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Tourism has performed better in compared to with total revenues rising by 4. If we keep acting as we should, in we will do a lot better. What has the Chamber gained from its business missions abroad? The mass media abroad have been praiseful of how we managed the crisis in our country, and it seems that this encourages foreign investors. In our missions we have adjusted our philosophy to the needs of the time.

In China, which we visited together with the President, great interest was demonstrated in connection to the real estate and tourism sectors. In Ukraine our biggest success was the signing of the agreement for the avoidance of double taxation. This was extremely important, since we were trying to conclude this agreement for the last eight years. We are certainly competing with others, and for this reason we must offer extra advantages to investors.

Although activity is taking place in the investments field, no breakthrough has yet been made. It is also worth mentioning that countries such as Thailand, which are not among traditional investors, are showing interest in the real estate sector specifically. By Harris Georgiades, Minister of Finance In Europe our country is now considered a shining example of how an economic crisis should be tackled.

Cyprus now features in articles in the international press for its achievements and not its problems. Of course, the consequences of the crisis are still being felt, but comparisons should be made not with a sound economy, but with the conditions of economic collapse shaped in the five years before March Everyone should consider the state the economy was in three years ago and where it stands now.

We could list all the forecasts — by those who disagreed and by those who voted against all the reforms — and how many of these have been proved wrong. Let us recall a few: we are in the euro, we did not impose new taxes, we did not need a second memorandum, we were not led into an ever-deepening recession, the Troika did not get its hands on our natural gas, society did suffer but destitution was avoided. In short, today we are back on the path to recovery and development.

We have, in effect, earned a second chance. And it is exactly now at this juncture that we are called upon to choose the road we will follow. One road is the one we followed in the past. It is the one of negligence in relation to the management of public finances. It is the one of constant pressure for appointments and pay rises in the public sector, for constant expansion of benefits and hand-outs offered by the state, usually not to those entitled to them but to those who claim them the most vociferously.

It is the road of those who condemn austerity, but do not realise that the deficits and debts of this irresponsible management always land on the taxpayer in a way that undermines the future and the prospects of development. It is the road of complacency, with a banking system — including the co-operative banks — that lent recklessly. It is the attitude that considers state organisations public wealth but is indifferent to their systematic plundering.

It is the road of conservatism which is chosen by those who resist every change and hide behind dogmatism and slogans. The other road is not easy at all. It is the one of prudent management of public finances. It means that recruitment and pay rises in the public sector must be reasonable and in line with the performance of the economy as stipulated in the proposed legislation that has been before the legislature since last August.

It means that all possibilities of transfers of existing staff will be explored before the option of new appointments is considered, as stipulated in another proposed bill tabled in the House some time ago. This approach carries the challenge of change and reform. One example is the radical reform of social policy that has already been implemented, offering cover to thousands of our compatriots who were in genuine need while also excluding others who should never have been eligible.

Another is the ceding of the running of the ports to a private investor, the finding of a strategic partner for CyTA and the operation of the state lottery by a private company. This road demands that the banks operate in a framework of trustworthiness and manage responsibly the money of their depositors who paid a very high price for the mistakes of the past; that they fund the real needs of individuals and businesses but will also ensure the loans they give will be repaid.

It prioritises the beneficial and not always the popular. But it is the only road that can lead the country forward. Unfortunately, we had to reach the brink of total catastrophe to understand this. Some, however, even today remain stuck in antiquated attitudes, frequently longing for the spoils of the past.

This is the time the people are also obliged to take their on responsibilities. It is the time for the silent majority who are struggling and worrying about tomorrow, and not for those who make a lot of noise and remain stuck in the past. It is the only way to ensure that we do not wake up to days like those we faced in March again.

By Marios Mavrides Member of the Parliament Associate Professor of Economics European University Cyprus According to the latest data, the yields of the Cypriot year government bonds rose by 20 basis points since the end of December. Even though this increase is not spectacular, it does make a difference when we are talking about loans amounting billions of euros. Germany refinances its maturing debt with 0. Cyprus has the highest borrowing costs in the euro area after Greece, which borrows at 9.

It is noteworthy that Cyprus managed to reduce its borrowing cost from the excessive levels of of up to 14 per cent to 3. In recent weeks however, we are witnessing a delay in the implementation of the terms of the bailout which displeases markets. The reluctance demonstrated by opposition parties to cooperate, and their resistance to privatizations disappointed financial markets. In addition, amendments to the foreclosure and insolvency legislation translate into obstacles in the process of consolidating the banking system smoothly, and in the reduction of non-performing loans.

It also begs the question of why a country with its economy chained by various interest groups and establishments, refuses to get rid of them. Markets are not stupid; they do have funds they want to lend but they also have brains, much more than what we believe. Unless the adjustment programme is completed as agreed and we also do what it takes to strengthen our economy, our borrowing cost will keep rising. Currencies are the means by which wealth is stored, protected and exchanged between countries, organisations and individuals.

A global currency, such as the euro, does this on a global scale. Since its introduction in , it has firmly established itself as a major international currency, second only to the US dollar. As we learned from our experience, the rate of economic recovery is slower than that of recession, therefore improvement of the economic climate is going to be gradual, without huge changes in the real economy. Apart from the high value added that each project is expected to provide to the economy, a much needed great number of new job positions will be created.

However, we cannot afford to be complacent neither we have the right to return to the times of irrational spending. As repeatedly stated by our political leaders, in recent months a new momentum has been developed in the negotiation process to solve the Cyprus problem.

We believe that the current year will definitely show whether this new effort will lead to a mutually acceptable solution to our political issue or not. In the case of a solution, the business world and the Cyprus economy, will find themselves faced with enormous challenges.

We will be obliged to go through major changes and adjustments that could lead us to great opportunities for rapid economic growth. That is why we must remain positive and alert in order to deal with every challenge that may arise. The management of public finances is expected to continue within the same reasoning and prudence taught to us by the memorandum and we must invest in the reforms we have undertaken as a state, if we wish to maintain and improve the recent rates of recovery.

Spending habits and practices of the past should be abolished once and for all and the brand new beginning in healthy and neatly budgeted finances must become a normal practice. We all anticipate that the faint signs of recovery as shown recently by the main economic indicators, will continue to improve for the rest of the year and certainly for the years to follow.

We are still going through a period of transitions for our business model, but with proper planning we can achieve many benefits for the near future. As our mission states, OEB is and shall continue to be next to the Cypriot businessmen and claim what is best for our economy. It is also used to store and create wealth for the future as savings and investments.

Public and private sectors in third countries acquire and use the euro for many purposes, including for trade or as currency reserves. For this reason, today, the euro is the second most important international currency behind the US dollar.

In , more than one-fifth of the global foreign exchange holdings were being held in euros. The status of the euro as a global currency, combined with the size and economic weight of the euro area, is leading international economic organisations, such as the IMF and the G7, increasingly to view the euro-area economy as one entity.

This gives the European Union a stronger voice in the world. To benefit from this stronger position, and to contribute effectively to international financial stability, the euro area is speaking with one voice more and more in important economic fora. This is done through close coordination between the euro-area Member States, as well as the European Central Bank and the European Commission during international economic meetings.

A number of third countries and regions are even more closely linked to the euro. By linking their currency to the euro they bring more certainty and stability to their national economies. The survey covered companies in France, Germany, Italy and the UK in the aircraft and shipbuilding, energy, financial services, and electrical and mechanical engineering industries.

Two thirds of the surveyed firms in France, Germany and Italy said they did not use any currency other than the euro for export invoicing. If companies did use other currencies, this was mostly due to client preference and the important role of the US dollar in global finance.

Moreover, four fifths of the companies said that the European sovereign debt crisis has had no effect on their use of the euro in trade invoicing. Second, in many countries globalization and technology left large numbers of people behind, creating potential for instability. This period is characterized by a deep and protracted worldwide recession and by a technological revolution and continuous innovation.

In the aftermath of the onset of the Great Recession in , there is a serious debate on its causes and impact with emphasis on the failings of capitalism and the resulting human suffering. It is up to this generation to implement reforms, which should eventually lead to a redefinition of the free enterprise system. The goal is that it will evolve into a market system with a human face.

The other game-changing development of our times is the digital revolution which is called by many as the Fourth Industrial Revolution. Powerful advances in Information and Communication technologies are leading to large gains in productivity and efficiency and rapid innovation in products and services. A large share of those now in high-school will probably look here for employment and should gear their preparation accordingly.

But these advances are also creating important challenges in job replacement, data protection and the distribution With respect to the Eurozone there are alternative narratives, as to the origins and the management of the ensuing crisis. There is also a shift in market strength: power accrues to those who have most data, best algorithms and most advanced computers.

The bet to be won here is how to maximize the benefits of the digital revolution while dealing effectively with its challenges. The financial crisis started in the United States about ten years ago. It was a remarkable combination of failings in bank supervision and regulation, greed for profit and lack of attention to the potential dangers of persistent trade imbalances and huge capital inflows coming in from China. The Americans dealt with the crisis, as they always do, and moved on.

But the crisis exposed serious shortcomings in the functioning of the worldwide economic system and especially in the European Union and the Eurozone. For a thirty-year period leading up to the recent crisis, expanding international trade, free enterprise and market-based systems, generated jobs for almost everybody, created wealth and got millions in all continents out of poverty —viewed from afar, a remarkable achievement.

But viewed from close by, this was an unsustainable system. First, there were growing imbalances, as successful exporters like China, other emerging economies and Germany accumulated export earnings but did not recycle them through increased demand for imports. With respect to the Eurozone there are alternative narratives, as to the origins and the management of the ensuing crisis. These alternatives were seen in action during the stand-off between Greece and its creditors.

First, is the narrative of national policy failures in terms of heavy public spending and borrowing, and declining competitiveness. The second narrative puts emphasis on the design faults of the Monetary Union: its narrow emphasis on fiscal criteria, the neglect of rapid growth in private sector borrowing and the absence of a banking union and of a federal budget.

At the same time the fact that surplus countries like Germany, do not participate in the needed correction by expanding their imports, makes the adjustment for deficit countries much harsher. There is truth in both narratives and the challenge going forward is to build systems to help avoid national policy errors, while fixing the architecture shortcomings of the Monetary Union.

The pressure for reforms is coming from the legacy of the crisis in Europe. What we now see is slow growth, income stagnation, low productivity, high debt and, above all, high unemployment, especially among young people. Some changes like a banking union and a stronger fiscal pact are happening. But, the key goal of political union that will enable Europe to deal with crises more effectively like the United States, remains elusive. In fact we now have sharper North-South and East-West divides, fuelled by economic differences and large migration flows.

All this leads to Euroscepticism, nationalism and xenophobia, mostly from the right, and populism from the left. Because the shortcomings of the free enterprise system are rightly seen as having contributed to the crisis, there is a danger for this populism to lead to a return to tax-and-spend approaches and a growth of the role state. These approaches have been tried and failed. That is why it is important for all of us to come up with a credible middle road that avoids the pitfalls of unchecked market-based capitalism without falling into the inefficiencies of socialism.

Elements of this approach must include combating corruption which allows those using devious methods to advance at the expense of the rest of us; fighting tax evasion which frustrates honest people in too many countries; real reform of the financial system so that innocent tax payers do not have to pay the bill again; and tackling monopolies and vested interest groups which have captured the political system and are blocking reforms that benefit the majority.

In parallel, this approach would refocus the welfare state on the really needy and use the money saved to invest in health and education. I have touched on some of the challenges of the younger generation, namely: forging a stronger political union in Europe, rehabilitating a market-based economic system, and taking full advantage from the digital revolution; but there are others, like climate change where the myopia of the young and the selfishness of the older generations is leading to inaction.

There is also the long-standing challenge of reducing income and wealth inequality worldwide and eliminating poverty in developing countries which ought to remain firmly on our radar screen. Reversal of the extreme increase in inequality that has occurred in the last thirty years is a policy choice and must be seen as part and parcel of the big challenge of our times of redefining and reshaping our free enterprise economic system.

However, the tenacity, focus and deliberate effort that we have witnessed since , must continue unabated: If was a year marked by massive effort, impressive achievement and the keeping of promises, will have to be a year of even more effort, more achievement and more promises kept. By John P. The banking industry continues to come under pressure as NPE ratios remain high, household and business indebtness continues to stifle growth and the abrupt dissaving that occurred in continues to limit opportunity.

Customer service must also become more intensely improved so that we can provide service that is not only satisfactory, but of top quality. We will not shirk from the challenge. We welcome it and we will continue to deal with it with equal measures of ambition and determination. ELA exposure, despite a decline that belies even the most optimistic observers, must continue.

The management of loans in arrears and restructuring must also continue despite the progress that has taken place, especially in the Austerity has come to its limits. With prudent management, the fiscal problem has been mostly tackled.

Reform seems to be underway. Overall asset quality needs to be further improved, despite the successful outcome of the SREP test that has taken place. The banking system, and Bank of Cyprus especially as the industry leader, need to support the economy of the country by extending rational, careful lending to viable customers and by assisting existing customers to return to viability.

Our focus on Cyprus itself is now complete and we remain devoted to supporting the economy of the country and its return to conditions that will allow Cypriots to not only make plans for the future, but to also dream of bigger and better things to come. Austerity has come to its limits.

Beyond the continued management of existing challenges, however, we need to start discussing more intently the road to prosperity- a new economic model for growth, stability and opportunity for all Cypriots. At Bank of Cyprus, we wish to engage in this discussion with all stakeholders, participating in the emergence of a new promise for the country.

Our wish, alongside all Cypriots, is that the year can bring a reunification of the island. The coming year will not be easy, but with ambition, renewed energy and deliberate effort, I am certain that it will be better. Attracting direct foreign investment is the only safe choice for economic growth in a strongly competitive and evolving international environment. Investor interest in large investment projects such as the integrated casino resort, luxury marinas, golf courses, expansion of Limassol Port, Vasilikos Energy Centre and the Scientific and Technological Park, as well as use of the old Larnaca airport building, are all testament to the prospects of key sectors of the economy, such as tourism, commerce, energy, research and innovation.

The Cypriot real estate market is also showing notable potential for growth, with sales to local and foreign buyers recording a remarkable increase in CIPA continues to contribute, in its own area of activity and with the same commitment and determination, to the unremitting effort to stabilise and adjust the Cyprus economy to the new state of affairs. The Agency actively participates in efforts to reposition the country and introduce a legislative framework for a comprehensive procedure to Facilitate Strategic Investments, which will provide a stable investment framework of regulations and procedures, bypassing bureaucracy and time-consuming procedures that hamper the implementation of investments.

Bringing the law up to date, promoting large investment projects, upgrading the tourism product, defining tax, town-planning and other business incentives, as well as accelerating licensing procedures and implementing an effective permanent residency programme for wealthy third country nationals, are just a few of the necessary steps which are underway in the investment sector to help the economy progress.

The progress that has been recorded and the prospects which have opened up have helped serve other top objectives, first and foremost of which is reducing unemployment, which though still high is showing signs of stabilising.

This is a collective mission, the benefits of which will be felt soon. Having recorded the required stabilisation and progress in , Cyprus has laid the foundations to achieve sustainable growth rates over the next year. Despite the improvement as illustrated by certain key indicators and the growth of the Cyprus economy, we still have to tackle several challenges arising from both internal and international factors.

By Christis M. Christoforou, CEO Deloitte Ltd In there have been positive developments which have led to increased hope for the future. The improvement of the perceived financial reliability of Cyprus internationally is of major significance.

In general, I would say that in we have set the foundations for positive developments. Yet, our efforts should not stop there. In order to be successful in the future we need to keep going with further initiatives. Furthermore, we worry about the delay in completing significant infrastructure projects marinas, golf clubs, etc.

We generally believe that we should move faster with more urgency, in order not to miss the momentum of the economic recovery, which brought some positive results in At the same time, we should be cautious of the global environment, as Cyprus is vulnerable to international developments, due to the nature of its economy. The crisis in Syria, in combination with the migration problem, international terrorism and the disruption of political relations among related parties RussiaWest or Russia-Turkey, etc.

We, as Cyprus, have neither the power nor the capabilities to influence these developments. Nevertheless, we can advance our role as a factor of stability and security in this crisis. Cyprus, as an EU member state with abundant competitive advantages, should build on the current situation pushing forward in its own interests, in respect of the Cyprus problem, energy and economy. The post — Memorandum era: Investments and employment In this light, I consider that the developments in the region may influence the development of our economy, yet, we may also take advantage of the new situation for the benefit of our country.

Under these circumstances, we have a vital role as professionals. Deloitte, as well as other professional services organisations, has made a major contribution to the efforts towards rebuilding the Cyprus economy. Through a variety of initiatives in Cyprus and abroad we have managed to alter the negative image portrayed by the economic crisis in At the same time, we have tried to persuade foreigners that our economy has not lost its comparative advantages, therefore, they should not stop their activities on the island.

Moreover, we have highlighted and promoted the prospects of Cyprus, based on energy, tourism, shipping and other promising sectors, so as to attract further investments and foreign companies. Assessing our efforts in the recent years, I can say that we are satisfied that Cyprus and its economic model continues to attract foreign investors.

Utilizing our knowledge, our extensive experience, vision and professionalism, Deloitte will continue being on the frontline of the development of the Cyprus economy. As a consequence, the economy is recovering while the banks have been restructured and recapitalized. Now that Cyprus exits the memorandum of understanding it is necessary that it continues its structural reform process. It is important that Cyprus continues the prudent fiscal policy so that it does not return to the era prevailing before the memorandum, when there was high non - targeted social expenditure, while wages were rising faster than the rise in productivity.

This led the downgrading of our competitiness and to a high current account deficit which in peaked at For the facing of the serious social and economic problem of unemployment, investment is necessary.

But investment cannot be undertaken by the public sector. As a consequence investment should be undertaken by the private sector, with the exception of certain infrastructural projects which help the private sector to promote productive investment. Consumers believe that an increase in private business activity will lead to an enhancement of world economic growth. Structural reform measures: for private investments to be carried out structural reform should continue and even be intensified.

Also the prudent behaviour of the trade unions is needed so that wages and salaries should not rise at o higher rate than the rate of increase of productivity. The role of the trade unions in a globalised economy is to cooperate with the businesses for the improvement of productivity so that their members will be receiving real wage rises, not nominal wage rises which lead to the rise of the cost of production and, as a consequence, the decrease of investments and unemployment.

And because we are in the middle of elections campaign the various political and social groups are expecting that the government will yield. As a result it has been decided that the Cyprus Electricity Authority will not be privatised as it was agreed with the international lenders. We now know the result. The Need for an Entrepreneurial Ecosystem It is important that Cyprus continues the prudent fiscal policy so that it does not return to the era prevailing before the memorandum Besides the privatisations, other issues which have not been finalised are the improvement of the civil service and the introduction of a general health care scheme GESY.

In parallel, the government and the trade unions have agreed that there will be no wage increase for the semi-government organizations for But for the wage cost should not exceed the rate of increase of the nominal GDP. The issue of wage indexation ATA however, remains open for the trade unions which insist that consultations should go on for a final solution. It should be stated, however, that the rise of wages and salaries at the same rate as the increase of the nominal GDP, also includes ATA, i.

There would only be a problem of wage indexation if the rise in wages and salaries was in real terms. And even here the employees are not entitled to the whole of the increase in real GDP, since the increase emanates from two sources: the increase of productivity and the employment of more human, capital and natural resources.

The employers are only entitled to the increase of productivity. Otherwise the competitiveness of Cyprus will be downgraded, and exports, investment and employment will fall. But in all three countries wage indexation is only offered if the state of the economy justifies it and in any way the wage cost should not be rising at faster rate than the wage cost in competitive countries. The purpose of the trip was to visit various organizations stakeholders that makeup the entrepreneurial ecosystem in Greece as well as various successful startup companies and entrepreneurs.

Given the current state of the Greek economy and the problems that it has been facing for many years, my expectations were very low. To my surprise though, I discovered that Greece yes, Greece! Corallia Clusters Initiative is an organization that was established to develop and manage innovation clusters in specific sectors and regions of the country with the aim to establish a competitive advantage for the participating players.

Attica Ventures and PJ Tech Catalyst are venture capital funds that draw their money either from private institutional investors banks in this case or from EU structural funds and their role is to identify, invest finance potentially successful start-ups by acquiring an equity stake in them with an exit plan usually in years. Lessons for Cyprus We should draw lessons from the setup of the Greek entrepreneurial ecosystem as well of course from the Israeli one.

