60.000 @ 35% Value added tax 4.0 34.5 18% (19% as value added 0.00 not included (VAT) from 13 January 2015) Tax on cheque 1.0 EUR 0.05 per number of 0.00 transactions cheque cheques (stamp duty) Totals 16 120 22.4 Page 42 Doing Business 2020 Cyprus Details – Paying Taxes in Cyprus – Tax by Type Taxes by type Answer Profit tax (% of profit) 8.3 Labor tax and contributions (% of profit) 13.0 Other taxes (% of profit) 1.1 Page 43 Doing Business 2020 Cyprus Details – Paying Taxes in Cyprus – Measure of Quality Answer Score Postfiling index (0-100) 74.5 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) 75% - 100% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 11.0 79.0 Time to obtain VAT refund (weeks) 44.0 21.6 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 3.0 97.2 Time to complete a corporate income tax correction (weeks) No tax audit per case 100 study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 44 Doing Business 2020 Cyprus Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 45 Doing Business 2020 Cyprus Trading across Borders - Cyprus Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Time to export: Border compliance (hours) 18 16.1 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 300 150.0 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 2 25.1 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 50 87.6 33.4 0 (20 Economies) Time to import: Border compliance (hours) 15 20.4 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 335 158.8 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 2 23.4 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 50 85.9 23.5 0 (30 Economies) Figure – Trading across Borders in Cyprus – Score 89.3 71.7 99.4 87.5 95.1 72.1 99.6 92.9 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Cyprus and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 97.4: Bulgaria (Rank: 21) 93.7: Greece (Rank: 34) 91.6: Turkey (Rank: 44) 88.4: Cyprus (Rank: 50) 87.3: Regional Average (Europe & Central Asia) 100: Italy (Rank: 1) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 46 Doing Business 2020 Cyprus Figure – Trading across Borders in Cyprus – Time and Cost Time (hours) Cost (USD) 20 18 400 335 350 300 15 Time (hours) 15 300 Cost (USD) 250 10 200 150 5 100 2 50 2 50 50 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 47 Doing Business 2020 Cyprus Details – Trading across Borders in Cyprus Characteristics Export Import Product HS 85 : Electrical machinery and equipment and HS 8708: Parts and accessories of motor vehicles parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Trade partner Germany Germany Border Limassol port Limassol port Distance (km) 69 69 Domestic transport time (hours) 2 2 Domestic transport cost (USD) 195 195 Details – Trading across Borders in Cyprus – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 1.3 0.0 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 18.0 300.0 Import: Clearance and inspections required by 1.0 0.0 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 14.7 335.0 Page 48 Doing Business 2020 Cyprus Details – Trading across Borders in Cyprus – Trade Documents Export Import Bill of lading Bill of lading Commercial invoice Commercial invoice Packing List Packing list Intrastat Intrastat SOLAS certificate SOLAS certificate Page 49 Doing Business 2020 Cyprus Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. • Alternative dispute resolution (0-3) Page 50 Doing Business 2020 Cyprus Enforcing Contracts - Cyprus Standardized Case Claim value EUR 43,624 Court name Nicosia District Court City Covered Nicosia Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Time (days) 1100 496.4 589.6 120 (Singapore) Cost (% of claim value) 16.4 26.6 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 8.0 10.3 11.7 None in 2018/19 Figure – Enforcing Contracts in Cyprus – Score 19.7 81.7 44.4 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Cyprus and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 71.4: Turkey (Rank: 24) 67.0: Bulgaria (Rank: 42) 65.5: Regional Average (Europe & Central Asia) 53.1: Italy (Rank: 122) 48.6: Cyprus (Rank: 142) 48.1: Greece (Rank: 146) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 51 Doing Business 2020 Cyprus Figure – Enforcing Contracts in Cyprus – Time and Cost Time (days) Cost (% of claim value) 1800 1711 27.6 30 Cost (% of claim value) 26.6 1600 24.9 22.4 25 1400 21.5 Time (days) 1200 18.6 1100 1120 20 16.4 1000 15 800 623 564 589.6 600 496.4 10 400 5 200 0 0 Bulgaria Cyprus Europe Greece Italy OECD Turkey & high Central income Asia Page 52 Doing Business 2020 Cyprus Figure – Enforcing Contracts in Cyprus and comparator economies – Measure of Quality Cyprus 2.5 1.5 1 3 Bulgaria 2.5 2.5 2 3.5 Greece 2.5 5 2 3 Italy 3 4 3 3 Turkey 2.5 5 4 3.5 OECD high income 2.5 3.2 2.4 3.6 Europe & Central Asia 2.3 2.8 1.3 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Cyprus Indicator Time (days) 1100 Filing and service 20 Trial and judgment 900 Enforcement of judgment 180 Cost (% of claim value) 16.4 Attorney fees 10.8 Court fees 0.5 Enforcement fees 5.1 Quality of judicial processes index (0-18) 8.0 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 1.5 Court automation (0-4) 1.0 Alternative dispute resolution (0-3) 2.5 Page 53 Doing Business 2020 Cyprus Details – Enforcing Contracts in Cyprus – Measure of Quality Answer Score Quality of judicial processes index (0-18) 8.0 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 1.5 1. Time standards 0.5 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? Yes 1.