banks

KPMG Academy: Specialised services through academic expertise

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KPMG Academy: Specialised services through academic expertise

The Academy, associated with KPMG in Cyprus, provides specialized services, solutions, and insights across various industries by combining professional and academic expertise. It has adapted successfully to market changes, regulations, and technological advancements over the years. The Academy offers a range of training services including open seminars/webinars, tailored trainings, learning advisory, and digital learning in areas such as Organisational Strategy and Operations, HR Advisory, Restructuring, IFRS and Accounting, Taxation, Corporate Finance, Financial Risk Management/consulting, IT Advisory, and Soft Skills. Its trainers, certified by the HRDA as Vocational Trainers, come from KPMG in Cyprus, the broader KPMG network, prestigious universities, and successful companies. The training programs are suitable for professionals from various industries and may fulfill Continuing Professional Development requirements, with many approved by the Human Resource Development Authority (HRDA) for subsidies. Upcoming trainings from March to June 2024 cover topics like VAT legislation in Cyprus, AML regulations, Blockchain and the Metaverse, corporate tax principles, tax updates, cybersecurity basics, data intelligence and AI, ESG assurance, real estate transactions, and the CRR III framework for banks.

Platform set up to evaluate business, ’ ESG compliance

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Platform set up to evaluate business, ’ ESG compliance

The Cyprus Credit Bureau, in collaboration with the Cyprus Banks Association and ICAP CRIF, is introducing a tool for assessing compliance with ESG (Environmental, Social, Governance) criteria through the Interbank Business Evaluation Project using Synesgy, a global digital platform. This initiative aims to enhance transparency and sustainability in Cyprus by enabling companies of all sizes and sectors to assess their ESG compliance and obtain a certificate valid for one year. Companies will receive a personalized Action Plan with recommendations for improving their ESG performance based on the assessment results. The methodology for evaluating a company’s ESG data adheres to current international and European regulations and standards, and the Synesgy questionnaire is certified by the CRIF Rating Agency. The platform facilitates easy access for businesses to complete the questionnaire, which is crucial for accurate ESG assessment and is shared with the company’s banking partners. Yiannis Tomasides, General Manager of Artemis Credit Bureau, highlighted the project’s significance in evaluating and enhancing the ESG performance of Cypriot companies and banks, contributing to the development of an ESG ecosystem in Cyprus.

Thousands of companies face hefty fines

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Thousands of companies face hefty fines

Out of approximately 230,000 registered companies in Cyprus, only 140,000 have updated their records regarding their ultimate beneficial owners (UBOs) as required. Companies that do not comply with this requirement by the extended deadline of March 31, 2023, could face fines starting at €200 on January 1, 2024, and accumulating at a rate of €100 per day of non-compliance, potentially reaching up to €20,000. Many companies have found it difficult to update their UBO information due to various reasons, including the inability to contact UBOs who are in Ukraine or Russia. Additionally, around 70,000 of the 90,000 entities that have not updated their UBO records have filed for deletion from the registry, but tax authorities and banks have not consented to many of these deletions. There has been criticism of the Registrar of Companies for not implementing electronic signatures, which has contributed to inefficiencies. Concerns have been raised about the potential impact of the fines on family businesses, especially given the short time frame until the deadline.

Real estate sector depends on outside factors

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Real estate sector depends on outside factors

The Cyprus economy has shown strong resilience, recording one of the highest growth rates in the European Union, according to Dr. Giorgos Mountis, CEO of Delfi Partners. The Cypriot economy grew by 2.4% in 2023 and is estimated to grow by 2.8% in 2024 and 3% in 2025. Inflation decreased from 8.1% in 2022 to 3.9%, with further reductions expected to 2.4% in 2024 and 2.1% in 2025. Efforts to contain inflation involved decisions that temporarily affected citizens’ incomes, with interest rate increases placing significant pressure on household incomes. However, optimism exists that the European Central Bank’s decisions will start to change in 2024, potentially leading to a decrease in domestic interest rates. Unemployment is at very low levels, approaching full employment, though many sectors face personnel shortages. The government’s strategies to employ and attract foreign labor could lead to an increase in the country’s population and economic development. The real estate sector remained resilient in 2023, with sales contracts increasing by 16% compared to 2022, reaching the highest level since 2008, driven by increased demand from non-European buyers. Apartment prices in 2023 exceeded those of 2010 for the first time, according to the Central Bank of Cyprus, leading to an increase in properties purchased for rental investment.

Europe, ’s stocks fall from record highs, inflation data in focus

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Europe, ’s stocks fall from record highs, inflation data in focus

European stock indexes fell from recent record highs on Monday, with Wall Street also expected to face losses. This shift in the market is attributed to an uncertain economic outlook and anticipation for U.S. inflation data set to be released later in the week. U.S. stocks began to decline from record highs on Friday, a move analysts believe was due to profit-taking after mixed U.S. payrolls data, yet expectations for a Federal Reserve rate cut in June remained. Traders are now focused on the upcoming U.S. inflation data, which could influence expectations for when major central banks will start reducing rates. As of 1236 GMT, the MSCI World Equity index was down by 0.3 percent after reaching a new all-time high on Friday. Similarly, the pan-European STOXX 600, which also reached a new all-time high on Friday, was down by 0.5 percent. London’s FTSE 100 and Germany’s DAX experienced declines of 0.5 percent and 0.7 percent, respectively. Amelie Derambure, a senior multi-asset portfolio manager at Amundi, suggested that Monday’s downturn might be due to uncertainty about the economic outlook and high stock valuations. Recent comments from Fed Chair Jerome Powell and European Central Bank policymakers have raised expectations for interest rate cuts starting in the summer, which contributed to pushing stock indexes to new highs.