My humble opinion is that President Anastasiades should include it in his agenda as another area of collaboration during his current discussions with the GreekIsraeli Prime Ministers and ask for help and guidance. The statistics provided at the moment for Cyprus on innovation and entrepreneurship are not encouraging. The level of our innovation index is now well below the EU average.

For , this is at 0. Reading the full report, I came to the conclusion that although there are some individual, scattered efforts from participating stakeholders government, private organizations and networks, academic institutions, etc. Many more of these efforts though are needed if we want our youth to enter this field and become entrepreneurs. Promoting innovation and entrepreneurship creates a more competitive environment, promotes growth, creates new jobs, and helps to increase the foreign direct investment in the country.

I was recently asked whether this country has the potential to look forward. By Savia Orphanidou Economist Nevertheless, I truly believe that this country has the potential of a prosperous future ahead. Cyprus has officially exited from the Memorandum of Understanding a few days ago.

After three years of extensive efforts to stabilise our banking system, to reform our fiscal policy and to promote the necessary structural changes, Cyprus has entered a new era of positive growth rates, of fiscal surpluses and of sustainable public debt levels. The growth rate for is 1. In other words, our public finances are back on track. This country has indeed potential. Because its citizens have shown enormous courage and dignity during the most crucial times of the crisis.

Because Cypriots, for once more after , have worked hard and with determination to achieve, slowly but steadily, another small economic miracle. It has certainly not been easy for anybody. However, Cypriots have chosen to place the public interest, instead of their own self interests, above all. Cyprus has entered a new era of positive growth rates, of fiscal surpluses and of sustainable public debt levels.

With one important precondition, to continue with the implementation of this prudent economic policy, leaving fiscal deficits and mismanagement in the past. By showing the necessary political will to speed up the implementation of major structural changes in vital sectors, such as healthcare, public service and semi-government organisations. I truly believe that the road towards growth and development is without return.

Not because we have exited the crisis and everything goes well. But because I am certain that we have the potential to change our mentality. To look forward, with a different way of thinking, for the benefit of Cyprus as a whole.

This country has a very well-educated and hardworking human capital. It has an economy with strong areas of potential growth such as tourism, shipping, financial services and energy. Managing these areas of growth prudently, and especially our natural gas sector, can make Cyprus one of the biggest energy players in the eastern Mediterranean, and a significant business and economic bridge between Europe and the Middle East.

Most importantly, Cyprus will have the biggest potential if we manage to solve the Cyprus problem and re-unite the island. The solution will safeguard our national survival and will lead to the speeding up of economic growth prospects and the re-engineering of our economy. It will create conditions of security and peace. Above all, it will create the opportunity to a better future not only for us but for our children. Yes, it is indeed true that this country has potential! And this potential lies in our hands!

In the space of a few days the economy of this country was demolished and put on life support. Since then the country has made significant progress, surpassing the expectations of many, including the IMF. That still leaves the Cyprus economy a long way from anything which might be considered economic prosperity. Unemployment is unacceptably high. Much remains to be done. In the context of the necessary rebuilding there has been much talk of a new economic model. Indeed there was every reason to believe that along with the pain of the financial crisis, there was also an opportunity to start afresh.

To develop new industries. To abandon much of the outmoded and arteriosclerotic customs and regulations of the pre- model. By Dr. Jim Leontiades Cyprus International Institute of Management But With the appearance of even the modest recovery the island now enjoys, many of the dinosaurs of the past are raising their heads, rushing to reassert destructive and outmoded practices.

Consider the issue of shop opening hours. The current debate in parliament turns about the interests of large shop keepers versus small retailers. The interests of the general public do not even figure into the debate. Apparently, it does not occur to the majority of our parliamentarians that society has changed.

The typical married couple is now one where both husband and wife are employed. During week days, most wives are at work. Allowing the stores to stay open on Sundays provides an enormous convenience for such families. But this gets little attention compared to organized self interest groups which can swing a few votes. Adding to this trend to re-establish the past is the prospect that the Troika may soon depart. But it is increasingly obvious that whatever progress has been made toward a new economic model owes much to oversight and pressure from the Troika.

Privatization of our national industries, bringing them into line with such measures taken many years ago by most of our European peer group was to be part of a new Cypriot economy. This has been fiercely opposed by the unions who have benefitted vastly from nationally owned industries. With the appearance of even the modest recovery the island now enjoys, many of the dinosaurs of the past are raising their heads, rushing to reassert Reaping the Returns of our National Wealth destructive and outmoded practices.

Under enormous pressure the government has buckled. Similarly, the de- nationalization of Cyta has met with the same strong opposition. The government is vacillating. Its attempts to abide by its agreement to privatize have met with cries of outrage from the usual sources.

What will happen to the profits which these industries contribute to the country? Examining the performance of this national wealth and its contributions to government is instructive. In , the EAC generated 42 million euros of profit. This was accompanied by a bill to the government of Cyta is not far behind. According to reports, there is a The Co-op Bank is the latest addition to our national wealth. Parliament has recently approved a donation by the taxpayer to that bank of million euros to make up a recently discovered shortfall.

These three nationalized industries alone require the taxpayer to pay m. This does not include the 1. This bank already has more non-performing loans relative to its size than the large private banks. Now that the Co-op bank is in government ownership steady losses are almost guaranteed. Without a government controlled airline how would tourists reach the island?

Bankruptcy of the airline followed. Naturally the government is still on the hook for the shortfall plus generous pension and other benefits. Cyprus Airways is no more but tourist arrivals have actually increased as have the number of destinations served. Increased competition has lowered many air fares.

Their success indicates that much needed change will be hampered and even reversed. These groups will fight to maintain their privileges and outmoded practices. More often than not, they have succeeded. The danger is that Cyprus will eventually find itself in a time warp, a country in the 21st century with a 20th century economic model. Since the collapse interest rates have been at record low levels and the printing presses have been running at full speed printing money, not only in Europe but around the world.

However, the only effect has been to produce bubbles in the stock exchanges and in some property markets, with no perceptible improvement in the real economy. Governments have gone ever-deeper into debt but unemployment rates remain at near-record high levels in most countries. A few countries, such as the United States, appear to have succeeded in reducing unemployment, but on closer inspection the reduction is illusory, with most of the new jobs created being McJobs, offering low wages and no guaranteed hours of work.

After the failure of zero interest rates and socalled quantitative easing, we are to be guinea pigs for a new miracle cure, which involves people being charged on their deposits instead of receiving interest. The big idea behind negative interest rates, according to their advocates, is that they will encourage people to spend money instead of saving, and so will kick-start stalled economies.

What these people are forgetting is that the main reason people save in the first place is to supplement their pension and help them maintain a respectable standard of living during the retirement years when they will not be working and earning an income. In those seemingly far-off times when deposits were still paying interest people strove to save enough to create a complementary income in retirement.

Now most people face penury in their old age. What is more, the policy is likely to fail in practical terms. In the short term, if people cannot rely on earning interest to supplement their pension the most likely outcome is that those who can afford to will save even more to make up for the lost income, achieving the exact opposite of what the central bankers hope for.

Instead of reviving growth, negative interest rates will force people to save more though not necessarily with the banks and spend less, entrenching deflation and stifling growth. A further unintentional consequence of negative interest rates is the increased risk of bank failures. The central premise of negative interest rates is that commercial banks are charged interest on funds they deposit with the central bank.

This is an additional cost for the commercial banks and they will have to decide whether to pass it on to their customers. If they do, people will be encouraged to withdraw the cash and hide it under the mattress, particularly now, when there is so little public confidence in banks as a safe place to keep money. If the banks decide not to pass on this cost their profits will be reduced, with a consequent effect on capital adequacy. Either way the policy risks creating a negative feedback loop that could force a run on the bank, slowly at first and at lightning speed later.

Additionally there is a new lollipop politicians all over the world are currently licking, being the massive and ever-widening disparity between the wealthy few and the rest of us, and their plans to address this issue. Irrespective of the fact that they are completely missing the point with their plans, they are also not telling people the real reasons for this intolerable increase in the wealth gap and why the middle class is becoming a dying breed.

It is a truism that banks prefer to lend money to people who already have plenty of it. Who is the better prospect from their point of view, the wealthy individual with useful contacts and security, or the average Joe who considers himself lucky if he can make his salary last until the end of the month, with no collateral to offer? When the central banks kill the value of money either by eliminating interest or printing new money, the only person who has access to these cheap funds is the rich one.

Unfortunately the financial game is rigged against the average person for one more reason: governments desperately need inflation to reduce the real value of their own sovereign debt. All countries are so deep in debt that there is no way they will ever manage to reduce it to sustainable levels using the proceeds of taxation alone. In the long run they are killing the middle class and risking social unrest. There is a good chance that being either a central banker or a politician will become a life threatening profession in the near future.

In case of a decrease of the cost of these elements, prices should also decrease. A prices and incomes policy for Cyprus By Dr Iacovos Aristidou Ex Minister Ex Director General, Planning Bureau On the occasion of the exodus from the Memorandum and the impending submission of claims for pay increases and requests for the re-establishment of the system of automatic price adjustment of salary and wages, I thought it would be useful to present and analyze our experience so far on these subjects and the wider issue of a prices and incomes policy, which we tried to follow in the past.

A prudent policy on these matters is required in order to secure uninterrupted growth of the economy and at the same time a more equitable distribution of income, two basic ingredients of a modern economic and social policy. During various periods of time, the economy faced destabilization tendencies, which were manifested in increasing inflation, widening of public finance deficit and the deficit of external current account.

As a result of these developments, there was a recess in productive investment, slowing down of the rate of growth of production and productivity as well as increased Prices have been left altogether to the market forces, whereas wages, salaries and other incomes are been checked for many years now by the existence of so many unemployed, the shrinkage of economic activity and certain arbitrary Government decisions because of the recession. Thus, no wonder how we ended up in the huge public deficit and the very high public debt since the beginning of the new century.

Things could have been definitely better if, among other things, a healthy prices and incomes policy had been adopted, under which the prices would have not followed the ups and downs of the market but only the unavoidable increases of the cost of production and the wages and salaries the increase of productivity and not the power of trade unions.

Prior to this there had been several attempts for the establishment of a similar council in Cyprus as well. The Sub-Committee suggested, among other things, the strengthening and coordination of the Services that were involved in the two legs of the subject-matter, the Market and Prices Inspection Services of the Ministry of Commerce and Industry and the Industrial Relations Services of the Ministry of Labour and Social Insurance.

At the same time it elaborated the general criteria for a correct prices and incomes policy: The increase of salaries, The above arrangements were utilized in order to face the new destabilization tendencies that appeared after the reactivation of the economy following the calamities of the invasion. Though such a policy was not achieved this time as well, the lengthy discussions that took place helped the sides to realize the dangers from the submission of irrational requests for pay increases as well as the unjustified increases of prices.

The efforts were not made in vain at the end. During the coming years there was a considerable restrain both on the height of the submitted requests for pay increases, which in general were within the limits of overall productivity and the price increases, which followed more or less the increases of the other elements of cost.

In parallel, the mechanisms for ensuring in practice a correct and just prices and incomes policy were strengthened. It was in this framework that our belief in the institution of free negotiations among social partners and the mechanisms for solving existing differences in accordance with the Code of Industrial Relations was re-assured, as well as to the need for exerting every effort to increase productivity, the need for combating monopolistic situations in the market of goods and services, as well as strengthening the mechanisms to follow up developments in these areas.

It was on our initiative in this respect that the Government started assisting financially the newly established Pancyprian Association of Consumers. At various points of time the prices and incomes policy followed was criticized. If this method was not in existence, the claims at the renewal of collective agreements would have been much larger. The increase of salaries, wages and other incomes should follow the increase of productivity, whereas prices should not increase unless there was an unavoidable increase of other elements of cost.

There were no concrete developments in this regard in the last few decades. On the contrary the efforts to develop and follow a healthy prices and incomes policy have been abandoned. Prices have been left altogether to the market forces, whereas wages, salaries and other incomes are been checked for many years now by the existence of so many unemployed, the shrinkage of economic activity and certain arbitrary Government decisions because of the recession.

However, what will happen when, hopefully, the reactivation of the economy starts? In conclusion, I think there is a need to re-examine the subject of prices and incomes with a view to improving existing practices and undertake collective action before it is too late. The Directive came into force on publication in the Official Gazette of the Republic on 13 November Simply put, the Directive sets out, for the first time, the legal framework enabling a company that so wishes to exit the stock exchange while safeguarding the best interests and rights of its shareholders.

Conditions According to the Directive, an issuer whose securities are traded on a CSE regulated market for at least three consecutive years may submit an application to the CSE Board to delist its securities under the following circumstances: a. On completion of a squeeze out, according to the Takeover Bids Law, b. Issuer obligations towards shareholders In relation to the latter point d , it is a prerequisite for the issuer: i.

The E. It is based on simplified listing requirements and fast - flexible listing procedures e. This listing fees are very low and competitive in relation to similar markets abroad. In this market there is also the possibility of listing newly established issuers, start-ups under conditions.

The market transactions are carried out with the same methodology as in the Regulated Market, using the existing electronic trading system of the Cyprus Stock Exchange. Companies listed on the ECM also enjoy the advantages of the tax regime in Cyprus, which can be exploited by issuers and investors such as non-payment of tax on capital gains, elimination of sales tax from 2.

In the E. M Market, the titles of 26 companies have been listed with a wide range of activities - Trade, Development of new projects, Golf Resorts, Insurance companies, Consulting Services, Hydrocarbons etc.

Out of the 26 listed companies 21 of them are from Cyprus, two are from Greece, one is from Malta and two from United Kingdom. Most of the Cyprus companies are of foreign interests with shareholders from abroad such as from Greece 5 , Israel 1 , Asia 4 etc. In this market 8 corporate bonds are also traded with issuers from the United Kingdom and Cyprus. A considerable number of Nominated Advisors are examining the listing of companies interested to list on the ECM.

These companies are either from Cyprus or abroad, focusing mainly on new business and innovation sectors. This perspective has broader positive implications as it provides added value to the listed companies and the Cyprus economy, in general. During , ten companies listed their titles on the ECM. For this reason continuous effort is required for the improvement of the quality of services provided and the reinforcement of the products offered.

The rate of registration of new companies is increasing, a trend which is expected to continue in The purpose is to render Cyprus as a powerful centre for the licensing and establishment of such undertakings, as well as their managers. It is important to note that the professional services sector has effectively contributed to the efforts made in other sectors of the economy, such as shipping, tourism, construction, research and innovation as well as start-ups, in order to steer the Cyprus economy towards the path of recovery.

The following year is expected to be especially important as far as the energy sector is concerned, bearing in mind the expected developments in relation to the natural gas reserves in the Cyprus Exclusive Economic Zone EEZ. It is imperative as the systems and procedures of the financial services providers are ready to properly implement the provisions of the Common Reporting Standard.

This of course involves increased administrative costs, as well as the proper collaboration between all professional sectors, bodies and the Tax Department. In order for Cyprus to be an attractive and strong business centre and for citizens to have at their disposal high quality services, properly addressing the completion of the economic adjustment programme should constitute a priority, with efforts being made to continue with the implementation of necessary reforms.

By Marios A. Klitou Chief Executive Officer Baker Tilly South East Europe Recent developments such as expected antitreaty abuse provisions to be introduced under the BEPS initiatives, limitation of benefits provisions in double tax treaties, enhanced exchange of information requirements and substance considerations, are rapidly changing the international business terrain.

Cyprus must also transform its landscape swiftly and effectively in order to respond to the changing needs of the business world. During , there was further development of services related to securing a residence permit in Cyprus and Cypriot citizenship. A careful approach is needed in regards to this market in order to encourage people who choose Cyprus as their country of residence to also consider moving the headquarters of their business to the island.

Another important development in the prior year was the marked increase of interest by Greek shipping companies in transferring their management to Cyprus. In order to ensure that this important opportunity for Cyprus is duly addressed, the authorities must proactively simplify the procedures relevant to the activities of these companies so that we can attract and keep them on the island.

The correct implementation of recent legislation aimed at improving the operation of the banking sector is key in ensuring that Cyprus can fully regain its credibility as a business centre and compete with other major business centres in Europe and worldwide. Certainly, there is no more room for further disruptions, as any further adverse developments could prove disastrous for the future of the services sector and the Cypriot economy in general.

It is also worth noting that Cyprus continues to be one of the main destinations for Russian entrepreneurs. Efforts are also being made to strengthen relations between Cyprus and Ukraine including the recent visit of the President to Kiev , indicating that the close and successful cooperation between Cyprus, Russia and Ukraine, is likely to continue. I would also like to comment on developments in the Middle East and the broader region. Political stability in Cyprus provides the island with the opportunity to form a bridge between these countries and the European Union, an important advantage which could be of great significance in the coming months and years.

Negotiations for the solution of the Cyprus problem are also encouraging. Without expressing an opinion on the political dimension, it is important to note that a possible solution of the Cyprus problem would act as a catalyst in the further expansion of the service sector and the economy.

I hope that the efforts of the Under Secretary to the President, Mr. The Council approved the proposal put forward by an ad hoc committee for the introduction of a retirement scheme for all its Members. The finalised proposals will be soon circularised to the Members of the Institute. During the quarter, the Council looked at various ways to foster its effectiveness in dealing with the increasing volume of issues involving the Institute.

Other important meetings and activities Significant time was devoted by ICPAC representatives for the National Risk Assessment project, which is under way in cooperation with other authorities and the consultation of the World Bank. The outcome of these meetings is to formulate new piece of legislation and align the understanding and actions of all parties involved. ICPAC also attended the meetings held for the transposition into the Companies Law the EU Directive regarding the disclosures of non-financial information in the annual reports of firms, contributing significantly into the discussion.

Meetings were also held with other competent authorities such as the Cyprus Securities and Exchange Commission and MOKAS for matters relating to anti-money laundering and administrative service providers. This new addition to the Institute is a clear proof of the Council s commitment to the continual upgrading of the Institute s services, as well as an enhancement of its monitoring role.

Ms Hadjimichael, who has assumed her new duties as of February 1st , is responsible for the audit and AML monitoring functions of the Institute, whilst she will also be the Compliance Officer of the Institute. Brief bio: Amalia worked at Deloitte between and where she has gained experience in the audit of international and local private and public companies.

From till January she was a Director at the audit firm G. H Audit Services Limited where she was in charge of the audit department. The agreement is in the form of a cooperation protocol and soon its implementation will commence. As the concept of Risk Management is fairly new and not many companies have formal policies or guidelines in place to address risks, the Committee examined a number of different policy guidelines and worked on some basic principles for consideration.

A Risk Management Policy Guidelines paper was put together which is included in the current issue of the Accountancy Cyprus magazine. The Committee, in consultation with the Educational Committee and the Institute of Directors, is organising a seminar focusing on a number of Corporate Governance issues. The Committee eventually organized the following 5 seminars during the aforementioned period: 1. How could advisors work better with banks in the debt restructuring process for corporates: The presentation event took place in Nicosia on 14th of January, 2.

Audit Monitoring Findings and Regulations: The half-day training events took place in Nicosia, Limassol and Larnaca on 12th, 13th and 14th of January respectively, 3. This platform has been developed by a UK company called VinciWorks and is offered to the Institute Members free of any charge. The log in credentials have been ed to all members and the site is available for use. This new development compliments the existing learning and training services offered by ICPAC, allowing the Members to take maximum benefits at the convenience of their own time and place.

Council abandons paper and adopts technology for its meetings The Council of the Institute adopted in February this year a web-based electronic tool for carrying out its meetings. The BoardPad application envisages to enhance the Council s effectiveness, communication and governance.

All Council meetings agenda, minutes and supportive material are now available on the application and the Council Members may use their tablet or laptop to follow the meetings. Gradually it is planned to incorporate all Council activities, as well as the activities of the Committees.

The General Manager and representatives of the Committee met with the Chairman of the Public Service Commission, to discuss various issues that are of mutual interest, in particular the recognition of ICPAC membership by public sector entities. This issue should be discussed and explored more, with other government officials.

During the meeting a number of issues were discussed that are of the interest of the Institute s members who work in the public and the wider public sector, the highlight being the public sector reform. The Committee underlined its willingness and commitment to cooperate and assist the government in developing a new structure in the public sector, that will be promoting the general public interest.