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 1.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 54 Doing Business 2020 Cyprus 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 55 Doing Business 2020 Cyprus Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered. • Assessors’ and auctioneers’ fees • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 56 Doing Business 2020 Cyprus Resolving Insolvency - Cyprus Indicator Cyprus Europe & Central OECD high Best Regulatory Asia income Performance Recovery rate (cents on the dollar) 73.8 38.5 70.2 92.9 (Norway) Time (years) 1.5 2.3 1.7 0.4 (Ireland) Cost (% of estate) 14.5 13.3 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 1 .. .. .. Strength of insolvency framework index (0-16) 10.5 11.2 11.9 None in 2018/19 Figure – Resolving Insolvency in Cyprus – Score 79.4 65.6 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Cyprus and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 77.5: Italy (Rank: 21) 72.5: Cyprus (Rank: 31) 57.8: Bulgaria (Rank: 61) 55.7: Regional Average (Europe & Central Asia) 53.1: Greece (Rank: 72) 38.5: Turkey (Rank: 120) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 57 Doing Business 2020 Cyprus Figure – Resolving Insolvency in Cyprus – Time and Cost Time (years) Cost (% of estate) 6 25 22.0 5.0 Cost (% of estate) 5 20 Time (years) 4 14.5 3.5 14.5 3.3 13.3 15 3 9.0 2.3 9.0 9.3 1.8 10 2 1.5 1.7 1 5 0 0 Bulgaria Cyprus Europe Greece Italy OECD Turkey & high Central income Asia Page 58 Doing Business 2020 Cyprus Figure – Resolving Insolvency in Cyprus and comparator economies – Measure of Quality Cyprus 5 3 1 1.5 Bulgaria 3 2.5 4 2.5 Greece 5.5 2.5 1 2.5 Italy 5.5 3 2 3 Turkey 3 3 3 1.5 OECD high income 5.3 2.8 2.1 1.9 Europe & Central Asia 4.5 2.5 2.3 1.7 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Cyprus and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 80 73.8 70 65.6 60 50 37.7 38.5 40 32.0 30 20 10.5 10 0 Cyprus Bulgaria Greece Italy Turkey Europe & Central Asia Page 59 Doing Business 2020 Cyprus Details – Resolving Insolvency in Cyprus Indicator Answer Score Proceeding receivership According to current practice, private parties still prefer to apply for receivership, rather than examinership. In the most likely scenario, Mirage and BizBank will try to renegotiate the debt first. Once the negotiations fail, BizBank will immediately appoint a receiver to take control of all charged assets of Mirage. In turn, Mirage will likely challenge the appointment of the receiver in court. After the court confirms receivership, the receiver will take up the case and will try to sell Mirage as a going concern in order to maximize the return to BizBank. Outcome going concern The court will appoint a receiver or manager who will administer the property with the view to sell it as a going concern to maximize the return to the bank. Time (in years) 1.5 It takes 1.5 years to complete receivership proceedings in Cyprus. Cost (% of estate) 14.5 The costs associated with the case would amount to approximately 14.5% of the value of the debtor's estate. The main components of this total cost would be the attorney's fees (around 4%), receiver's fees (around 3%), other professionals' fees (around 4%), auctioneer's fees (3%) and court's fees (0.5%). Recovery rate 73.8 (cents on the dollar) Page 60 Doing Business 2020 Cyprus Details – Resolving Insolvency in Cyprus – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 10.5 Commencement of proceedings index (0-3) 3.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0 may file for both liquidation and reorganization What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available, of its assets but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? No 0.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary 1.0 unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 1.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency Yes 1.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting No 0.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 61 Doing Business 2020 Cyprus Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 62 Doing Business 2020 Cyprus Employing Workers - Cyprus Details – Employing Workers in Cyprus Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) 30.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 1046.8 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) 24.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.5 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 100.