Akel demands cheaper electricity

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Akel demands cheaper electricity

The opposition party Akel in Cyprus, led by Stefanos Stefanou, has urged the government to reduce electricity costs for households and businesses and has demanded an investigation into the liquefied natural gas (LNG) terminal project at Vasiliko. Stefanou emphasized the need for Cyprus to transition to natural gas for electricity generation to avoid the high costs associated with burning heavy fuel oil, highlighting that Cyprus paid about €350 million in greenhouse gas emissions allowances last year. Akel has proposed several measures to alleviate high electricity prices, including reducing VAT on electricity from 19% to 9%, taxing windfall profits of banks and energy companies, promoting competitive tenders for renewables, and extending electricity subsidies.

Gold rally could extend beyond recent highs

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Gold rally could extend beyond recent highs

Gold has increased by nearly 19% since a low in October and about 7% in the past month. UBS strategists suggest there might be a short-term pullback in gold prices, but the rally could continue over the year. Factors supporting gold include potential Federal Reserve rate cuts, central banks and investors buying gold, and increased geopolitical risks. Gold prices have surpassed ,180, reaching near ,200 highs in Asian trading. The Federal Reserve’s potential rate cuts this year and ongoing geopolitical tensions are supporting gold’s value. Fed Chair Jerome Powell indicated the U.S. economy is healthy, and rate cuts could begin once there is confidence in inflation’s downward trajectory. Futures markets anticipate a 70% chance of the Fed cutting rates by mid-June, with a total of one percentage point reduction by year-end. U.S. Nonfarm Payrolls (NFP) data for February showed 275,000 jobs added, exceeding expectations and potentially influencing Fed rate decisions. China’s inflation data for February indicates a return to normal consumption levels, positively affecting gold prices as China is a major consumer of gold. The Chinese Consumer Price Index (CPI) increased by 0.7% year-over-year in February, and the Producer Price Index (PPI) declined by 2.7% year-over-year in the same month. Upcoming U.S. CPI and Retail Sales data for February are awaited for further market direction, with CPI expected to increase by 0.4% month-over-month and Retail Sales projected to rise by 0.7% month-over-month.

Gold extends rally above $2,160 ahead of US NFP

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Gold extends rally above $2,160 ahead of US NFP

The price of gold reached a new all-time high above ,160, influenced by a weaker US Dollar, a decline in US Treasury bond yields, and expectations for a rate cut by the Federal Reserve in June. Dovish commentary from central bank policymakers, including Fed Chair Jerome Powell and European Central Bank chief Christine Lagarde, also supported gold prices. Powell indicated the Fed is close to being confident enough to cut rates, while Lagarde suggested the ECB might ease policy in June. Additionally, geopolitical tensions and safe haven buying, particularly following a Houthi attack in the Red Sea, contributed to the demand for gold. Despite investors pulling metal out of Gold-backed ETFs, central banks remain strong buyers of gold.

Cyprus: weak tax administration and prolific tax evasion

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Cyprus: weak tax administration and prolific tax evasion

– Tax evasion in Cyprus is defined as the deliberate non or underpayment of taxes and is illegal, while tax avoidance involves using legal methods to minimize tax owed.
– Weak and ineffective tax administration in Cyprus contributes to large-scale tax evasion.
– The Tax Department’s primary goal is to collect taxes and enforce payment in accordance with tax laws.
– Tax collections in Cyprus are below potential, with a significant shortfall attributed to widespread tax evasion.
– It is difficult to quantify tax evasion levels, but as of end-September 2023, taxes owed to the state amounted to €3.4 billion, with nearly €900 million deemed uncollectible.
– Self-employed persons in Cyprus paid on average €1,080 in personal income taxes in 2022, compared to employees who paid on average €1,920.
– Tax evasion and avoidance deprive the government of revenue, limit the scope for reducing tax rates, and hurt honest taxpayers.
– Cyprus’s reputation for weak law enforcement and corruption attracts corrupt politicians and criminals from abroad.
– The inefficiency of Cyprus’s tax administration contributes to tax evasion, with personal income tax returns taking about five years to process.
– The government has been promised €24.2 million from the EU’s Recovery and Resilience fund to improve tax administration efficiency.
– Increased digitalization and coordination between tax units could help curtail tax evasion and avoidance.
– Simplifying the tax registration and filing process could encourage greater tax compliance.
– Government policies that delay the submission of tax returns and payments foster tax evasion and avoidance.
– Enhanced digitalization of public services and harsh penalties for late tax payments are suggested to enforce timely tax payment and compliance.

Cyprus banks on track to meet MREL goals, according to SRB chief

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Cyprus banks on track to meet MREL goals, according to SRB chief

Dominique Laboureix, Chair of the Single Resolution Board, praised Cypriot banks for their progress towards meeting the Minimum Requirements for Own Funds and Eligible Liabilities (MREL). MREL is a capital tool designed to enhance banks’ ability to absorb losses and facilitate restructuring without resorting to taxpayer funds. The Single Resolution Board has set MREL targets for Bank of Cyprus and Hellenic Bank, with Cypriot banks given a longer transitional period until 2024 and 2025. Laboureix expressed confidence that Cypriot banks would achieve their MREL targets on time. He highlighted the shift from liquidation to resolution, aiming to build bank resilience through capital instruments instead of relying on taxpayer or creditor funds. The Single Resolution Board, established in 2015, faces evolving risks including the Covid-19 pandemic, geopolitical tensions, and challenges from digitisation. The Single Resolution Fund has €78 billion, indicating improved bank loss absorption capacity compared to a decade ago. The SRB’s strategy focuses on addressing new risks and ensuring swift action in crises by collecting necessary bank data. Laboureix also discussed the potential for further improving the EU framework for bank crisis management and deposit insurance, moving beyond the “too big to fail” narrative.