As a first step of this cooperation, it has been agreed and planned to co-organize a seminar, presenting the changes in the legislation for the pensions payments to civil servants in Cyprus. Marios Hadjidamianou Chairman 4. The professional liability of Accountants, Directors and Secretaries: The full-day training events took place in Nicosia and Limassol on 8th and 15th of March respectively, 5.

Overall, 10 training events were organized in all cities during the first quarter of The Committee aims to organize the following seminars during the second quarter of 1. Europass - Writing your own C. Corporate Governance in Nicosia on 5th of April, 4. Soft Skills in Nicosia and Limassol in June , 7. No conclusion was being reached and issues will be revisited. The main priority of our committee was to continue monitoring the licensing procedures of IPs as outlined in the new Insolvency Laws and to record logistical and other problems regarding the implementation of the new Insolvency Regime.

Practical and logistical difficulties were identified and suggestions have been made to ICPAC, the Ministry and the Registrar of Companies for addressing and resolving such issues. Meetings were held with the Cyprus Bar Association, The Cyprus Banks Association, with Registrar of Companies officials and the provisions of the transitional period were discussed and efforts made to ensure that all qualified IPs will be in a position to meet the law requirements. I would like to take this opportunity to thank all the committee members for their hard work, commitment and dedication who under very tight deadlines always ensure that the views of ICPAC are effectively communicated to decision makers and the interests of our members are safeguarded.

A special price per person had been arranged which included a set menu and unlimited consumption of drinks especially for the members and friends of ICPAC. The participation for the event was considered satisfactory and members and their friends met up for an enjoyable night.

The Committee would like to thank each and everyone involved and all the donor companies for their generous gifts for this charity event. The net proceeds of the event were donated to the Center of Spastic Children Anemone, for children with special needs. Avgousta Papadopoulou Chairwoman Advisory Services Committee In the first quarter of , we have organised our first event with the invaluable assistance of the Education Committee whom we sincerely thank.

On the evening of the 14th January , the ballroom set up in Nicosia proved too small to accommodate the crowd of professionals that gathered to listen to our guest; Nick Smith, Head of the Restructuring and Recoveries Unit at the Bank of Cyprus. Mr Smith, a professional with unparalleled international experience on debt restructurings on both sides of the deal; advising both borrowers and lenders, had a lot to talk about on the role of professional advisors in financial restructurings.

Having spent already 18 months on the island, Nick Smith spoke about his expectations when he first came Cyprus, a country with an inexistent record on debt restructurings, an economy in crisis and a troubled banking sector. He also spoke about steps taken to improve the overall restructuring and insolvency framework as well as the significant effort still needed by the legislators but also the community of professionals to help the banking sector and the economy recover fully.

At the end of his presentation, Mr Smith answered questions from the Chairman and Vice Chairman of the Committee as well as the audience. This discussion gave participants a chance to also express their opinion and, at the same time, exploit the opportunity to hear BOC s Head of Restructurings and Recoveries talk on the progress of resolving the great NPL challenge. We believe that the professionals that attended the event took away much more than their CPD units and the Advisory Services Committee would like to thank all those that supported this event.

Christophoros P. The proposed legislation covers areas such as registration and deregistration, submission of returns, books and records keeping, VAT Audits, Assessments, objections and court appeals, collection of taxes, administrative and criminal offenses and penalties etc.

The proposed piece of legislation applies to both Direct and Indirect taxes. The VAT committee was represented at the house of Parliament to make comments to the Finance Committee with regards to the proposed bill for the restructuring of loans. The representatives of the committee suggested to the Finance Committee that before the passing of the above-mentioned bill the VAT implications must also be considered and incorporated in the bill.

One of the issues causing concern as far as VAT is concerned is the VAT treatment of new properties that are foreclosed by financial institutions in satisfaction of outstanding debts. The VAT Committee formed a sub-committee for re-examining the current VAT treatment of fees payable to non-executive directors and to draft a letter giving grounds as to why the current policy adopted by the VAT office in this respect must be changed. In the committee s opinion, the current practice negatively affects the continuous effort by Government and private agencies to promote Cyprus as a financial center for major businesses to set-up their global or regional headquarters.

In preparing its proposal, the VAT Committee performed a research to find out how competitive jurisdictions treat non-executive directors fees for VAT purposes. Further to the issuance of Circular providing clarifications on the Bad Debts relief procedure, the VAT Committee raised some concerns regarding the practical application of one of the conditions contained in the circular.

More specifically, for the bad debt relief to be allowed, the debtor s account must be credited with the total amount written off under the bad debt relief procedure thus in effect deleting the debtor entirely from the taxpayer s records. We explained to the Tax Authorities that this requirement will cause a serious reduce the taxpayer s chances in recovering this debtor as his balance will show zero balance and consequently risking recovering the debtor at all.

It was suggested to the Tax Authorities that the written off amount can alternatively be posted in a separate account and they promised to look at positively. Although the option to tax to the leasing of immovable property was previously discussed with the Tax Authorities, the subcommittee will once more bring it up at the next scheduled meeting with the Tax Commissioner. In particular, the intention of the proposal is to incorporate in the VAT Law option to tax provisions applicable to the leasing of immovable properties.

The introduction of an option to tax scheme is expected to ease cash flow problems of local businesses as well as attracting foreign investors wishing to invest in real estate projects. We have met with the newly appointed Commissioner of Taxation Mr.

Yiannis Tsangaris and discussed the way forward in addressing the issues and problems faced with the Tax Department that need to be resolved. We have studied, submitted our comments and attended parliamentary meetings during which tax bills were discussed, the most recent one being the bill of Finance Leases. We have met with the Tax Department and discussed the scope of application of the circular on fiscal memories.

We have been involved with the finalisation of the circular on notional interest deduction. We have examined and commented on the new tax bill on tax procedures which attempts to consolidate direct and indirect tax procedures. We have finalised our proposals for the taxation of benefits in kind following the Tax Department s intention to regulate the matter and are expecting the arrangement of a meeting with the Tax Department to discuss.

We have continued working on proposals for the improvement of the taxation environment on trusts. We have continued our participation in the committee examining the tax issues arising from the adoption of the Solvency II Directive. We have continued providing technical support to the Min- 8 9. Currently we are assisting with the amendment of our IP regime. Members of our committee continued their involvement with DTT negotiations.

A representative of our committee attended on behalf of ICPAC a Parliamentary Committee meeting regarding the proposed amendment to the Corruption Law and the enforcement of certain penalties to companies when in default. In addition our committee is liaising with different anti-fraud bodies in UK with the purpose of exchange ideas and possible cooperation such as the Fraud Advisory Panel and the Forensic Specialist panel. In the current issue of Accountancy Cyprus, two members of the ECFA committee have written an article relating to PWC s global economic crime survey for The article stressed that the economic crime is still going strong despite the millions of dollars spent to tackle it.

The message is clear: the burden of preventing, protecting and responding to economic crime rests firmly with organisations themselves. The ECFA editorial committee issued volume 6 issue 4 of the e-bulletin. The main article in the issue described the latest results of the KPMG fraud barometer which was published in August and identified the latest fraud trends and patterns affecting the UK economy which helps business to stay alert to new fraud risks.

The ECFA committee is working very closely with the Educational committee of the ICPAC for the organization of a number of seminars covering topics in the field of forensic accounting and economic crime. A number of seminars are currently in the process to be organized in the near future.

On 27 January a follow up meeting, arranged by the General Manager of ICPAC, with the Superintendent of Insurance and the personnel of her department took place at the office of the Superintendent, in relation to the reporting requirements of Solvency II. The committee was represented by its chairman and a member of the subcommittee dealing with Solvency II matters.

It was agreed that a working group is formed by ICPAC in order to liaise with the Superintendent during the deliberations for agreeing on the regulatory reporting requirements and regulatory reporting format by external auditors of insurance companies under the Solvency II regime.

The Committee is represented by one member in the working group. The last meeting of the working group with the Superintendent took place on 11 March On 27 January the Committee represented by the Chairman and a member of the Committee had a meeting with the Superintendent of the National Betting Authority. The meeting took place following an inquiry by the Superintendent to discuss the possible guidance needed to be sent to the members regarding the application of reporting requirements provided on the Betting Law of The nominated subcommittee will review the law and provide its suggestions at the next meeting.

The Committee has completed the examination of the revised and new International Standards on Auditing ISAs relating to the new Audit opinions effective for the accounting periods ending on or after 15 December ISAs, , , , and The complete booklet with the new audit reports have been drafted, by the sub-committee, incorporating the comments of all the members of the Committee.

The booklet is now under a consultation period with the technical departments of various audit firms. The aim is to issue promptly a revised booklet of illustrations of Audit Reports based on the revised ISAs. The seminars that have been scheduled to take place in May are currently under the final stages of preparation.

Christos Tsissios Chairman Limassol Paphos Coordinating Committee During the period from 1 January to 31 March the Limassol-Paphos coordinating committee has carried out the following activities: 1. On the 13th of January the committee coordinated the seminar Audit Monitoring Findings and Regulations.

The seminar was held at Carob Mill in Limassol. On the 22nd of January the committee donated as a Christmas gift the amount of to Limassol Home for Children charity. The seminar was held at St Raphael Resort in Limassol. On the 15th of March the committee coordinated the seminar Professional Liability.

Ioanna E. Nicolaides Chairman Shipping Committee During the last three months the shipping committee continued its involvement with the initiatives of the Ministry in connection with the development of a national shipping strategy. The committee has been working closely with the Cyprus Shipping Chamber, the Cyprus Shipowners Association, the shipping committee of the Bar Association, the Central Bank, the Statistical Department as well as the Ministry of Transport, in an effort New Members to align efforts on Shipping and work towards a common goal.

Issues like contribution of shipping to the economy, filing of accounts, freight taxes imposed on Cyprus vessels, tonnage tax forms are some of the issues that are being discussed. This year ICPAC celebrates the fifty-fifth anniversary of its inception back in Starting off as a humble club of the very few, at the time, qualified accountants, and passing through various phases of development and maturity, ICPAC grew into a significant stakeholder of the economic and business scene, a multi-discipline organisation serving more than members and nearly students.

This exponential expansion in the Institute s roles and interests is evident by the fact that ICPAC has been entrusted legal responsibility and authority under four separate legislations, regulates today three distinct professions, operates via 24 specialised committees, as well as, by the multiple issues governing the Council s agenda.

One of the most challenging periods for ICPAC is undoubtedly the one that we currently endure, with the economic crisis and Troika dominating the scene. Apart from the overall financial and social predicament which affected everybody and ICPAC was no exception , the Cypriot professional accountancy body actively participated in the efforts to successfully meet the obligations under the adjustment programme of the Memorandum of Understanding with Troika. In parallel, the Institute s Council, the management, committee and other members worked hard in order to alleviate adverse repercussions on the economy, to maintain Cyprus as an international business centre and to restore the county s reputation and credibility We are of course very pleased with the successful completion of the adjustment programme, however there is still way to go.

We are definitely not out of the woods yet, and the economy still faces a number of serious challenges such as high unemployment, slow economic development, banks non-performing loans, market s lack of liquidity, coupled by the inevitable social effects Something we should have learned from this tough lesson though, is that we ought to adopt a new mind-set and culture, be more professional and less tolerant towards mediocre, corruption, nepotism and complacency.

The necessity for genuine and effective structural reforms in the manner that the State is both governed and run is eminent, calling for fair but tough and bold decisions without daring to consider any political or personal cost. Pursuing the above is imperative in order to be in position to cherish the fruits of the economy potentials that pose so attractively before us. Serious investors will most probably bypass Cyprus if they fear that their investments will be at stake, with uncertainty and loose procedures in the picture.

There is indeed a lot of business potential; but it is not a sitting duck any more. What ICPAC has achieved in its history so far, in comparison to other local organisations and to international accountancy bodies, is truly impressive. A mere glance at its current activities and services is good enough to get an idea. However, we are still far from ultimate excellence; but we try to gradually build it piece by piece, given the constraints of our capabilities and resources.

ICPAC is actually found at a strategically transitional stage, exploring its possibilities for restructuring and developing new skills and competencies. This is of-course partly dictated by the increasing legal and professional obligations, the new EU Directives and Regulations, the overall regulatory environment and global developments.

We try to anticipate how the future obligations and Member needs will shape up and, at the same time, we develop our courses of action to meet those needs. We try to think and plan ahead! Being an organisation whose activities as well as the work done by its Members affect public trust, ICPAC is also committed to servicing the public interest and safeguarding public value.

The accountancy profession carries its share of public responsibility, something that is understood and addressed by the Institute is a landmark year for ICPAC, not only because of the successful completion of the first 55 years of professional service, but it is envisaged to be a turning point in its activities and image.

Placing ethics, competence, knowledge and professionalism on top of its list, ICPAC is committed to pursue further enhancement of its good services to its members, the economy, the society and the public in general. History so far is not by itself a guarantee of what will follow, but it is a strong indication that we will keep on progressing on robust foundations. Board evaluation for performance excellence Mounting expectations, regulations and challenges, have brought Boards of Directors quality of performance under greater scrutiny.

KPMG focuses on preparing Boards to proactively work towards meeting their evolving responsibilities through evaluation of their performance and provision of practical solutions for improvement. Our well-established methodology and approach lies on the implementation of a targeted evaluation, placing emphasis on particular concerns without losing its comprehensiveness.

Our past experience, market knowledge and high caliber experts are our most valuable assets placed at your disposal. We can become your trusted advisor bringing on Board in-depth insight, objectivity, independence and consistency. All rights reserved. It celebrates the success of many future business leaders who will join the family of Chartered Accountants. He went on to point out to the new ACA graduate students the rewarding careers that their prestigious qualification could bring. Andrew said: By passing your exams, you ve opened up the door to a very exciting career.

The ACA is internationally-recognised, and we will offer you a network and ongoing professional support wherever your career takes you. He noted: You will be providing a service that society depends upon. Our members in Cyprus are playing a crucial part in rebuilding the nation s economy, and it is great to see that firms continue to support this for the future by training the next generation of Chartered Accountants.

And there is an increasing demand from these firms to employ more ACA students, which is a good indicator of the nation s economic growth for the year ahead. Cyprus was the first country outside the UK where ACA students were able to study, and marked the first step towards making it a truly international qualification, making it a key international market for ICAEW The successful graduates will now go on to complete their practical work experience requirements, at which point they will be able to become full ICAEW members and call themselves ICAEW Chartered Accountants Professional reputations.

Directors and officers liability. Data breaches and cyber risk. These are just some of the issues facing organizations today. Marsh helps you anticipate and manage threats to your business. Educating insurers on your business risks and customizing coverage to manage specific challenges. Marsh enables you to conduct business with confidence, bringing stability for your business, facilitate innovation and growth, improve cash flow and return on investment, and increase shareholder value.

It replaces accounting requirements introduced more than 30 years ago that are no longer considered fit for purpose and is a major revision of the way in which companies account for leases. Leasing provides an important and flexible source of financing for many companies. However, the old lease accounting Standard IAS 17 Leases makes it difficult for investors and others to get an accurate picture of a company s lease assets and liabilities, particularly for industries such as the airline, retail and transport sectors.

That is because leases to date have been categorised as either finance leases which are reported on the balance sheet or operating leases which are disclosed only in the notes to the financial statements. This somewhat arbitrary distinction made it difficult for investors to compare companies. It also meant that investors and others had to estimate the effects of a company s off balance sheet lease obligations, which in practice often led to overestimating the liabilities arising from those obligations.

IFRS 16 solves this problem by requiring all leases to be reported on a company s balance sheet as assets and liabilities. The amendments, Recognition of Deferred Tax Assets for Unrealised Losses Amendments to IAS 12 , clarify how to account for deferred tax assets related to debt instruments measured at fair value.

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What I would like to point out is that the government must be brave and insistent on these reforms. There is still a lot to be done and implemented, and undoubtedly the benefits we have obtained so far stem from the restraint in public sector wages and recruitments, which should continue to be applied. As regards the issue of bureaucracy, the public sector is persistently demonstrating indifference and resistance to change causing major investors to flee.

Phidias Pilides, President of the CCCI regarding the prospects and challenges faced by the Cyprus economy we have been informed, inter alia, that under no circumstances should the Government backslide and hesitate to continue implementing the structural changes that must take place. The economic situation in most companies does not yet allow the complete return to their employees of what they have been deprived as a result of the crisis.

They can only give back part of these benefits, and unless a gradual restoration of benefits is followed we are all jeopardizing what has been achieved so far with a lot of sacrifices. To our question about the reform of the public sector Mr. Pilides stated that the government must be brave and insistent on these reforms. Pilides stressed that there is still a lot to be done and implement, and undoubtedly the benefits we have obtained so far stem from the restraint in wages and recruitments in the public sector, which should continue to apply.

Regarding the privatisation of semi-public organisations Mr. Pilides stated that It is unacceptable for our country to be the last one to still have a public telecommunications organisation. This is a sector enjoying immense privileges at the expense of consumers.

As regards the current situation of enterprises Mr. Pilides stated that the truth is that some enterprises have started to breathe more easily. Pilides stated. The interview of Mr. Under no circumstances should the Government backslide and hesitate to continue implementing the structural changes that must take place.

We all saw how beneficial the result of the initial effort was, and this effort must go on. I hope that we have learned our lesson, though some disappointing actions have come to our attention. Demands have begun to be posed even before coming out of the crisis. Demands should be posed when there is enough room for their satisfaction. This is not the right time to discuss about collective agreements covering entire sectors.

They can only give back part of these benefits, and unless we follow a gradual restoration of benefits we are all jeopardizing what has been achieved so far with a lot of sacrifices. This is the correct course of action. Through their behaviour, the employees of semi- Furthermore, we still cannot understand the reason behind the reactions in relation to the full implementation of the interchangeability system. The absence of a proper evaluation system and the employment permanence in the public service, in the negative sense, are two elements that must be changed.

Of course there should be security at work and employees should feel that their jobs are not threatened, yet again they should be appropriately evaluated and, in case the state decides that some of them hold posts that are outside their duties, it should be able to make the necessary corrections. The public sector should be an ally and a supporter of the private sector instead of being an obstacle and a deterrent to its activities. So we must bring about a change of mentality. Civil servants are there to help the state operate in a way that serves the society in whole instead of causing distress to citizens from an ill-conceived position of power.

What is your opinion on the privatisation of semi-public organisations? It is unacceptable for our country to be the last one to still have a public telecommunications organisation. The unreasonable privileges, and not the basic ones, must be readjusted on a rational basis. We are not encouraging the passing of state monopolies into private hands in a way that would perpetuate their status as monopolies, since this would worsen the situation.

What we are saying is that the conditions for healthy competition should be safeguarded and semi-public organisations should be privatised. Provided that the conditions for healthy competition are in place, I am confident that we will begin to enjoy the benefits within the first six months. CYTA and EAC employ excellent technical staff, but no one can deny that there are undeserving employees among them, and this must be remedied. What is the current situation of enterprises?

The truth is that some enterprises have started to breathe more easily. Some of them handled the crisis diligently and are now beginning to move forward with optimism. There is increasing optimism in the market, consumers are not as reluctant to spend as before. It seems that those who can afford to invest are gradually starting to invest and, besides, a relevant recovery in the real estate sector is starting to show.

Professional services managed to sustain the crisis and are now back in the track of development. Even during the crisis, Cyprus never stopped being a reputable international business centre offering high quality services without any significant losses.

Many companies have already begun to show again their interest in using our country as a base for their international activities. Tourism has performed better in compared to with total revenues rising by 4. If we keep acting as we should, in we will do a lot better. What has the Chamber gained from its business missions abroad? The mass media abroad have been praiseful of how we managed the crisis in our country, and it seems that this encourages foreign investors.

In our missions we have adjusted our philosophy to the needs of the time. In China, which we visited together with the President, great interest was demonstrated in connection to the real estate and tourism sectors. In Ukraine our biggest success was the signing of the agreement for the avoidance of double taxation.

This was extremely important, since we were trying to conclude this agreement for the last eight years. We are certainly competing with others, and for this reason we must offer extra advantages to investors. Although activity is taking place in the investments field, no breakthrough has yet been made. It is also worth mentioning that countries such as Thailand, which are not among traditional investors, are showing interest in the real estate sector specifically. By Harris Georgiades, Minister of Finance In Europe our country is now considered a shining example of how an economic crisis should be tackled.

Cyprus now features in articles in the international press for its achievements and not its problems. Of course, the consequences of the crisis are still being felt, but comparisons should be made not with a sound economy, but with the conditions of economic collapse shaped in the five years before March Everyone should consider the state the economy was in three years ago and where it stands now.