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 20.0 Paid annual leave for a worker with 5 years of tenure (working days) 20.0 Paid annual leave for a worker with 10 years of tenure (working days) 20.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 20.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? No Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 2.0 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 7.0 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 8.0 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 5.7 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 0.0 Page 63 Doing Business 2020 Cyprus Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 0.0 Unemployment protection after one year of employment? Yes Page 64 Doing Business 2020 Cyprus Business Reforms in Cyprus From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Starting a Business: Cyprus made starting a business less expensive by reducing the cost to register a company. Paying Taxes: Cyprus made paying taxes easier by implementing an online system for filing and paying mandatory labor contributions. DB2019 Protecting Minority Investors: Cyprus strengthened minority investor protections by increasing disclosure of related-party transactions and strengthening shareholders’ rights and role in major corporate decisions. Paying Taxes: Cyprus made paying taxes easier by abolishing the immovable property tax, discontinuing the special contribution for private sector employees, private sector pensioners and self-employed individuals, introducing an online system for filing value added tax returns and value added tax refund claims and reducing the sewerage duty tax rates. DB2018 Registering Property: Cyprus made registering property easier by decreasing the Immovable Property Tax. Paying Taxes: Cyprus made paying taxes more difficult by increasing the frequency and number of VAT audits, including in cases of VAT cash refund requests. At the same time, Paying Taxes was made less costly following the introduction of notional interest tax deductible expenses and an increase in the discount rate on immovable property. DB2017 Starting a Business: Cyprus made starting a business easier by merging the procedures to register for taxes and for VAT while making name search and reservation faster. Getting Credit: Cyprus made access to credit information more difficult by stopping the distribution of historical credit data. Paying Taxes: Cyprus made paying taxes easier by introducing improvements to its internal processes and to the electronic tax filing system. Cyprus also made paying taxes less costly by increasing the discount rate applied on immovable property tax. Employing Workers: Cyprus amended its legislation to allow shops and supermarkets to operate seven days a week DB2016 Getting Electricity: The utility in Cyprus made getting electricity easier by reducing the time required for obtaining a new connection. Getting Credit: Cyprus improved access to credit information by allowing credit bureaus to collect and report positive credit information and to report credit histories for both borrowers and guarantors. Paying Taxes: Cyprus made paying taxes easier for companies by facilitating online payment of corporate income tax. At the same time, Cyprus raised the contribution rate for social insurance paid by employers, lowered the tax brackets for the social contribution fund, raised the rate on interest income and increased the vehicle tax. Enforcing Contracts: Cyprus made enforcing contracts easier by introducing a fast-track simplified procedure for claims worth less than €3,000. Resolving Insolvency: Cyprus made resolving insolvency easier by introducing a reorganization procedure as well as provisions to facilitate the continuation of the debtor’s business during insolvency proceedings and allow creditors greater participation in important decisions during the proceedings. DB2015 Getting Credit: Cyprus improved its credit information system by adopting a central bank directive eliminating the minimum threshold for loans to be included in credit bureaus’ databases. Paying Taxes: Cyprus made paying taxes easier for companies by reducing the number of provisional tax installments for corporate income tax. DB2013 Registering Property: Cyprus made property transfers faster by computerizing its land registry. Paying Taxes: Cyprus made paying taxes more costly for companies by increasing the special defense contribution rate on interest income and introducing a private sector special contribution and a fixed annual fee for companies registered in Cyprus. At the same time, it simplified tax compliance by introducing electronic filing for corporate income tax. Page 65 Doing Business 2020 Cyprus DB2012 Protecting Minority Investors: Cyprus strengthened investor protections by requiring greater corporate disclosure to the board of directors, to the public and in the annual report. DB2011 Getting Credit: Cyprus improved access to credit information by establishing its first private credit bureau. Page 66 Doing Business 2020 Cyprus Page 67