We could list all the forecasts — by those who disagreed and by those who voted against all the reforms — and how many of these have been proved wrong. Let us recall a few: we are in the euro, we did not impose new taxes, we did not need a second memorandum, we were not led into an ever-deepening recession, the Troika did not get its hands on our natural gas, society did suffer but destitution was avoided.

In short, today we are back on the path to recovery and development. We have, in effect, earned a second chance. And it is exactly now at this juncture that we are called upon to choose the road we will follow. One road is the one we followed in the past. It is the one of negligence in relation to the management of public finances. It is the one of constant pressure for appointments and pay rises in the public sector, for constant expansion of benefits and hand-outs offered by the state, usually not to those entitled to them but to those who claim them the most vociferously.

It is the road of those who condemn austerity, but do not realise that the deficits and debts of this irresponsible management always land on the taxpayer in a way that undermines the future and the prospects of development. It is the road of complacency, with a banking system — including the co-operative banks — that lent recklessly. It is the attitude that considers state organisations public wealth but is indifferent to their systematic plundering. It is the road of conservatism which is chosen by those who resist every change and hide behind dogmatism and slogans.

The other road is not easy at all. It is the one of prudent management of public finances. It means that recruitment and pay rises in the public sector must be reasonable and in line with the performance of the economy as stipulated in the proposed legislation that has been before the legislature since last August. It means that all possibilities of transfers of existing staff will be explored before the option of new appointments is considered, as stipulated in another proposed bill tabled in the House some time ago.

This approach carries the challenge of change and reform. One example is the radical reform of social policy that has already been implemented, offering cover to thousands of our compatriots who were in genuine need while also excluding others who should never have been eligible.

Another is the ceding of the running of the ports to a private investor, the finding of a strategic partner for CyTA and the operation of the state lottery by a private company. This road demands that the banks operate in a framework of trustworthiness and manage responsibly the money of their depositors who paid a very high price for the mistakes of the past; that they fund the real needs of individuals and businesses but will also ensure the loans they give will be repaid.

It prioritises the beneficial and not always the popular. But it is the only road that can lead the country forward. Unfortunately, we had to reach the brink of total catastrophe to understand this. Some, however, even today remain stuck in antiquated attitudes, frequently longing for the spoils of the past.

This is the time the people are also obliged to take their on responsibilities. It is the time for the silent majority who are struggling and worrying about tomorrow, and not for those who make a lot of noise and remain stuck in the past.

It is the only way to ensure that we do not wake up to days like those we faced in March again. By Marios Mavrides Member of the Parliament Associate Professor of Economics European University Cyprus According to the latest data, the yields of the Cypriot year government bonds rose by 20 basis points since the end of December.

Even though this increase is not spectacular, it does make a difference when we are talking about loans amounting billions of euros. Germany refinances its maturing debt with 0. Cyprus has the highest borrowing costs in the euro area after Greece, which borrows at 9. It is noteworthy that Cyprus managed to reduce its borrowing cost from the excessive levels of of up to 14 per cent to 3. In recent weeks however, we are witnessing a delay in the implementation of the terms of the bailout which displeases markets.

The reluctance demonstrated by opposition parties to cooperate, and their resistance to privatizations disappointed financial markets. In addition, amendments to the foreclosure and insolvency legislation translate into obstacles in the process of consolidating the banking system smoothly, and in the reduction of non-performing loans.

It also begs the question of why a country with its economy chained by various interest groups and establishments, refuses to get rid of them. Markets are not stupid; they do have funds they want to lend but they also have brains, much more than what we believe. Unless the adjustment programme is completed as agreed and we also do what it takes to strengthen our economy, our borrowing cost will keep rising.

Currencies are the means by which wealth is stored, protected and exchanged between countries, organisations and individuals. A global currency, such as the euro, does this on a global scale. Since its introduction in , it has firmly established itself as a major international currency, second only to the US dollar. As we learned from our experience, the rate of economic recovery is slower than that of recession, therefore improvement of the economic climate is going to be gradual, without huge changes in the real economy.

Apart from the high value added that each project is expected to provide to the economy, a much needed great number of new job positions will be created. However, we cannot afford to be complacent neither we have the right to return to the times of irrational spending. As repeatedly stated by our political leaders, in recent months a new momentum has been developed in the negotiation process to solve the Cyprus problem.

We believe that the current year will definitely show whether this new effort will lead to a mutually acceptable solution to our political issue or not. In the case of a solution, the business world and the Cyprus economy, will find themselves faced with enormous challenges. We will be obliged to go through major changes and adjustments that could lead us to great opportunities for rapid economic growth.

That is why we must remain positive and alert in order to deal with every challenge that may arise. The management of public finances is expected to continue within the same reasoning and prudence taught to us by the memorandum and we must invest in the reforms we have undertaken as a state, if we wish to maintain and improve the recent rates of recovery. Spending habits and practices of the past should be abolished once and for all and the brand new beginning in healthy and neatly budgeted finances must become a normal practice.

We all anticipate that the faint signs of recovery as shown recently by the main economic indicators, will continue to improve for the rest of the year and certainly for the years to follow. We are still going through a period of transitions for our business model, but with proper planning we can achieve many benefits for the near future. As our mission states, OEB is and shall continue to be next to the Cypriot businessmen and claim what is best for our economy.

It is also used to store and create wealth for the future as savings and investments. Public and private sectors in third countries acquire and use the euro for many purposes, including for trade or as currency reserves. For this reason, today, the euro is the second most important international currency behind the US dollar. In , more than one-fifth of the global foreign exchange holdings were being held in euros.

The status of the euro as a global currency, combined with the size and economic weight of the euro area, is leading international economic organisations, such as the IMF and the G7, increasingly to view the euro-area economy as one entity. This gives the European Union a stronger voice in the world. To benefit from this stronger position, and to contribute effectively to international financial stability, the euro area is speaking with one voice more and more in important economic fora.

This is done through close coordination between the euro-area Member States, as well as the European Central Bank and the European Commission during international economic meetings. A number of third countries and regions are even more closely linked to the euro. By linking their currency to the euro they bring more certainty and stability to their national economies.

The survey covered companies in France, Germany, Italy and the UK in the aircraft and shipbuilding, energy, financial services, and electrical and mechanical engineering industries. Two thirds of the surveyed firms in France, Germany and Italy said they did not use any currency other than the euro for export invoicing.

If companies did use other currencies, this was mostly due to client preference and the important role of the US dollar in global finance. Moreover, four fifths of the companies said that the European sovereign debt crisis has had no effect on their use of the euro in trade invoicing. Second, in many countries globalization and technology left large numbers of people behind, creating potential for instability. This period is characterized by a deep and protracted worldwide recession and by a technological revolution and continuous innovation.

In the aftermath of the onset of the Great Recession in , there is a serious debate on its causes and impact with emphasis on the failings of capitalism and the resulting human suffering. It is up to this generation to implement reforms, which should eventually lead to a redefinition of the free enterprise system. The goal is that it will evolve into a market system with a human face. The other game-changing development of our times is the digital revolution which is called by many as the Fourth Industrial Revolution.

Powerful advances in Information and Communication technologies are leading to large gains in productivity and efficiency and rapid innovation in products and services. A large share of those now in high-school will probably look here for employment and should gear their preparation accordingly. But these advances are also creating important challenges in job replacement, data protection and the distribution With respect to the Eurozone there are alternative narratives, as to the origins and the management of the ensuing crisis.

There is also a shift in market strength: power accrues to those who have most data, best algorithms and most advanced computers. The bet to be won here is how to maximize the benefits of the digital revolution while dealing effectively with its challenges. The financial crisis started in the United States about ten years ago. It was a remarkable combination of failings in bank supervision and regulation, greed for profit and lack of attention to the potential dangers of persistent trade imbalances and huge capital inflows coming in from China.

The Americans dealt with the crisis, as they always do, and moved on. But the crisis exposed serious shortcomings in the functioning of the worldwide economic system and especially in the European Union and the Eurozone. For a thirty-year period leading up to the recent crisis, expanding international trade, free enterprise and market-based systems, generated jobs for almost everybody, created wealth and got millions in all continents out of poverty —viewed from afar, a remarkable achievement.

But viewed from close by, this was an unsustainable system. First, there were growing imbalances, as successful exporters like China, other emerging economies and Germany accumulated export earnings but did not recycle them through increased demand for imports. With respect to the Eurozone there are alternative narratives, as to the origins and the management of the ensuing crisis. These alternatives were seen in action during the stand-off between Greece and its creditors.

First, is the narrative of national policy failures in terms of heavy public spending and borrowing, and declining competitiveness. The second narrative puts emphasis on the design faults of the Monetary Union: its narrow emphasis on fiscal criteria, the neglect of rapid growth in private sector borrowing and the absence of a banking union and of a federal budget.

At the same time the fact that surplus countries like Germany, do not participate in the needed correction by expanding their imports, makes the adjustment for deficit countries much harsher. There is truth in both narratives and the challenge going forward is to build systems to help avoid national policy errors, while fixing the architecture shortcomings of the Monetary Union. The pressure for reforms is coming from the legacy of the crisis in Europe. What we now see is slow growth, income stagnation, low productivity, high debt and, above all, high unemployment, especially among young people.

Some changes like a banking union and a stronger fiscal pact are happening. But, the key goal of political union that will enable Europe to deal with crises more effectively like the United States, remains elusive. In fact we now have sharper North-South and East-West divides, fuelled by economic differences and large migration flows.

All this leads to Euroscepticism, nationalism and xenophobia, mostly from the right, and populism from the left. Because the shortcomings of the free enterprise system are rightly seen as having contributed to the crisis, there is a danger for this populism to lead to a return to tax-and-spend approaches and a growth of the role state.

These approaches have been tried and failed. That is why it is important for all of us to come up with a credible middle road that avoids the pitfalls of unchecked market-based capitalism without falling into the inefficiencies of socialism. Elements of this approach must include combating corruption which allows those using devious methods to advance at the expense of the rest of us; fighting tax evasion which frustrates honest people in too many countries; real reform of the financial system so that innocent tax payers do not have to pay the bill again; and tackling monopolies and vested interest groups which have captured the political system and are blocking reforms that benefit the majority.

In parallel, this approach would refocus the welfare state on the really needy and use the money saved to invest in health and education. I have touched on some of the challenges of the younger generation, namely: forging a stronger political union in Europe, rehabilitating a market-based economic system, and taking full advantage from the digital revolution; but there are others, like climate change where the myopia of the young and the selfishness of the older generations is leading to inaction.

There is also the long-standing challenge of reducing income and wealth inequality worldwide and eliminating poverty in developing countries which ought to remain firmly on our radar screen. Reversal of the extreme increase in inequality that has occurred in the last thirty years is a policy choice and must be seen as part and parcel of the big challenge of our times of redefining and reshaping our free enterprise economic system.

However, the tenacity, focus and deliberate effort that we have witnessed since , must continue unabated: If was a year marked by massive effort, impressive achievement and the keeping of promises, will have to be a year of even more effort, more achievement and more promises kept. By John P. The banking industry continues to come under pressure as NPE ratios remain high, household and business indebtness continues to stifle growth and the abrupt dissaving that occurred in continues to limit opportunity.

Customer service must also become more intensely improved so that we can provide service that is not only satisfactory, but of top quality. We will not shirk from the challenge. We welcome it and we will continue to deal with it with equal measures of ambition and determination.

ELA exposure, despite a decline that belies even the most optimistic observers, must continue. The management of loans in arrears and restructuring must also continue despite the progress that has taken place, especially in the Austerity has come to its limits. With prudent management, the fiscal problem has been mostly tackled. Reform seems to be underway. Overall asset quality needs to be further improved, despite the successful outcome of the SREP test that has taken place.

The banking system, and Bank of Cyprus especially as the industry leader, need to support the economy of the country by extending rational, careful lending to viable customers and by assisting existing customers to return to viability. Our focus on Cyprus itself is now complete and we remain devoted to supporting the economy of the country and its return to conditions that will allow Cypriots to not only make plans for the future, but to also dream of bigger and better things to come.

Austerity has come to its limits. Beyond the continued management of existing challenges, however, we need to start discussing more intently the road to prosperity- a new economic model for growth, stability and opportunity for all Cypriots. At Bank of Cyprus, we wish to engage in this discussion with all stakeholders, participating in the emergence of a new promise for the country. Our wish, alongside all Cypriots, is that the year can bring a reunification of the island.

The coming year will not be easy, but with ambition, renewed energy and deliberate effort, I am certain that it will be better. Attracting direct foreign investment is the only safe choice for economic growth in a strongly competitive and evolving international environment. Investor interest in large investment projects such as the integrated casino resort, luxury marinas, golf courses, expansion of Limassol Port, Vasilikos Energy Centre and the Scientific and Technological Park, as well as use of the old Larnaca airport building, are all testament to the prospects of key sectors of the economy, such as tourism, commerce, energy, research and innovation.

The Cypriot real estate market is also showing notable potential for growth, with sales to local and foreign buyers recording a remarkable increase in CIPA continues to contribute, in its own area of activity and with the same commitment and determination, to the unremitting effort to stabilise and adjust the Cyprus economy to the new state of affairs. The Agency actively participates in efforts to reposition the country and introduce a legislative framework for a comprehensive procedure to Facilitate Strategic Investments, which will provide a stable investment framework of regulations and procedures, bypassing bureaucracy and time-consuming procedures that hamper the implementation of investments.

Bringing the law up to date, promoting large investment projects, upgrading the tourism product, defining tax, town-planning and other business incentives, as well as accelerating licensing procedures and implementing an effective permanent residency programme for wealthy third country nationals, are just a few of the necessary steps which are underway in the investment sector to help the economy progress.

The progress that has been recorded and the prospects which have opened up have helped serve other top objectives, first and foremost of which is reducing unemployment, which though still high is showing signs of stabilising. This is a collective mission, the benefits of which will be felt soon. Having recorded the required stabilisation and progress in , Cyprus has laid the foundations to achieve sustainable growth rates over the next year.

Despite the improvement as illustrated by certain key indicators and the growth of the Cyprus economy, we still have to tackle several challenges arising from both internal and international factors. By Christis M. Christoforou, CEO Deloitte Ltd In there have been positive developments which have led to increased hope for the future. The improvement of the perceived financial reliability of Cyprus internationally is of major significance.

In general, I would say that in we have set the foundations for positive developments. Yet, our efforts should not stop there. In order to be successful in the future we need to keep going with further initiatives.

Furthermore, we worry about the delay in completing significant infrastructure projects marinas, golf clubs, etc. We generally believe that we should move faster with more urgency, in order not to miss the momentum of the economic recovery, which brought some positive results in At the same time, we should be cautious of the global environment, as Cyprus is vulnerable to international developments, due to the nature of its economy.

The crisis in Syria, in combination with the migration problem, international terrorism and the disruption of political relations among related parties RussiaWest or Russia-Turkey, etc. We, as Cyprus, have neither the power nor the capabilities to influence these developments. Nevertheless, we can advance our role as a factor of stability and security in this crisis. Cyprus, as an EU member state with abundant competitive advantages, should build on the current situation pushing forward in its own interests, in respect of the Cyprus problem, energy and economy.

The post — Memorandum era: Investments and employment In this light, I consider that the developments in the region may influence the development of our economy, yet, we may also take advantage of the new situation for the benefit of our country. Under these circumstances, we have a vital role as professionals.

Deloitte, as well as other professional services organisations, has made a major contribution to the efforts towards rebuilding the Cyprus economy. Through a variety of initiatives in Cyprus and abroad we have managed to alter the negative image portrayed by the economic crisis in At the same time, we have tried to persuade foreigners that our economy has not lost its comparative advantages, therefore, they should not stop their activities on the island.

Moreover, we have highlighted and promoted the prospects of Cyprus, based on energy, tourism, shipping and other promising sectors, so as to attract further investments and foreign companies. Assessing our efforts in the recent years, I can say that we are satisfied that Cyprus and its economic model continues to attract foreign investors.

Utilizing our knowledge, our extensive experience, vision and professionalism, Deloitte will continue being on the frontline of the development of the Cyprus economy. As a consequence, the economy is recovering while the banks have been restructured and recapitalized. Now that Cyprus exits the memorandum of understanding it is necessary that it continues its structural reform process.

It is important that Cyprus continues the prudent fiscal policy so that it does not return to the era prevailing before the memorandum, when there was high non - targeted social expenditure, while wages were rising faster than the rise in productivity. This led the downgrading of our competitiness and to a high current account deficit which in peaked at For the facing of the serious social and economic problem of unemployment, investment is necessary.

But investment cannot be undertaken by the public sector. As a consequence investment should be undertaken by the private sector, with the exception of certain infrastructural projects which help the private sector to promote productive investment. Consumers believe that an increase in private business activity will lead to an enhancement of world economic growth.

Structural reform measures: for private investments to be carried out structural reform should continue and even be intensified. Also the prudent behaviour of the trade unions is needed so that wages and salaries should not rise at o higher rate than the rate of increase of productivity. The role of the trade unions in a globalised economy is to cooperate with the businesses for the improvement of productivity so that their members will be receiving real wage rises, not nominal wage rises which lead to the rise of the cost of production and, as a consequence, the decrease of investments and unemployment.

And because we are in the middle of elections campaign the various political and social groups are expecting that the government will yield. As a result it has been decided that the Cyprus Electricity Authority will not be privatised as it was agreed with the international lenders. We now know the result. The Need for an Entrepreneurial Ecosystem It is important that Cyprus continues the prudent fiscal policy so that it does not return to the era prevailing before the memorandum Besides the privatisations, other issues which have not been finalised are the improvement of the civil service and the introduction of a general health care scheme GESY.

In parallel, the government and the trade unions have agreed that there will be no wage increase for the semi-government organizations for But for the wage cost should not exceed the rate of increase of the nominal GDP. The issue of wage indexation ATA however, remains open for the trade unions which insist that consultations should go on for a final solution. It should be stated, however, that the rise of wages and salaries at the same rate as the increase of the nominal GDP, also includes ATA, i.

There would only be a problem of wage indexation if the rise in wages and salaries was in real terms. And even here the employees are not entitled to the whole of the increase in real GDP, since the increase emanates from two sources: the increase of productivity and the employment of more human, capital and natural resources. The employers are only entitled to the increase of productivity. Otherwise the competitiveness of Cyprus will be downgraded, and exports, investment and employment will fall.

But in all three countries wage indexation is only offered if the state of the economy justifies it and in any way the wage cost should not be rising at faster rate than the wage cost in competitive countries. The purpose of the trip was to visit various organizations stakeholders that makeup the entrepreneurial ecosystem in Greece as well as various successful startup companies and entrepreneurs.

Given the current state of the Greek economy and the problems that it has been facing for many years, my expectations were very low. To my surprise though, I discovered that Greece yes, Greece! Corallia Clusters Initiative is an organization that was established to develop and manage innovation clusters in specific sectors and regions of the country with the aim to establish a competitive advantage for the participating players.

Attica Ventures and PJ Tech Catalyst are venture capital funds that draw their money either from private institutional investors banks in this case or from EU structural funds and their role is to identify, invest finance potentially successful start-ups by acquiring an equity stake in them with an exit plan usually in years.

Lessons for Cyprus We should draw lessons from the setup of the Greek entrepreneurial ecosystem as well of course from the Israeli one. My humble opinion is that President Anastasiades should include it in his agenda as another area of collaboration during his current discussions with the GreekIsraeli Prime Ministers and ask for help and guidance.

The statistics provided at the moment for Cyprus on innovation and entrepreneurship are not encouraging. The level of our innovation index is now well below the EU average. For , this is at 0. Reading the full report, I came to the conclusion that although there are some individual, scattered efforts from participating stakeholders government, private organizations and networks, academic institutions, etc. Many more of these efforts though are needed if we want our youth to enter this field and become entrepreneurs.

Promoting innovation and entrepreneurship creates a more competitive environment, promotes growth, creates new jobs, and helps to increase the foreign direct investment in the country. I was recently asked whether this country has the potential to look forward. By Savia Orphanidou Economist Nevertheless, I truly believe that this country has the potential of a prosperous future ahead.

Cyprus has officially exited from the Memorandum of Understanding a few days ago. After three years of extensive efforts to stabilise our banking system, to reform our fiscal policy and to promote the necessary structural changes, Cyprus has entered a new era of positive growth rates, of fiscal surpluses and of sustainable public debt levels.

The growth rate for is 1. In other words, our public finances are back on track. This country has indeed potential. Because its citizens have shown enormous courage and dignity during the most crucial times of the crisis. Because Cypriots, for once more after , have worked hard and with determination to achieve, slowly but steadily, another small economic miracle. It has certainly not been easy for anybody. However, Cypriots have chosen to place the public interest, instead of their own self interests, above all.

Cyprus has entered a new era of positive growth rates, of fiscal surpluses and of sustainable public debt levels. With one important precondition, to continue with the implementation of this prudent economic policy, leaving fiscal deficits and mismanagement in the past.

By showing the necessary political will to speed up the implementation of major structural changes in vital sectors, such as healthcare, public service and semi-government organisations. I truly believe that the road towards growth and development is without return. Not because we have exited the crisis and everything goes well. But because I am certain that we have the potential to change our mentality.

To look forward, with a different way of thinking, for the benefit of Cyprus as a whole. This country has a very well-educated and hardworking human capital. It has an economy with strong areas of potential growth such as tourism, shipping, financial services and energy. Managing these areas of growth prudently, and especially our natural gas sector, can make Cyprus one of the biggest energy players in the eastern Mediterranean, and a significant business and economic bridge between Europe and the Middle East.

Most importantly, Cyprus will have the biggest potential if we manage to solve the Cyprus problem and re-unite the island. The solution will safeguard our national survival and will lead to the speeding up of economic growth prospects and the re-engineering of our economy.

It will create conditions of security and peace. Above all, it will create the opportunity to a better future not only for us but for our children. Yes, it is indeed true that this country has potential! And this potential lies in our hands! In the space of a few days the economy of this country was demolished and put on life support.

Since then the country has made significant progress, surpassing the expectations of many, including the IMF. That still leaves the Cyprus economy a long way from anything which might be considered economic prosperity. Unemployment is unacceptably high. Much remains to be done. In the context of the necessary rebuilding there has been much talk of a new economic model.

Indeed there was every reason to believe that along with the pain of the financial crisis, there was also an opportunity to start afresh. To develop new industries. To abandon much of the outmoded and arteriosclerotic customs and regulations of the pre- model. By Dr. Jim Leontiades Cyprus International Institute of Management But With the appearance of even the modest recovery the island now enjoys, many of the dinosaurs of the past are raising their heads, rushing to reassert destructive and outmoded practices.

Consider the issue of shop opening hours. The current debate in parliament turns about the interests of large shop keepers versus small retailers. The interests of the general public do not even figure into the debate. Apparently, it does not occur to the majority of our parliamentarians that society has changed. The typical married couple is now one where both husband and wife are employed. During week days, most wives are at work. Allowing the stores to stay open on Sundays provides an enormous convenience for such families.

But this gets little attention compared to organized self interest groups which can swing a few votes. Adding to this trend to re-establish the past is the prospect that the Troika may soon depart. But it is increasingly obvious that whatever progress has been made toward a new economic model owes much to oversight and pressure from the Troika.

Privatization of our national industries, bringing them into line with such measures taken many years ago by most of our European peer group was to be part of a new Cypriot economy. This has been fiercely opposed by the unions who have benefitted vastly from nationally owned industries. With the appearance of even the modest recovery the island now enjoys, many of the dinosaurs of the past are raising their heads, rushing to reassert Reaping the Returns of our National Wealth destructive and outmoded practices.

Under enormous pressure the government has buckled. Similarly, the de- nationalization of Cyta has met with the same strong opposition. The government is vacillating. Its attempts to abide by its agreement to privatize have met with cries of outrage from the usual sources. What will happen to the profits which these industries contribute to the country? Examining the performance of this national wealth and its contributions to government is instructive.

In , the EAC generated 42 million euros of profit. This was accompanied by a bill to the government of Cyta is not far behind. According to reports, there is a The Co-op Bank is the latest addition to our national wealth. Parliament has recently approved a donation by the taxpayer to that bank of million euros to make up a recently discovered shortfall. These three nationalized industries alone require the taxpayer to pay m. This does not include the 1. This bank already has more non-performing loans relative to its size than the large private banks.

Now that the Co-op bank is in government ownership steady losses are almost guaranteed. Without a government controlled airline how would tourists reach the island? Bankruptcy of the airline followed. Naturally the government is still on the hook for the shortfall plus generous pension and other benefits.

Cyprus Airways is no more but tourist arrivals have actually increased as have the number of destinations served. Increased competition has lowered many air fares. Their success indicates that much needed change will be hampered and even reversed. These groups will fight to maintain their privileges and outmoded practices.

More often than not, they have succeeded. The danger is that Cyprus will eventually find itself in a time warp, a country in the 21st century with a 20th century economic model. Since the collapse interest rates have been at record low levels and the printing presses have been running at full speed printing money, not only in Europe but around the world. However, the only effect has been to produce bubbles in the stock exchanges and in some property markets, with no perceptible improvement in the real economy.

Governments have gone ever-deeper into debt but unemployment rates remain at near-record high levels in most countries. A few countries, such as the United States, appear to have succeeded in reducing unemployment, but on closer inspection the reduction is illusory, with most of the new jobs created being McJobs, offering low wages and no guaranteed hours of work. After the failure of zero interest rates and socalled quantitative easing, we are to be guinea pigs for a new miracle cure, which involves people being charged on their deposits instead of receiving interest.

The big idea behind negative interest rates, according to their advocates, is that they will encourage people to spend money instead of saving, and so will kick-start stalled economies. What these people are forgetting is that the main reason people save in the first place is to supplement their pension and help them maintain a respectable standard of living during the retirement years when they will not be working and earning an income.

In those seemingly far-off times when deposits were still paying interest people strove to save enough to create a complementary income in retirement. Now most people face penury in their old age. What is more, the policy is likely to fail in practical terms. In the short term, if people cannot rely on earning interest to supplement their pension the most likely outcome is that those who can afford to will save even more to make up for the lost income, achieving the exact opposite of what the central bankers hope for.

Instead of reviving growth, negative interest rates will force people to save more though not necessarily with the banks and spend less, entrenching deflation and stifling growth. A further unintentional consequence of negative interest rates is the increased risk of bank failures. The central premise of negative interest rates is that commercial banks are charged interest on funds they deposit with the central bank.

This is an additional cost for the commercial banks and they will have to decide whether to pass it on to their customers. If they do, people will be encouraged to withdraw the cash and hide it under the mattress, particularly now, when there is so little public confidence in banks as a safe place to keep money. If the banks decide not to pass on this cost their profits will be reduced, with a consequent effect on capital adequacy.

Either way the policy risks creating a negative feedback loop that could force a run on the bank, slowly at first and at lightning speed later. Additionally there is a new lollipop politicians all over the world are currently licking, being the massive and ever-widening disparity between the wealthy few and the rest of us, and their plans to address this issue. Irrespective of the fact that they are completely missing the point with their plans, they are also not telling people the real reasons for this intolerable increase in the wealth gap and why the middle class is becoming a dying breed.

It is a truism that banks prefer to lend money to people who already have plenty of it. Who is the better prospect from their point of view, the wealthy individual with useful contacts and security, or the average Joe who considers himself lucky if he can make his salary last until the end of the month, with no collateral to offer? When the central banks kill the value of money either by eliminating interest or printing new money, the only person who has access to these cheap funds is the rich one.

Unfortunately the financial game is rigged against the average person for one more reason: governments desperately need inflation to reduce the real value of their own sovereign debt. All countries are so deep in debt that there is no way they will ever manage to reduce it to sustainable levels using the proceeds of taxation alone. In the long run they are killing the middle class and risking social unrest.

There is a good chance that being either a central banker or a politician will become a life threatening profession in the near future. In case of a decrease of the cost of these elements, prices should also decrease. A prices and incomes policy for Cyprus By Dr Iacovos Aristidou Ex Minister Ex Director General, Planning Bureau On the occasion of the exodus from the Memorandum and the impending submission of claims for pay increases and requests for the re-establishment of the system of automatic price adjustment of salary and wages, I thought it would be useful to present and analyze our experience so far on these subjects and the wider issue of a prices and incomes policy, which we tried to follow in the past.

A prudent policy on these matters is required in order to secure uninterrupted growth of the economy and at the same time a more equitable distribution of income, two basic ingredients of a modern economic and social policy. During various periods of time, the economy faced destabilization tendencies, which were manifested in increasing inflation, widening of public finance deficit and the deficit of external current account. As a result of these developments, there was a recess in productive investment, slowing down of the rate of growth of production and productivity as well as increased Prices have been left altogether to the market forces, whereas wages, salaries and other incomes are been checked for many years now by the existence of so many unemployed, the shrinkage of economic activity and certain arbitrary Government decisions because of the recession.

Thus, no wonder how we ended up in the huge public deficit and the very high public debt since the beginning of the new century. Things could have been definitely better if, among other things, a healthy prices and incomes policy had been adopted, under which the prices would have not followed the ups and downs of the market but only the unavoidable increases of the cost of production and the wages and salaries the increase of productivity and not the power of trade unions.

Prior to this there had been several attempts for the establishment of a similar council in Cyprus as well. The Sub-Committee suggested, among other things, the strengthening and coordination of the Services that were involved in the two legs of the subject-matter, the Market and Prices Inspection Services of the Ministry of Commerce and Industry and the Industrial Relations Services of the Ministry of Labour and Social Insurance. At the same time it elaborated the general criteria for a correct prices and incomes policy: The increase of salaries, The above arrangements were utilized in order to face the new destabilization tendencies that appeared after the reactivation of the economy following the calamities of the invasion.

Though such a policy was not achieved this time as well, the lengthy discussions that took place helped the sides to realize the dangers from the submission of irrational requests for pay increases as well as the unjustified increases of prices. The efforts were not made in vain at the end.

During the coming years there was a considerable restrain both on the height of the submitted requests for pay increases, which in general were within the limits of overall productivity and the price increases, which followed more or less the increases of the other elements of cost.

In parallel, the mechanisms for ensuring in practice a correct and just prices and incomes policy were strengthened. It was in this framework that our belief in the institution of free negotiations among social partners and the mechanisms for solving existing differences in accordance with the Code of Industrial Relations was re-assured, as well as to the need for exerting every effort to increase productivity, the need for combating monopolistic situations in the market of goods and services, as well as strengthening the mechanisms to follow up developments in these areas.

It was on our initiative in this respect that the Government started assisting financially the newly established Pancyprian Association of Consumers. At various points of time the prices and incomes policy followed was criticized. If this method was not in existence, the claims at the renewal of collective agreements would have been much larger. The increase of salaries, wages and other incomes should follow the increase of productivity, whereas prices should not increase unless there was an unavoidable increase of other elements of cost.

There were no concrete developments in this regard in the last few decades. On the contrary the efforts to develop and follow a healthy prices and incomes policy have been abandoned. Prices have been left altogether to the market forces, whereas wages, salaries and other incomes are been checked for many years now by the existence of so many unemployed, the shrinkage of economic activity and certain arbitrary Government decisions because of the recession.

However, what will happen when, hopefully, the reactivation of the economy starts? This should be a country with good communications. A place where wealthy, productive people can be creative, live, relax, prosper and enjoy themselves, preferably with bank secrecy and no threat of war or revolution. This should be a tax haven with excellent communications and professional and confidential financial services from which.

FLAG 5: Playgrounds. These are places where you actually physically spend your time around the world. You will therefore need several favored places so that you can move freely among them like a simple, low profile tourist, without attracting any undue official attention. It becomes a thought that never leaves you". An administrative office is frequently located in a country other than that of the headquarters office, the parent company or a country of operation.

The role of such an administrative office may be to co-ordinate international or regional activities, to provide particular services such as management analysis, financial or other related services or to perform a given function such as marketing. A number of otherwise high tax jurisdictions such as the United Kingdom, France, Belgium and Greece grant special tax treatment in order to attract the administrative offices of multinationals. Advisory Board of Directors: An advisory board of directors are individuals appointed to advise the elected board of directors.

An advisory board is not bound by the duties imposed upon elected board members, and the corporation is not required to follow the recommendations of the advisory board. Agent: An agent is anyone who is authorized to act on behalf of another. A corporation can only act through its agents; therefore, it is important to define what actions an agent is authorized to perform. Akte Van Opricht: Statutes of a Dutch company. Aktiengesellschaft AG : German company limited by shares.

Alternate Director: A person appointed to represent and vote on behalf of a director of a company when he is absent from a meeting of directors. Amex: American Stock Exchange. Anstalt: Establishment, a legal entity without shares established in Liechtenstein, with some features of a trust but with corporate personality.

Do not have shares. Anti-Avoidance Measures: The object of anti-avoidance measures, insofar as they relate to tax havens, is to prevent the avoidance or reduction of tax through the displacement of one or more connecting factors i. Anti-avoidance measures may be of general application or may refer to specific tax havens.

Any measures usually appear in domestic tax systems; they may however be imposed by tax treaties. Apostille: Certificate of Good Standing in connection with corporations according to the Convention of the Hague of October 05, Arbitrage: A form of hedged investment meant to capture slight differences in the prices of two related securities. Arm's Length Relationship: An arm's length relationship is a term used to describe a type of business relationship a corporation should have with a close associate to avoid a conflict of interest.

For example, when you negotiate with your banker or your supplier, any agreement which results will likely. When you loan money to your son or daughter, you may be inclined to. The first example would be considered to be an arm's length relationship, while the second example would not. When your corporation does business with or makes loans to corporate officers and directors, the relationship must be at arm's length to avoid conflicts of interest. Articles of Association also Bye-Laws or By-Laws : Articles of Incorporation: Must contain: 1 the Corporation's name; 2 its registered address; 3 its objects and aims; 4 its capitalization; 5 a statement that the company is a limited liability organization.

Articles of Incorporation US Style! Upon filing the articles with the secretary of state, the corporation comes into existence. Articles are a public record available for inspection anymore. Commonly, articles will provide the name of the corporation; the number of shares which the corporation is authorized to issue; and the classification of those shares, if any; the name and address of the registered agent; and the name and address of the incorporator.

Additional information is also permitted. Asset Protection Trust APT : A new type of trust which places the trust's assets beyond the reach of potential foreign governments, litigious plaintiffs, creditors and contingent fee lawyers. Auditors: The last body needed in connection with a corporation: required to inspect the company's bookkeeping and verify the correctness of annual accounts.

Usually not employees or directors of the corporation but an outside firm. Aussensteuergesetz: Anti-avoidance German law whereby German citizens remain subject to the principal German taxes for a period of ten years if they immigrate to a country designated in the legislation as from time to time amended as a low tax country.

Back-to-Back loans are matching deposit arrangements. They may be used in order to solve a financing or exchange control problem. However, in the case of certain tax havens, the function of back-to-back loans is to reduce the taxable base subject to withholding taxes on interest payments, by interposing an intermediary subsidiary company between the source of the income and the recipient.

For example, an intermediary company located in the Netherlands or the Netherlands Antilles may be interposed so as to take advantage of a favourable tax treaty. In such cases the authorities usually require a certain spread or "turn" on the rates so as to create a small profit which is subject to tax locally.

Bandwidth: Measure in kilobytes of data transferred of the traffic on a web site. Banking: A considerable volume of international banking takes place offshore and many of the world's major banks have banking and trust company operations in one or more tax havens. Most tax haven jurisdictions have enacted legislative provisions and set up administrative authorities whose function it is to control banking and trust company activities.

Banking Passport:. Bank Secrecy: In most countries one of the terms of the relationship between banker and customer is. Staff members are normally required to sign a declaration of secrecy as regards the business of the banks. Where numbered accounts are used their purpose is to limit the number of persons who know the identity of the client.

In certain countries e. Switzerland and the Cayman Islands specific legislation makes breaches of bank secrecy subject to criminal law sanctions. However, in all legal systems including Switzerland there are specific cases where the duty of secrecy of a banker is discharged, e.

The exchange of information clause contained in most tax treaties may enable the tax administration of one treaty country to obtain information concerning bank accounts which its residents have in the other country. Basis: Basis, a tax and accounting term is the measuring rod against which gain or loss is measured. With stock, basis is what you pay for stock or the fair market value of property you contribute in exchange for the stock. Bearer Bond: A bond issued in bearer form rather than being registered in a specific owner's name.

Ownership is d determined by possession. Bearer Shares: Shares in the capital of a company which are transferable by delivery of the certificate. Unlike registered shares, which are transferred by an instrument of transfer, the name of the holder is not registered in the books of the company. Beneficiary: A person to whom a trust's proceeds are distributed. Besloten Vennootschap met Beperkte aansprakelijkheid BV : Dutch limited company for small commercial enterprise, not required to publish accounts; used as a Substantial Holding Company.

Big Brother: Your un friendly local government watching over your shoulder. Board of Directors: The company's "cabinet" - as specified in the Articles of Association - is supposed to make decisions on the issues that are too specific for the general meeting to discuss but which are beyond the day-today responsibility of the company management. They appoint officers, and they are elected by the shareholders of the corporation.

Board members owe the corporation duties of ordinary care, good faith, and loyalty. Bonds: A bond certificate is simply an IOU. It certifies that you have loaned money to a government or corporation and describes the terms of the loan. Only corporations can issue stocks, but bonds can be issued by corporations or governments. Business Class A class of service on airlines that is usually situated between first class and coach and offers amenities as larger seats, free cocktails, and early check-in.

Bylaws - Bye-Laws see also Articles of Association : The bylaws are the rules and procedures which govern the corporation. Such things as director and shareholder meetings and procedures are described in the bylaws. In the event of a conflict between the articles of incorporation and the bylaws, the articles control. Bylaws can't be inconsistent with the business corporation act as well. Captive Insurance Company: Insurance company established by a company or international group to provide insurance or reinsurance for the promoter and associates of the promoter.

Cedula: National ID in Spanish speaking countries. Certificate of Authority U. Certificate of Incorporation: The basic existence of a corporation usually derives from two documents: the Articles of Association and the Certificate of Incorporation. Charter: Memorandum of Association. Close Corporation U. The state in which the close corporation is formed must have a close corporation statute.

Close corporations can eliminate or limit the powers of the board of directors, and corporate formability requirements are relaxed. Closely held Corporation: A closely held corporation is any corporation in which the stock is held by a relatively small group of people or entities. Stock of a closely held corporation is not publicly traded on any stock exchange. Commingle: Commingling is the sharing and pooling of personal and corporate assets. For example, rather than maintain separate corporate and personal bank accounts, you choose to use one account for personal and corporate purposes.

This is considered commingling and an easy way to become personally liable for corporate acts. Common Trust Fund: A trust that operates by the process of pooling funds from a number of participants in the trust, who as beneficiaries under the trust, share in the income or other gains derived from the acquisition, holding, management or disposal of assets acquired for the trust.

Consent Resolution: A consent resolution is any resolution signed by all of the directors or shareholders, which authorizes a particular action. This act eliminates the need for face-to-face meetings of directors and shareholders. Controlled Foreign Corporation: A company incorporated outside the United States but under control of a United States resident and subject to the anti-tax haven measures contained in Subpart F. This information is provided by the user during the first visit to a web server.

The server records this information in a text file and stores this file on the visitor's hard drive. When the visitor accesses the same web site again, the server looks for the cookie and configures itself based on the information provided. Corporate Charter: See Articles of Incorporation. Corporate Officers: Another "cabinet like" institution, sometime part of the Board of Directors: president, secretary and treasurer etc. These individuals have the right to represent the company to third parties, to negotiate and make commitments in its name.

Corporation Corp. Corporation Tax Company: A company incorporated in Jersey but not trading in Jersey and thereby designated as non-resident for tax purposes; liable only to low fixed annual rate of tax. Credit, Credit Card: With an old-fashioned credit card, you charge to your heart's content and receive a bill.

The credit card company hopes that you will eventually pay off the balance. In other words, the card company trusts you pay. Cuba Clause: The so-called "Cuba Clause" allows the situs and proper law of a trust to be transferred from one jurisdiction to another. Cumulative Voting U. For example, if John has 25 voting shares and there are three directors to be elected, John has 75 votes which he may allocate in any manner chooses. In some states, cumulative voting exists unless the articles reject it.

In other states, cumulative voting does not exist unless the articles permit it. CV: Curriculum vitae. Course of career. The Drug Enforcement Agency U. Debenture: An unsecured bond backed only by the general credit of the issuing corporation. Debit, Credit Card: Almost as tricky to get these days as the good old 'Credit, Credit Card", a debit card is directly tied to a bank account.

Whatever charges the user runs up are debited to the bank account, and monthly statements do not carry a remittance slip. The same account may have a checkbook tied to it as well. Credit as such, however, is not extended since you are not allowed to use the card if the balance on the bank account wanders into the red. Deelnemingsvrijstelling: Substantial Holding Company in the Netherlands.

Derivatives: Financial contracts whose values are based on, or derived from, the price of an underlying financial asset or price - for example, a stock or an interest rate. Discretionary Trust: A highly flexible arrangement in which the beneficiary has no fixed interest in any part of the income of the trust or its assets except perhaps at the termination of the trust. The Trustees usually hold the property and income for a broad class of beneficiaries to whom they distribute the assets at their discretion.

However, the Trustees may be guided by an informal memorandum written by the settlor who outlines his wishes but has no legal status. One advantage of this arrangement is that benefits can be varied according to changes in circumstances with little difficulty. Another is that the beneficiary has a somewhat nebulous hope of receiving anything and therefore it is difficult for any creditors to find an interest to which to attach a liability. Dissenters' Rights U.

Business corporation laws prescribe the procedures by which these rights may be exercised. If a corporation proposes to sell substantially all of its assets or merge with another corporation, minority shareholders may be able to force the corporation to purchase their shares. Dissolution can be voluntary, initiated by the. When in dissolution, activities of the corporation must be geared to winding up corporate business, not expanding it. Dividend: A dividend is a distribution of cash or property by a corporation to a shareholder.

Dividends are paid out of the corporation's net earnings and profits. If there are no earnings and profits, dividends cannot be paid. Generally, there is no right to have a dividend declared, and the board of directors can decide whether or not to declare a dividend. Certain classes of preferred stock may limit this discretion of the board.

Domain Name Lookup: The process of converting a numeric IP address into a text name for example, Domicile: The place where an individual has his permanent home, or to which he intends to return, or in some cases the country of origin. In other jurisdictions the place where an individual has a long established residence or in relation to a company, where it is incorporated Double Taxation Agreement or Double Tax Treaty : Agreement between two countries intended to relieve persons who would otherwise be subject to tax in both countries from being taxed twice in respect of the same transactions or events.

Almost all phone calls in the world are routinely scanned for "suspicious words" by various governmental agencies' computers. In Germany, all international calls are already automatically scanned by the Bundes Nachrichten-Dienst,. Even Austria is following suit. Emigration: Emigration to a tax haven or to a country offering special retirement incentives may serve to break totally or in part the link between a taxpayer and the high tax jurisdiction from which he is emigrating.

Normally, it is the change in the place of residence which is material; however, in other cases a change in domicile or even citizenship in the case of the United States may be necessary. Anti-avoidance provisions or exchange controls may delay or render extremely difficult the coming into effect of the fiscal advantages of the act of emigration. Federal Employer Identification Number.

Escrow: Written legal engagement to do something, kept in third person's custody until some condition has been fulfilled. Establishment: See Anstalt. Euro: The European Currency Union. They may take the form of loans, debentures or convertible debentures and are issued at a fixed rate of interest. Eurobonds are normally issued in countries where interest payments are not subject to withholding tax. Major issues are frequently handled by international underwriting syndicates.

The market originally developed in Eurodollars, but other currencies, e. Deutschemarks, Swiss francs and Yen, now form a major part of the market. The market is not subject to exchange controls or other restrictions, although investors and borrowers may be so subject in their own countries. Exchange Control: Regulations whereby a country controls transactions in foreign currencies or securities.

In some jurisdictions e. Australia, Japan and the United Kingdom the regulations may render a contract void unless prior consent is obtained. Exempt Company: A company exempted from tax or from compliance with specified regulations of the country in which it is established. Exempt Trust: A trust established in a country where the Government issues a guarantee that the trust income and property will not be taxed for a specified number of years no matter what laws are subsequently passed relating to income, inheritance, estate duty, or capital gains taxes.

Exempt Gilt: Security issued by the British Government with the condition that they will be free of United Kingdom tax when beneficially owned by non-residents. Exequatur: Recognition of a country's consul by a foreign government.

A service in which a factoring house or other financial institution purchases a customer's accounts receivables and assumes all the credit risk of the customer's debtors and the responsibility of collection payments. Fiduciary: See Trustee. Filters: A means of narrowing the scope of a computer report or view by specifying ranges or types of data to include in or exclude.

Government's Financial Crimes Enforcement Network. Flag of Convenience: The flag of a ship is the flag of the country of its registration. The term "flag of convenience" refers to the flag of a country in particular Liberia and Panama which is chosen for ship registration in order to achieve fiscal benefits no income tax being levied by such countries on international shipping operations and other non-tax advantages relating to lower labour costs and manning scales, officer and crew requirements, trade union practices, etc.

Ownership of the ship is normally vested in a company incorporated in the country of the flag. Foreign Bank Accounts U. Virgin Islands. Foreign Corporation: A corporation organized under the laws of a foreign country and whose parent company in the home country may participate in any percentage of shares of the affiliate corporation. Foundation: See Stiftung.

Free Zones: Free zones are designated areas which receive special treatment through their exclusion from the area to which the country's normal customs rules apply. A free port is one at which imports may be landed without paying customs duties. The system of free zones or free ports favours; export processing, transhipment and the entrepot trade since there is no need to pay and then reclaim customs duties.

Though free zones are often part of a tax incentive package in what would otherwise be a high tax jurisdiction, they may also be found in tax havens, e. Freeport in the Bahamas. General Accounting Office U. Gilt: Security issued and guaranteed by the Government. Golden Parachute: Provisions in the employment contracts of executives guaranteeing substantial severance benefits if they lose their position in a corporate takeover. GPOA: General power of attorney. Greenmail: A company buying back its own shares for more than the going market price to avoid a threatened hostile takeover.

G U. Hedge funds use almost all investment techniques, including those forbidden to mutual funds, such as short-selling and heavy leveraging. Hedging: Taking two positions whose gains and losses will offset each other if prices change, in order to limit financial risk. Hit: An action on the Web site, such as when a user views a page or downloads a file. Holding Company: A company whose activity is limited to holding and managing investments or property but not having ordinary commercial or trading activities.

The requirements to achieve holding company status vary in different countries in particular Liechtenstein, Luxembourg, Nauru and the Netherlands. Home Page: The main page of a Web site. The home page provides visitors with an overview and links to the rest of the site. It often contains or links to a Table of Contents for the site.

Incorporation Havens: An incorporation haven is a country, such as Liberia and Marshall Islands, which has no infrastructure of local attorneys or accountants. It is simply in the business of registering corporations and ships.

There are no other services offered and the tax haven clientele never goes there. Incorporator: An incorporator is the person who signs the articles of incorporation. Incorporators may have personal liability for false statements contained in the articles of incorporation. Many corporate directors and officers will require that they be reimbursed for all cost, expenses, and liability which they incur while acting on behalf of the corporation.

Insider Information: Important facts about the conditions or plans of a corporation that have not been released to the general public. Intellectual Property:. Ownership conferrint right to possess, use or dispose of products created by human ingenuity, including patents, trademarks and copyrights.

Inter-Company Pricing: Tax havens may be used for the purpose of inter-company pricing in a number of ways. In the first place, a manufacturing company located in a high tax jurisdiction could effect sales to a related company in a tax haven jurisdiction at cost or at prices involving a very small profit margin; the tax haven company could then in turn sell the goods to one or more related marketing companies in high tax jurisdictions at high prices which would produce a low profit in the hands of the latter company or companies.

A variation of this technique would involve selling to unrelated marketing companies at arm's length prices, the primary object of the exercise still being achieved since the manufacturing company would have avoided taxation on the real profits that would otherwise have accrued to it. Secondly, raw materials or goods or components manufactured at a very low cost abroad, could be purchased by a tax haven company and then sold to a related company in a high tax jurisdiction at high prices which would give the latter company a substantially lower profit than if purchases had been effected directly.

Often inter-company pricing takes place by companies merely passing invoices without the subject matter of the sale actually being transferred to or by the intermediary company. Interest: The cost of borrowing money. Interest Rate Swap: An agreement involving exchange of interest coupons at a fixed rate for coupons at a floating rate.

Both parties' liabilities under the swap are in the same currency and for an equal amount. Thus, there is no exchange of principal. Vincent and refers to companies which, though resident in one of these countries, do not carry on business in goods or services originating in such country. International Financial Centers: The term "International Financial Center" which is occasionally used - incorrectly - as a synonym for "tax havens", refers more correctly to centers such as London, Luxembourg, Paris, Singapore and Zurich.

One of the important requirements of a successful international financial center is that international financial business transacted there should not be subject to inconvenient controls or withholding taxes. International Tax Planning: The object of international tax planning is to determine, from the tax point of view, whether or not to embark on a project; and, if it is embarked upon or has already been commenced, then to minimize or defer the imposition of the tax burden falling on taxable persons and events and to do so lawfully, in the attainment of the desired business and other objectives, while taking into consideration all relevant tax factors with particular regard to the danger of double taxation and the advantages which may be derived from the inter-relationship of two or more tax systems, and in the light of the material non-tax factors.

The role of tax havens in international tax planning lies in the possibility of situating a taxable person or a taxable event in a tax haven with a view to displacing the connecting factor with a high tax jurisdiction and thus permitting a modification in the incidence of tax. Investment Bank: A financial institution that arranges the initial issuance of stocks and bonds and offers companies advice Advice about acquisitions and divestitures.

Investment Currency Premium:. Consideration for the purchase is the establishment on the investment company's books of a debt to the investor equivalent to the value of the investments transferred whereby the income generated from the investment holding company's assets are not taxable. Investment Incentive: Investment incentives are incentives of various kinds which are granted in order to attract local or foreign investment capital to certain activities e.

Such incentives may be of various types, e. Signed document bearing these letters followed by specified sum, constituting formal acknowledgement of debt. Itinerary Day by day plan. The physical condition resulting from long distance travel and changes in time zones, the symptoms include insomnia, lack of appetite, and a short temper. Joint Venture: A type of business partnership involving joint management and the sharing of risks and profits as between two or more enterprises based in different countries.

When the capital of the partnership is known as a joint venture. Junk Bonds: Bonds issued by companies with low credit ratings. They typically pay relatively high interest rates because of fear of default. A corporation set up in a tax haven with nothing more than a mailing address to take advantage of tax provisions.

Severely criticized in many quarters as an evasive measure, the company whose existence is little more than a name-plate has been outlawed in Monaco but is allowed to function in many other havens. Amplifies the potential gain or loss for the purchaser. Licensing: Technology which can be the subject-matter of licensing covers all forms of industrial.

It embraces industrial property which may be protected by patents, Wade marks, etc. As well as technology which cannot be patented. Industrial enterprises frequently exploit their technology by transferring it to licensing companies in tax havens so that royalties and other sums may be received by the licensing company from related companies or third parties thus reducing the total tax burden.

The anti-avoidance provisions of most developed countries have limited the use of tax havens for this purpose. Log File: A file created by a web or proxy server which contains all of the access information regarding the activity on that server. Sometimes it's in the same city, other times in another continent. Mail is sent to the mail drop and is then placed unopened into another envelope and mailed to its final destination.

As long as your intentions are legal there is never any problem with authorities. A good, reliable service does not condone fraudulent business activity. You can still use your regular address to receive most of your mail but your confidential mail goes to the mail forwarding service and then to you.

Financial privacy is almost a thing of the past nowadays. With computers, it's eroding rapidly, much quicker than in the past. You might say, "Who needs Privacy? I have nothing to hide! Then about a month later you start receiving weekly catalogs, sales literature, promotions, etc. Try giving them a name other than your own with your address. I tried John Doe I and sure enough that person started receiving catalogs.

Many companies sell our names to others and sooner or later you are getting bombarded with Investment Schemes, Get Rich Quick Letters, Chain Letters, Miracle Health Cures, and other distracting material. People who use mail forwarding services are a mixed bag of individuals and organizations. Some people have made enemies in life, ex-spouses, and business acquaintances and while they may be living in Paris, France, they would like the other party to think they are in London, England, so they use a mail forwarding service.

If you are going to sell a product by mail and have the best product in the world but are located in San Salvador, El Salvador a potential buyer for your product may be hesitant about sending money for your product. If you have a US address, most buyers are not too worried about sending money through the mail. Many people, maybe they have accumulated great wealth or are celebrities, have to worry about the press, fans and admirers, enemies, kidnappers, robbers, and so on.

With a mail drop you can keep distance between you and these people. Companies use mail forwarding services to do things their competition might find out about if they used their regular address. It's also a good way to check out your competition. You can find out what they are charging the people you are selling to. Another company ran Help Wanted Ads just to see how loyal his employees were to him. Mailing list companies also use mail forwarding services to salt their mailing lists to the people they are renting to, and check to see that the lists are being used on.

In using a mail drop try to find out beforehand how much privacy they give you, some will give information out to anyone calling over the phone - a good one will not as it could be just anyone calling. Try to find out how long they have been in business and if they plan to be in business for awhile.

Make sure they don't sell your name to other. They prefer to establish themselves before signing a lease, though some companies that arrive intending to use a business center for a few months end up staying with them for years - for the sake of convenience, the comfort of clean modern offices with a prestigious address, without the hassle of maintenance and other problems associated with a lease, becomes too difficult to give up. Telephone services range from a basic message-taking service to the most up-to-date call diversion system.

One business center offers a diversion service called "The London Office". This was designed with the telecommunications company so that your own -telephone number is instantly diverted to a chosen number anywhere in the world, and a programmed announcement saying "This is a call from your London office" pre-warns whoever answers the telephone. Of course you pay for the second leg of the call.

This is a package offering clients the flexibility to work from anywhere they choose; local telephone numbers are logged onto a computer system for call diversion. The package includes use of the business center's address, use of meeting rooms and secretarial services.

In most serviced office centers clients can buy services a la carte in order to suit their particular needs. For example, you can rent conference rooms by the hour so as to have an office for, for example in London, when the need arises. The main attraction of the serviced office facility is that the client has the option to walk away when his license expires.

Business centers take the operational headaches out of renting office space and of clients having to employ their own staff, which leaves them free to focus their efforts entirely on the success of their business. Management and Control: In certain legal systems e. Ireland which follow the former United Kingdom law in this regard, a company is treated as being resident in the country in which its management and control is exercised, and not in the country of its place of registration or incorporation.

The criterion of residence may be of relevance in international arrangements in involving tax havens, and can be material from both the fiscal and the exchange control points of view. Management Company: See Administrative Offices. Margin Account: A brokerage account that allows a person to trade securities on credit. Margin Call: A margin call is a demand for more collateral on a margin account. Memorandum of Association: See Articles of Association. In meger situations, one of the corporations will survive the merger, and it is referred to as the survivor.

The other corporation is referred to as the disappearing corporation. The survivor assumes all of the assets and liabilities of the disappearing corporation. Minute Book: Used for writing minutes in. Minutes: The corporate minutes reflect the written record of actions taken or authorized by the board of directors or shareholders.

These written records are customarily stored in the corporate minute book. Money Laundering: Money laundering occurs when criminals seek to make illegally obtained funds look legitimate by funneling them through a string of banks and businesses until the money's origin is obscured. The 'fingerprint' most money transactions leave. Mutual Assistance Agreement: A contract agreement between two or more nations in which the fiscal Governments are empowered to take preference over the civil rights of each others' citizens in ascertaining and collecting crime-related proceeds or tax liability.

Mutual Fund: Investment company usually formed in a tax haven and issuing shares to the public. Limited company in the Netherlands used as a Substantial Holding Company, required to publish its accounts. No-frills: Basic service on an airplane with no extras. Nominee Director: Someone who acts on your behalf as a 'front' director of the company. In some jurisdictions the nominee director can also be another offshore company.

Non-refundable: Money cannot be refunded. Non-Resident Company: A company treated by the jurisdiction in which it is incorporated as non-resident for tax purposes or exchange control purposes or both. Non-transferable: Item is not to be used by any other person than the one named on the item. No-Tax Haven: Term used by certain financial writers to refer to tax havens where there are no relevant taxes. Not-for-Prof it Corporation: A not-for-profit corporation, sometimes referred to as a nonprofit corporation, generally exists for the purpose of carrying out some socially useful objective.

Formed under the nonprofit corporation laws of a state, not all of these corporations are tax exempt. And, unlike the name implies, many not for-profit corporations make money. The money, however, does not get distributed to members, officers, or directors. The money is used to further the socially useful purpose. Organisation for Economic Co-operation and Development. Officers: Officers are appointed by the board of directors and serve at the pleasure of the board.

The bylaws usually prescribe the titles and duties of each office. Common officers are the president, secretary, and the treasurer. Officers direct the daily operations of the corporation. Offshore: Any country other than your own. Offshore Center: A financial center used as a foreign base for overseas operations where the investor may move in and out of his investment freely and which fits the needs of the user. Offshore Finance Company: A company organized in a foreign country, almost always in a tax haven country, which handles such financing services as arranging foreign loans in Eurocurrency markets and.

Generally the offshore finance company is created to handle the financing requirements of its parent or related companies but is used occasionally to handle the financing needs of the parent company's distributors or agent overseas. Offshore Holding Company: A company organized in a foreign country which controls one or more affiliate companies and which manages, administers or services its affiliate companies usually located outside the country in which the parent company is incorporated.

Offshore Investor: An investor who is a user of a foreign base company in an offshore center and who may move in and out of his investment freely. Offshore Trading Company: A company organized in a foreign country to buy goods from an exporter in one or more other foreign countries and to sell these same goods to importers in other foreign countries. The documents are processed by the offshore trading company and all managerial, administrative and day-to-day financial transactions are handled by it.

The goods are shipped from the seller in one country to the buyer in the other country without ever being shipped or landed in the country where the offshore trading company is located. Also called Page Impressions. Paper Trail: The inevitable trail that most transactions leave tracing back to its originator. Par Value: Par value, an accounting term which is rapidly being discarded, is the face value assigned to shares of stock.

If the stock is no par, the board of directors retains the discretion to set a price for the shares and to allocate whatever portion of that price it chooses to the paid in capital account. Partnerships: A partnership often offers useful features for the purposes of an overall tax plan.

In certain jurisdictions, a partnership may have corporate attributes and resemble a company. Passenger Mile: One airline passenger carried one mile; this is calculated by multiplying the number of miles traveled times the number of passengers. Passport: Official document proclaiming the citizenship of an individual.

Permanent Establishment: Legal concept applied by a country in order to tax commercial activities realized in its territory by a company or person incorporated or resident outside the jurisdiction. The expression is commonly used in double taxation agreements and is defined in the O.

Personen- und Gesellschaftsrecht: Law applicable to individuals and corporate bodies in Liechtenstein. Petrodollar: United States dollars obtained by oil exporting countries. The operating system i. Windows 98, Windows NT, etc. Point to Point: A term for using individual airline fares from city to city. Portal: Internet general-purpose starting point. Preemptive Rights U. Like cumulative voting, preemptive rights exist in some state unless the articles reject them.

In other states, preemptive rights don't exist unless the articles permit them. Professional Corporation U. Professional corporation statutes designate which professionals may incorporate under these statutes. Professional corporation shareholders remain personally liable to their clients for professional malpractice. Promoter: A promoter, in a corporation context, is one who generates interest and activity in and on behalf of a corporation before its formation. A promoter is usually personally liable for all pre- incorporation activities.

Protector: An individual appointed by the settlor of a trust to ensure that the trustee s administers and manages the trust assets in accordance with the trust deed and he is often vested with the power to appoint and remove trustees. Protocol: An established method of exchanging data over the Internet. Proxy: A proxy is a written authorization to vote on behalf of another.

Shareholders often vote by proxy, permitting others to vote their shares. Except for close corporations U. Proxies are usually revocable, but they can be made irrevocable under certain circumstances. In a nutshell, a PT merely arranges his or her paperwork in such a way that all governments consider him a tourist. A person who is just "Passing Through". One can be a fulltime PT or a part-time PT. Quorum: A quorum is usually at least half of the directors or the holders of at least half of a corporation's issued and outstanding stock.

Before directors or shareholders can authorize any action, a quorum must be present. The bylaws prescribe quorum requirements. Real Estate: Withholding and other taxes are frequently imposed on rental income deriving from the holding of real estate in a foreign country; similarly, capital gains taxes may be imposed on the profits flowing from the sale of property.

However, in exceptional cases, the provisions of a tax treaty may be of considerable value in minimizing the total tax burden, e. Ownership of real estate by individuals may also result in liability to death duties and similar taxes in the country in which the real estate is situated, irrespective of the residence or domicile of the individual owner. For this reason it is common to hold foreign real estate through a tax haven or other company.

Registered Agent: A registered agent is the person or entity designated in the articles of incorporation to receive service of process and other important notices from the state. A corporation must maintain a registered agent at all times or risk forfeiture of the corporate charter. Registered Office: The registered office is the place where the registered agent can be found.

It may be the corporate office, or it may be the office of the corporation's attorney. Registered Share: Share which is transferred by an instrument of transfer. The name of the holder is registered in the books of the company. Resident Company: A company treated by the jurisdiction in which it is incorporated or in which it conducts commercial activities as resident for tax purposes or exchange control purposes or both.

Resolutions: A resolution is a formal statement of any decision which has been voted upon. When the board of directors or shareholders authorize a particular action, the authorization most often comes in the form of a corporate resolution. For example, a corporate resolution could read: "Resolved, that this corporation establish a depositary account with the XXX Bank. An S corporation is created under the Internal Revenue Code. A corporation may elect to be treated as an S corporation. Stringent rules exist with respect to how and when the election is made; the number and type of shareholders; and the means by which the election may be terminated.

S corporations pay no income tax; all items of income, gain, credit, and losses pass through to the shareholders in proportion to their shareholdings. Schengen Treaty: A number of European countries have signed an agreement called the Schengen Treaty which states that if a person secures a visa from one member country, they may use a Schengen Visa to enter all other member countries. Austria and Italy have also agreed to become members in the. Screen Company: A company incorporated in a country which charges a nil or low rate of tax on receipts or distributions of interest, dividends or royalties received from another country, taking advantage of a favorable double taxation agreement between two countries which reduces the tax withheld at source in the country in which the income arises.

Secured Credit Card: Here, there are two accounts: a frozen bank account the funds in which act as a guarantee for the card - and the actual credit card account. Statements are mailed only in the months when something is charged to the account, unless the balance for the preceding month has yet to be paid off in full. But you are still obliged to make a minimum monthly payment of 10 per cent of the outstanding balance within a couple of weeks from receiving your statement. Securities: Securities can include notes, stock, treasury stock, preorganization subscriptions, voting trust certificates, partnership interests, investment contracts, and certificates of interest in oil, gas, or mineral rights.

Both the offer and sale of securities are regulated by state and federal governments, and care must be taken to comply with applicable laws and regulations. Server: A computer that hosts information available to anyone accessing the Internet. Settlor: The person who creates a trust. Share of Stock: Represents ownership in a corporation. There exist several different types common and preferred and classes of shares with different privileges and rights, such as registered shares with or without par value , preference shares, non- redeemable shares, shares with or without voting rights and bearer shares etc.

Shareholders do not own specific corporate property; they merely own an interest in the corporation. Some state statutes use the term "shareholder"; others refer to "stockholders. Shipping: Owing to the innate mobility of the shipping industry it is common for ship-owners and operators to have recourse to tax havens.

Frequently the ownership, operation, administration and registration are situated in carefully chosen and often different jurisdictions in order to keep global tax burdens at a low level. An international company owned by airlines that provides communication services.

Smurfing: Breaking large sums of money into small deposits through anonymous bank accounts and offshore "shell" companies into order to dodge banks to report these transactions. Spam Blast: The e-mail equivalent of junk snail mail.

Statutes: Statutes are laws passed by the state legislature or U. Business corporation laws are statutes. Statutes often authorize an administrative agency to declare regulations which are used to supplement the statute.

In the event of a conflict, statutes control over regulations. Stepping-Stone Country: A country in which a screen company is incorporated. Sterling Area: The area in which the pound sterling is legal tender, namely the Scheduled Territories. In general, the United Kingdom does not impose restrictions on exchange transactions or payments and receipts between residents of the United Kingdom and residents of the Scheduled Territories.

Exchange control applies mainly to transactions with residents of countries outside the Scheduled Territories. Stiftung: Foundation, a legal entity established in Liechtenstein with corporate personality and founded in order to receive a permanent transfer of assets by way of settlement.

Stock: Stock represents ownership in the corporation and is often evidenced by a stock certificate. Stock can be common or preferred, voting or nonvoting, convertible, redeemable, and so on. The articles of incorporation will determine the designations and classifications of stock.

Stock Purchase Agreement: A stock purchase agreement is an agreement between the shareholders and the corporation. It provides a mechanism to regulate the transfer and sale of corporate stock. Often, a stock purchase agreement will provide a right of first refusal in favor of the corporation or remaining shareholders in the event of a proposed sale of stock by shareholders.

A stock purchase agreement can also provide for a purchase upon the death, disability, retirement, discharge, resignation, or bankruptcy of a shareholder. Subpart F Income U. Subsidiary Company: A subsidiary company is a company under the control of another company through stock ownership. Substantial Holding Company: A particular type of holding company established in the Netherlands exempted from tax on income from investments under specified conditions.

Liechtenstein , GmbH Germany , Inc. France , S. Suffix Internet Domain Name : The three digit suffix of a domain can be used to identity the type of organization. Lawful agreement, or re-arrangement, of the affairs of an individual or company intended to avoid liability to tax.

Tax Evasion: Fraudulent or illegal arrangements made with the intention of evading tax, e. Tax Incentives: The term Tax Incentives is used when tax benefits are part of an economic development programme. Most tax incentive measures fall into one or more of the following categories: tax exemption tax holiday ; deduction from the taxable base; reduction in the rate of tax; tax deferment.

Tax Haven: The term Tax Haven is generally used to refer to a jurisdiction: 1 where there are no relevant taxes; 2 where taxes are levied only on internal taxable events, but not at all, or at low tax rates, on profits from foreign sources; or 3 where special tax privileges are granted to certain types of taxable persons or events.

Such special tax privileges may be accorded by the domestic internal tax system or may derive from a combination of domestic and treaty provisions. Where tax benefits are part of an economic development programme the term tax incentives is usually used. Simply stated, a tax haven is any country whose laws, regulations, traditions, and, in some cases, treaty arrangements make it possible for one to reduce his over all burden.

The tax havens of the world broadly may be classified into six separate categories: 1 no-tax havens e. Vincent and Vanuatu ; 2 countries taxing only local income e. Tax Holiday: Exemption from taxation for a designated period of time. Tax Loophole: An unintended benefit permitted under the tax laws of a country when previously the Government unknowingly approved legislation that encourages a tax-payer to take advantage of a tax reduction or exemption which the legislators had foreseen.

Tax Shelters: The term "tax shelters" is sometimes employed to refer to those jurisdictions where taxes are levied only on internal taxable events, but not at all, or at very low rates, on profits from foreign sources. In domestic tax law the term applies to a variety of devices which allow taxpayers to deduct certain artificial losses, i.

These artificial losses may be offset not only against income from the investment out of which they arise, but also against the taxpayer's other income, usually from his regular business or professional activity. Tax Sparing: The sphere of application of a tax incentive may be extended by way of a tax sparing clause in a treaty between a capital importing country and a capital exporting country.

Such clauses allow residents of the capital exporting country a credit against domestic tax for profits or gains derived in the developing country in respect of which all or specified taxes are subject to exemption or reduction in the latter country. In line with this approach certain tax treaties specifically exclude from their scope entities which benefit from specially favored tax treatment e.

However, certain colonies or former colonies of the United Kingdom and the Netherlands benefit from extensions with or without modification of treaties concluded respectively by the United Kingdom and the Netherlands. The existence of such treaty links may be of considerable value with regard to tax haven operations taking place in jurisdictions such as the British Virgin Islands and the Netherlands Antilles.

Tax Treaties: Tax treaties are international agreements or conventions concluded with the object of eliminating double taxation by the contracting states. International double taxation may be loosely defined as the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical or overlapping periods. The most harmful effects of double taxation are on the exchange of goods and services and on the movement of capital and persons.

Treuhanderschaft: A Liechtenstein form of a trust. Treuunternehmung: Another Liechtenstein form of a registered trust, designed to undertake commercial activities. Trust: The concept of a trust dates back to the time when the Norman's conquered England in the middle of the 11th century.

The trust concept has been developed over the centuries, and has now become one of the most effective tax and estate planning techniques available today. The word "trust" refers to the duty or aggregate accumulation of obligations that a person known as the settlor rest upon a person described as a trustee by transferring his assets to this third party.

The responsibilities are in relation to property held by him or under his control. The trustee is obliged to administer the trust property in the manner lawfully prescribed by the trust instrument Trust or Settlement Deed, Declaration of Trust , or in the absence of specific provision, in accordance with equitable principles or statute law.

The administration will thus be in such a manner that the consequential benefits and advantages accrue, not to the trustee, but to the beneficiary ies. There are three basic types of trust: 1 an 'Interest in Possession' trust allows for a particular beneficiary, often the settlor, to have a distinct right to income from part of the trust's capital assets; 2 An 'Accumulation and Maintenance' trust allows for income to accumulate until a class of beneficiaries reach a certain age; 3 A 'Discretionary' trust vests discretion with the trustees to decide how both income and capital are distributed.

It is also possible to appoint an individual who is known as the 'protector'. The protector's main function is to ensure that the trustees administers and manages the trust assets in accordance with the trust deed and he is often vested with the power to appoint and remove trustees. A trust does not have shares. Trustee: Trustees have a fiduciary duty to act in accordance with a trust deed and for the benefit of the beneficiary ies. See trust. Trust Deed Settlement Deed, Declaration of Trust or Trust Instrument : The document that lays down the foundations of how the trustees are to administer and manage the trust assets and how they are to distribute and dispose of trust assets during the lifetime of the trust.

Trust Services: A large number of banks located in tax havens offer trust services. In addition there are trust companies specifically offering trust services. Most tax haven jurisdictions have enacted legislative provisions and set up administrative authorities to control the activities of such banks and trust companies. Services offered by banks and trust companies normally include a fairly wide range of trusteeship, management and related services.

The trusteeship services involve not merely acting as trustee of settlements, but many other services such as acting as trustee for debenture holders or as custodian trustee for pension funds, attending to statutory requirements and the maintenance of financial records.

Often nominee shareholders, directors and other officers are furnished. Investment services are normally provided. Government imposed tax on goods and services. Vintage Company: See Shelf Company. Visa: A stamp or endorsement usually placed in a passport by a consulate allowing a person to enter a country for a certain period of time. Visitor Visa: Visa that allows a tourist to enter a country for the purpose of travel.

Voting or Pooling Agreement: A voting or pooling agreement is an agreement, preferably in writing, of two or more shareholders to vote their shares in a certain manner. The most common use of this agreement would be to pool voting strength for the election of directors. Voting Trust: A voting trust is an agreement among the shareholders of the corporation.

Under a voting trust, shareholders transfer their shares of stock to a trustee in exchange for voting trust certificates. The trustee votes the shares in the manner directed in the voting trust agreement. Voting trusts are often used to preserve control of the corporation. Austrian "Sparbuch". Legal, legitimate, affordable. Visit PT Shamrock's website and select any or all of their 22 privacy and wealth acquisition and preservation reports e-mailed to you automatically via auto responders on subjects ranging from anonymous corporations and A TM cards, Swiss bank accounts, 2nd passports and citizenship from numerous countries, free banking guide, confidential bank introductions, anonymous offshore corporations, anonymous credit cards, secured credit cards to driver's licenses - plus much, much more!

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That taxation can be an important social and economic policy tool is not in doubt and, again, few are likely to oppose the philosophy of taxing the rich and returning some of the collected wealth in the form of benefits to the poorer members of society. When it comes to taxation, though, theory and practice are often worlds apart and while we may all understand the need to make our own contribution to the common good, it is often accompanied by a nasty suspicion that, while we are doing our bit, others are involved in clever ways of avoiding their obligations.

And no-one likes to feel that they are being made a fool of. And while some foreign governments may turn a blind eye to the fact that many of their major earners — individuals and companies — are benefiting from their ability to be taxed in low-tax jurisdictions or, heaven forbid, tax havens, their citizens understandably do not take at all kindly to this. So perhaps there are still a few things that we can be thankful for when we submit our annual tax return.

Cassoulides Masterprinters contact: 5 Aigaleo St. Firmly established as the Cyprus business event of the year, it brought together an impressive crowd of business and political figures from around the island. Once again, the prestigious awards were presented to outstanding companies and managers while innovative products and excellent business practices were recognized. Entertainment was provided by satirist Demetris Kallergis and violinist Barbara Lucas.

The deal is expected to close by the second quarter of The bank, like its rivals, has been moving to strengthen its capital base. Last year HSBC announced that it would eliminate 30, jobs worldwide as part of a broad cost-cutting program to improve profitability. The purchase of the Japanese private banking business will help Credit Suisse, the second-largest Swiss bank after UBS, bolster its presence in the Asia-Pacific region. Credit Suisse has been shifting focus from its investment banking operations to its wealth management unit in attempt to increase profitability.

Apple confirmed in January that it had bought the Israel company Anobit, a maker of flash storage technology whose chips it already uses in products such as the iPad. Apple is also reported to be planning to open a research and development centre in Israel, its first outside the USA. The facilities will provide 88 MW power to Sacramento Municipal Utility District, and are expected to generate about ,, kWh in their first year of operation — enough to power more than 13, average US homes.

Google had announced in that it intended to invest hundreds of millions of dollars in solar, wind and geothermal technologies. Ahmet Bozer, president of Coca-Cola for Eurasia and Africa, noted in a statement that the Middle East is a high-growth region with some of the highest rates of non-alcoholic readyto-drink per capita consumption. Three of the four projects will be complete early. However, the directors plan to turn the pay vote at the 23 February AGM into a motion of confidence, raising the possibility of mass resignations from the board.

He believes the way easyJet calculates ROCE delivers a figure three times higher than the rate of return using a different method of calculation. The company believes that the payout is justified as the airline performed well in Late last year, easyJet paid its first dividend after full-year profit rose by one third. It should be noted, however, that German short-term debt has traded at negative yields in the secondary market for some weeks with three-month, sixmonth and one-year debt all below zero.

Bills for six-month debt hit a low of minus 0. Investors have flocked to German debt as the twoyear sovereign debt crisis has rumbled on, sending benchmark borrowing costs — calculated on year debt — tumbling to their lowest ever level. This contrasts with the action in other eurozone countries such as Italy and Spain, which are now facing their highest borrowing costs since the s. Axia Ventures Group is a privatelyowned investment banking boutique providing financial advisory and capital marketrelated services to corporate and institutional clients.

AVG is headquartered in Nicosia. Houlihan Lokey is an international investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, and valuation. The firm has 14 offices and more than employees in Europe, the United States and Asia.

The average return for the top art grew by 6. Some companies, however, have fifteen firms in stands at 8. The gap, the largest since , was of long-term debt, current portion of fund other investments. Autodesk property index. Electronic Arts destruction. The Companies from all over the world will come to London to meet, interact and do business and the UK Government will take advantage of this by hosting the biggest investment conference Britain has ever seen.

The Government has developed an exciting Games time programme of networking opportunities, conferences, summits, seminars and face-toface meetings for British and international businesses. As the platform for showcasing international business partnerships and the best of British expertise and skill, the Olympics conference series is the key element of this programme running from the eve of the Games on July 26 to end of the Paralympics on September 7.

We are working hard to make sure the whole country can seize this once-in-a-generation opportunity. On 26 July, the eve of the Olympics, the Government will host the Global Investment Conference, a major international event which will be attended by more than global financial and business leaders. The Global Investment Conference will address the vital issues that are facing all world economies; how to drive growth and how to stimulate increased global trade, investment and partnerships.

The Global Investment Conference will feature leaders of the multinational and central banks including the Bank of England , sovereign wealth funds, foreign trade ministers from key emerging markets, leading global investment managers and Chief Executive Officers from energy, infrastructure, technology and healthcare companies.

To give British and international businesses the chance to attract inward investment and grow their business internationally, the Government is alsol hosting a series of Global Business Summits from July 26 to September 7 Focusing on a different high growth global sector, country or sports-related issue each day, the programme includes summits on key sectors such as advanced manufacturing, automotive and aerospace, creative industries, energy, infrastructure and construction, life sciences, technology and telecom as well as high growth partner regions such as Brazil and China.

Corporations are increasingly making social media connectivity an important aspect of their marketing campaigns, allowing them to communicate with their customers, develop their brand, and even offer special promotions. The new measure tracks structured activity on Facebook, such as users commenting on posts or sharing links and photos. When users engage in this brand-related activity, it becomes a mini-endorsement of the company or piece of content and offers immediate visibility to their friends.

The company directly encourages users to Corporations are increasingly making social media connectivity an important aspect of their marketing campaigns. Coca-Cola has a vibrant events page, which announces local and global company events and promotions, in which fans can engage and announce their intention to attend. The company also posts short videos featuring Coke products and other company-related materials.

Not only does the page draw a large number of fans, but it also keeps them engaged, through posts of Disney facts, screenshots of films, and cartoons, videos, and quotes from Disney classics. MTV keeps its audience engaged by posting exclusive sneak peeks of trailers and clips from upcoming MTV shows and films. The company also frequently post humorous questions, photos, quizzes, and insights, mostly based on pop culture icons such as Britney Spears, Lady Gaga, and Justin Bieber.

Starbucks allows user comments and posts on its wall, where fans post photos, ask questions, and largely declare their love for the brand. Other features included on the page are a store locator and the ability to send friends Starbucks card eGifts via Facebook. Users can also manage their gift cards and check up on their rewards through the social network and, of course, post their own Starbucksrelated photos.

Red Bull, the most popular energy drink in the world by volume, is also the most popular energy drink on Facebook, drawing in more than 23 million fans through its brand page. Red Bull mixes humour, extreme sports, and event notices on the page. In early December, it began a daily offer to give away , gift cards and it gained more than , additional fans. The Facebook page promotes fashion shows, features videos of models, sneak peeks at in-store deals, and makes computer screen wallpaper available for download.

Though not widely advertised in the media, Monster receives a large amount of recognition from its sponsorship of various sporting events, including motocross and car racing. It also posts information about events and TV programs that Monster is affiliated with.

The company runs various Facebookexclusive promotions, and issues traditional press releases around its Facebook campaigns, thereby driving conversations on the social network. The company often links to community. So do we! Antoniadou and the Israeli Energy and Water Resources Minister, Uzi Landau, discussed further steps to advance the proposal of an submarine electricity cable linking the two countries. Along with another similar proposed project linking Cyprus and Greece. Israel has a technologically advanced market economy but is dependent on imports of crude oil, grains, raw materials and military equipment.

Israel has also developed its agricultural and industrial sectors over the past decades with lead exports ranging from cut diamonds and high-tech equipment to agricultural products fruits and vegetables. Israel usually posts a sizable trade deficit, which is covered by large transfer payments from abroad and by foreign loans. Hot on the heels of recent natural gas discoveries in Cyprus, such a project would be a further step towards making Cyprus a regional energy centre.

With more than 3, high-tech companies and start-ups, Israel has the highest concentration of hi-tech companies in the world after Silicon Valley. Israel has the fourth largest airforce in the world after the the U. S, Russia and China , including an aerial arsenal of over Fs. As one of few countries in the world to have a space programme, Israel designs, builds, launches and operates its own satellites. Israel is one of the most highly-educated countries in the world with the highest number of engineers, scientists and Ph.

Ds per capita. Israelis are slowly becoming a nation of wine lovers — there are now over wineries in Israel producing red, white, and sparkling wines. Gold: How important is the fiduciary sector to Cyprus? Maintaining Cyprus as an attractive jurisdiction to do business not only generates revenue for the country but it also attracts foreign investment into other sectors such as real estate and the finance industry.

What are the main problems facing it? One of the main problems faced by the fiduciary sector is the lack of regulation and the lack of government support in the promotion of Cyprus as an International Business Centre. Lawyers and accountants are regulated by their professional bodies regarding money laundering and terrorist financing, for example, but corporate service providers remain unregulated in this area.

Another problem is the fact that the Trevor Peacock office By of the Registrar of Companies is not as developed and as efficient as its counterpart in other jurisdictions. The CFA will also be in a position to voice the views of its members to the relevant government departments and to promote Cyprus and the fiduciary.

The CFA will carry out frequent audits of its members to ensure compliance with its requirements. How will regulation assist the sector? The security it offers to clients, and the guarantee that their interests will be protected by law, eliminates even the slightest reservations of doing business in Cyprus.

What is required of firms wishing to join the CFA? Why has it taken so long to form such an association? In the past, the lack of legislation did not have such an impact on doing business in Cyprus. With the growing popularity of using Cyprus at an international level, however, the issue of regulation has become much more important and it is this growing need that has led to the key players within the industry to come together and form the CFA.

This way there is some form of legislation within the industry and. Who are the founding members of the association? The first ten firms are Abacus Ltd. Fiducenter Cyprus Ltd. Data shows that the US economy has done well stepping into and the current outlook is on track for slow growth. The US managed to close the year better than in Iran has threatened to close the Strait of Hormuz, which is the major lifeline of global oil supplies. On paper, the eurozone outlook has improved but the advance can hardly mean any real change.

The debt crunch continues to do damage to the member countries and even France has been downgraded from AAA status. The gold price dipped further at the end of December with support around It then recouped its losses steadily in January, climbing above Eurozone debt worries eased, which released some capital to buy into gold and central bank actions left a bullish effect on gold price.

The euro strengthened against the dollar, which also buoyed gold. Both the European Central Bank and the Bank of England kept their low rates unchanged in January and the US Federal Reserve made a new promise to keep extremely low rates for at least two more years. Most Fed members believe that it is not necessary to hike rates before the end of Furthermore, according to a report from the World Gold Council, the central banks are estimated to have added about tonnes of gold to existing reserves in , four times that of Central banks will need even more gold to back their legal tender.

Although the eurozone debt crisis and global economic uncertainty have weighed on many other commodities, oil keeps trading near half-year highs. Furthermore, the US is enacting tougher sanctions against the nation. Besides, the strong and steady increasing oil demand from emerging countries easily offsets the weaker demand in Western Europe.

But the currency pair suddenly bottomed out in the middle of the month after briefly touching 1. The rally coincided with improved yield rates throughout bond sales in the latter half of the month. The all-time high ECB overnight deposit level is a sign that fear is still escalating.

Technically, the euro seem to have competed a cycle which started in June with an end at 1. The bottom end seems safe for now and a bullish fluctuation to 1. The advance will be a bumpy ride as time goes by and it should not be surprising to see the rebound touching 1. USD Moreover, economic figures also indicate that the US economy is recovering slowly and steadily. The pound achieved a beautiful turnaround to close up for the first month in , largely influenced by the euro.

However, the rally seems less sustainable as the debt crisis continues to shadow the European continent. The fundamental outlook in Britain is poorer than in the US since the Bank of England has less ammunition to promote growth than the Fed. The yen had a hard time in and the Bank of Japan had to intervene several times within the year preventing the resilient yen from further damaging its economy.

The government will definitely set out to alter its trade policy in in order to avoid running a big trade deficit. However, given the fact that Japan is an export-oriented economy, weak global demand will undo much of the effort. The yen was softer in the second half of with a higher bottom near The support is solid and no major dips below are expected. Upside pressure near 80 is strong within first half of the year but the currency has started heading towards it.

Such information has not been independently verified and no warranty, representation or warranty, express or implied, is made as to its accuracy, completeness or correctness. This report is provided for information purposes only. Nothing in this report should be considered to constitute investment advice. It is not intended, and should not be considered, as an offer, invitation, solicitation or recommendation to buy or sell any of the financial instruments described herein.

Leveraged products incur a high level of risk and can result in the loss of all your invested capital. KAB Strategy Cyprus Ltd and its affiliates accept no liability whatsoever for any direct or consequential loss arising from the use of this document or its contents. The State of the Civil Service Radical change is necessary if Cyprus is to improve the reputation of its public services.

It gave me the opportunity to serve my country in a way which made my working life meaningful and interesting. In all the departments in which I served 6 and in all the others with which I came into working contact, most people I encountered were well qualified. I also met very many who were deeply responsible and who believed in doing a good job, considering it their duty. I also knew that in every Ministry or every department there were a number of people who were outstanding, both in ability and character: people on whom Cyprus could count, no matter how demanding the task or challenge.

Yet at the same time it was impossible not to be aware of the fact that the civil service was an organisation which systematically produced bureaucratic deformations that inhibited its effectiveness. Efficiency and a high output were only beyond doubt and outstanding in cases of national emergency or exertion, such as immediately after the catastrophe of and during the inspired period of working towards European Union membership between and This was partly because, during these periods, there were clear objectives.

Objectives and management by objectives are normally lacking in the civil service context, as is the measurement and even any note of outcomes. A lack of urgency and formalistic action is frequently the norm, followed by a lack of followup. This is combined with the lack of any system of self-evaluation.

The criterion for judgment is invariably the formal legality of action rather than the effectiveness of that action. This is particularly important in the attitudes of people in managerial positions. The formal observance of legality is undemanding compared to management by objectives and it.

Of course, observance of legality is a necessary — though not a sufficient — condition of meritorious and effective service. Most people, other than outright thieves, fulfil this criterion so it is difficult to assess people objectively on the basis of merit. As a result, performance is eliminated from the equation to be replaced by two largely irrelevant criteria: paper qualifications and seniority.

Yet positions in the civil service are well paid, often much better paid than their equivalent in the private sector. Moreover, civil servants are cosseted with short working hours, free medical care and adequate holidays, lengthened by plentiful and easily obtainable sick leave. They have constitutionally guaranteed permanence of job tenure independent of productivity , non-contributory pensions and a generally easy life.

So civil service jobs are much sought after and patronage and influence are brought to bear wherever possible. The Civil Service Commission is composed of party nominees who have a tendency to protect and promote their own. Under these circumstances it is not difficult to understand why a culture of unrealistic demands, self-satisfaction and a lack of consideration for other citizens — extending, as happened recently, to a lack of appreciation of the need to protect democratic processes — can develop in some sections of the civil service.

Indeed, when such a privileged group strikes at the expense of the community as a whole, such action has all the characteristics not of working class self-protection but of monopolistic blackmail. It is not difficult to conclude that radical change is necessary. Every Cypriot government since independence appears to have had some kind of absurd moral problem over the issuing of licences for the operation of casinos on the island.

Cities develop casinos for many reasons, the first of which is to attract more tourists, both local and foreign. Paphos, Limassol and Agia Napa have seen their tourist numbers fall over the past decade as competing destinations have offered visitors more of what they want. Experts and consultants have repeatedly recommended the casino option and they have been consistently ignored.

A second reason is to keep local money within the local economy by giving residents the opportunity to gamble at home. As part of the entertainment industry, casinos make their money on volume, like a cinema or a restaurant and, since no-one doubts that such businesses are good for the economy, casinos cannot be excluded simply because. Tell that to the residents of Monte Carlo and Las Vegas and watch them laugh.

It is definitely not the role of governments to tell people how to spend their money. The same is true of those who are happy to spend an evening feeding a slot machine with coins or trying their luck at roulette or blackjack. The argument that casinos are not good for society is a spurious one. That they will have a positive effect on the Cypriot economy is beyond doubt. It is no secret that gambling is a destructive pleasure that can easily turn into an addiction, depriving individuals and their families of money that they cannot afford to lose.

According to Economics Nobel Laureate Paul Samuelson, gambling only enables a sterile transfer of money between individuals, creating absolutely no new money or goods. Samuelson argues further that, while gambling creates no output, it does absorb valuable time and resources and, when pursued beyond the limits of recreation, gambling. Gambling is addictive and leads to compulsive behaviour, unhealthy obsessions and other problems actually subtracts from the national income.

Most gamblers cannot afford to indulge in their pastime in the first place. When they do it can cost their families dearly and, in many cases, the tax payer too. Gambling is by its very nature irresponsible.

The argument can be — and frequently is — made that casinos bring benefits the economy, including employment opportunities, tax revenues and increased tourism, but for every tax euro made, how many more will it cost to hire additional law enforcement officers, to fund more social benefits and, as invariably happens elsewhere, to set up gambling treatment programmes?

The economic and social costs of legalized gambling far outweigh the benefits. Gambling is addictive and leads to compulsive behaviour, unhealthy obsessions and other problems. In many cases it fuels other vices which, taken in their entirety, can be described as an economic and moral cancer within society.

Where do casinos fit into this grand picture? It would be far better to focus our efforts on economic activities that improve morale, engage creativity, build infrastructure and make us proud. With the newly-found gift of hydrocarbon resources, Cyprus can easily do this without investing in casinos and abandoning its core values.

John Marsa conducts casino-related consultancy work in more than different countries. Not only the profits of stock but the rent of land and the wages of labour would necessarily be more or less diminished by its removal. Taxes are mainly of two equally unpopular types: direct and indirect, most commonly in the form of tolls, duties, customs, excise or levies. These functions include law and public order enforcement, the development of economic infrastructure, social engineering, public works and the operations of government itself.

Nowadays most governments use taxes for funding public and welfare services such as pensions for the elderly, public transport, the education and health care systems, and unemployment benefits. Some other common publicly-funded utilities also include water, waste and energy management systems.

In addition, taxes are applied to influence the macroeconomic performance an economy, to fund military activities or to modify patterns of employment or consumption within the country. Many political leaders now have to walk the tightrope of balancing public sector budget cuts on the one hand while imposing increasing levels of taxation for both workers and corporations on the other.

This is undoubtedly a very politically-charged issue as the main motivation for any politician or party is to remain popular enough to stay in power. Because of this, and the fact that solutions must be found before public finances run dry, ruling politicians have been frantically trying to figure out what course of.

A prime example of this is the ousted Greek Prime Minister, George Papandreou, whose attempts to take the necessary measures to keep the country solvent quickly led to a popular uprising and discontent in both the private and public sectors. Given the difficulties that many governments are currently facing in their efforts to raise sufficient revenue to fund public services and support mechanisms, one of the topics sparking a passionate debate is tax avoidance.

At one end of the spectrum are those who believe that it is a fundamental right for people and corporations to be able to organise their tax affairs as they wish, so long as they do not break the law. This moral attitude towards tax has arisen from the debate that has gone on for many years regarding the differences between tax.

Strictly speaking, the distinction appears to be straightforward: the former being in agreement with the letter of the law and the latter involving some kind of dishonesty and thus being illegal. Along with globalisation, multinational businesses have become much more sophisticated regarding the extent to which they arrange themselves into complex structures enabling them to pick and choose where they will be taxed.

Combined with the ability to relocate and carry out wealth-generating activities in any number of locations, the multinationals are being fought over by low tax jurisdictions such as Cyprus, Ireland and Switzerland which seek to attract them. Many argue, however, that this competitive environment enables large corporations to avoid paying their fair share of taxes anywhere and gives them a distinct advantage over smaller domestic companies that may have far fewer or no methods by which to lower their tax burden.

Despite being recently shut out of the capital markets because of continued sovereign debt downgrades, the state appears to be incapable of reducing public sector wage and benefit excesses because it fears the political consequences of bringing the powerful unions to heel.

However, by turning to the private sector to raise funds. Taxation is used to raise money to spend on hospitals, schools and roads and on other indirect government functions such as the justice system and effective law enforcement. Redistribution: Normally this means the transfer of wealth from the richer sections of society to the poorer sections. This function is uniformly accepted across most democracies but the extent to which the transfer of wealth should take place remains a controversial issue.

Taxes are frequently imposed to address externalities. For example, tax is applied on tobacco to discourage smoking. Many people advocate such policies as preventive measures. Another example could be the implementation of a carbon tax to tackle global warming. Many studies have shown that direct taxation results in a higher degree of accountability and better governance while indirect taxation tends to foster the opposite.

As events unfold and new legislation on taxation is proposed, debated, adopted or rejected, it seems that the best course of action for wealthy individuals and corporations is to draw up a plan that will provide them with plenty of options should the tax hammer fall in a way that impacts them financially to any great extent.

Gold: Why are there differing attitudes to taxation among countries? Costas Markides: Southern Europe has a much more volatile institutional environment in which maladministration and, at times, corruption are present while Northern Europe is characterized by high levels of organisation and transparency. The greater fidelity shown by citizens of north European states to their governments translates into increased tax compliance.

This represents an integral part of the behaviour of citizens as taxpayers and of their general relationship with their governments. Michalis Zambartas: Yes, to some extent, it is based on the culture, history and the mentality of the people. Differing attitudes develop over time and it is quite difficult to shift or adjust them.

Some coun-. Tax policy harmonisation would constitute a serious blow to the competence of member states and would represent a loss of sovereignty tries are well organised and even though tax burden on the population is significant such as in the Scandinavian countries , the people are confident that their tax revenues will be spent for the public benefit infrastructure, public services, education, medical care, etc. Costas Markides:Tax compliance represents a clear example of law enforcement and an act of law-abiding citizens.

Greater trust in the institutions and the legal system will eventually lead to higher rates of tax compliance. Michalis Zambartas: It also depends on factors such as the extent to which tax compliance is enforced and followed-up, if there is an efficient control mechanism in place and how significant the tax revenue is for the country. A democratic government inspires more trust than a dictatorship. Trust in the public institutions may lead to more positive attitudes towards taxpaying and the tax schemes of the government, which will eventually have a positive consequence on tax compliance.

Gold: What are your views on striking the right balance in tax rates in order to maximise private sector growth while keeping government revenue healthy? Costas Markides: Economic growth cannot be supported solely by public spending which is primarily financed from taxes. What economic growth requires is a series of stimulating measures that will contribute to increased investment and the expansion of the employment market.

Striking the balance can be a dubious task for every government but measures directed at increasing tax revenue should be always supplemented by economic incentives that will give rise to economic growth and development. Michalis Zambartas: The eternal dilemma of governments is how to increase tax rates and maximize business growth while remaining tax-competitive internationally.

Low corporate taxation has always been seen as a boost to economic growth and high tax rates generally tend to affect business investments negatively. By turning to the private sector to raise funds by increasing taxes on profits, the state runs the risk of making Cyprus a less attractive tax jurisdiction.

The private sector should not be financing government inefficiency as represented by excessive personnel and remuneration or other internal government sector expenditure. Gold: How do you define the fundamental differences between tax evasion and tax avoidance? Angelos Paphitis: There is a clear, fundamental distinction between the two.

Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities in order to reduce their tax bill; this amounts to dishonest tax reporting. In other words, tax evasion means using illegal means in order to avoid paying taxes, which is an offence, whereas tax avoidance involves using legal means i. Cyprus has concluded almost 50 tax treaties for the avoidance of double tax payments which today apply to 42 countries.

The main purpose of these treaties is the avoidance of double taxation on income earned in any treaty country. In this way, a company the taxpayer can lawfully reduce its tax liabilities by using the correct techniques agreed between the relevant states. Further to that, to prevent the misuse of such treaties, EU member states have concluded a multilateral agreement on information exchange. This means that they will each report a list of those savers who have claimed exemption from local taxation on the grounds of not being a resident of the state where the income arises.

Costas Markides: An international tax professional should operate proactively. The difference between tax avoidance and tax evasion is the thickness of a prison wall. Denis Healey. Therefore, the ultimate purpose is not for the client to avoid tax liability but to maximize tax savings within lawful constraints.

Angelos Paphitis: It is vital that corporations or physical persons looking to reduce their tax liabilities be advised by a professional body of international tax lawyers or other tax advisers in order to avoid any situation which may put them at risk in the future.

Good tax advice can save you money whereas bad tax advice can cause you heavier tax payments later on or may even land you in prison in some countries. Gold:How much can a good tax adviser save a major company or individual and what is the trade-off between paying less or more tax? The trade-off between paying more or less tax is fairly obvious. Paying more tax could bring some positive results in the long run or not bring any results at all. Gold: What company structures are best suited for tax minimisation in Cyprus?

Angelos Paphitis: I would point to three structures that are well-suited for avoiding excessive or double tax payments: International Trading Companies, Group Finance Companies and Holding Companies. Firstly, International Trading Companies may employ expatriate staff who benefit by paying tax and social insurance in Cyprus at low rates, therefore avoiding high tax rates in their home country. Secondly, Cyprus companies for group finance are exceptionally attractive.

Group Finance Companies fulfil intra-company financial management functions, such as granting of loans for project financing etc. Thirdly, Cyprus is considered as one of the most beneficial holding company regimes in the World. Due to the simplicity of its establishment and operation, it is the most widely-used vehicle for international investors. Ample opportunities for profit repatriation, financing, Intellectual Property holding and real estate investment are offered through the use of a Cyprus tax resident company.

Complemented with provisions such as the lowest corporate tax rate in the European Union and the full applicability of European Tax Directives, Cyprus holding companies are an extremely efficient tool in international tax planning. Minimizing taxes from investment activities is important because it is one of the few aspects of investing over which an investor can gain significant control.

Paying attention to the tax consequences of investing can substantially increase long-term wealth and net income. Cyprus offers private investors a variety of low tax solutions such as the advantages that a Cyprus company offers or through Trust structures and Private Funds or through a combination of such vehicles. Michalis Zambartas: Cyprus offers HNWIs numerous possibilities such as succession planning, tax structuring, business structuring and so on.

Cyprus International Trusts. Another solution is to make use of an international collective investment scheme ICIS. A private ICIS is capable of having up to investors, also known as unitholders, and it offers an arrangement whereby they jointly invest their assets, have these assets administered, controlled and invested by independent professionals and receive the gains from profitable investments through a tax cost- effective method.

ICIS enjoy the same tax benefits as a limited liability company incorporated in Cyprus. Gold: What are the major upcoming developments regarding taxation that will affect European companies? Once introduced, however, it will or may have a material effect on the way European companies will be taxed on their corporate profits based on allocation keys related to the formulary apportionment of assets, labour and sales.

Michalis Zambartas: There is a general trend towards greater scrutiny by national tax authorities and more cooperation between tax officials in different jurisdictions. It focuses on ways of combating tax evasion and strengthening tax compliance, as well as on the new ways of increasing tax administration efficiency. Maarten Koper: Anti-avoidance measures and an increase in tax audit activities represent a continuing trend. In particular, the transfer pricing policies of taxpayers in the bigger EU member states are expected.

There will be a continuing backdrop of debate about what is considered responsible corporate practice by large taxpayers and whether big business is willing to share the burden in times of austerity. Perceived tax avoidance by multinational corporations may be a significant subset of this debate.

The trend towards reducing corporate tax rates seem to have come to an end because of the recent economic turmoil. More importantly, perhaps, there seems to be political pressure among the eurozone members including Cyprus to make their level of corporate tax closer to that of the European powerhouse economies or, alternatively, to have greater harmonisation in determining the corporate taxable basis in the various members of the eurozone. Also, the battle lines are being drawn regarding environmental taxes in Europe, especially for the aviation industry, while the EU Energy Tax Directive is expected to influence how energy products are taxed in Europe and it is anticipated that an agreement aimed at harmonising energy taxation without harming competition and eliminating severe distortions and obstacles to the internal market will be reached.

Gold: What does the possibility of European tax harmonisation imply for Cyprus? Costas Markides: Direct taxation has traditionally been the field of competence of the member states and this has been reaffirmed by the European Court of Justice. Tax policy harmonisation would constitute a serious blow to the competence of member.

Opponents of the idea argue that such reforms will create more problems than solutions including a weakening of budgetary revenue through income loss associated with tax competition, the risk of double taxation and a loss of national sovereignty where taxation is concerned. I am of the opinion that even if tax harmonisation has its benefits, each member state should maintain its own tax system and computation methods.

Cyprus could be faced with the need to remove tax provisions that render it one of the most attractive EU holding jurisdictions and such a development would have negative consequences on foreign direct investment into Cyprus, with consequent setbacks on the operation of the services sector and the development of the Cyprus economy as a whole. Michalis Zambartas: There would definitely.

Cyprus taxation system? When the first round of austerity measures was passed in August, business was promised that future measures would be directed at promoting growth, rather than adding to the tax burden. Contrary to those assurances we have seen new taxes and tax increases, while at the same time a law to update the Cyprus International Trusts Law, which would reinvigorate the trusts sector and the real estate market and generate significant revenue, remains in limbo.

The proposed amendment to the International Trusts Law was presented to the House of Representatives more than a year ago. It strengthens the defences offered by Cyprus International Trusts by giving Cyprus courts exclusive jurisdiction over Cyprus International Trusts, as they have over Cyprus companies. The proposed amendment has been welcomed by practitioners and business leaders in Cyprus and abroad, and has received extensive coverage in the local and international professional press.

At a time when Cyprus is under severe financial pressure and the market for real estate is in the doldrums, it would be natural to expect the opportunity to generate significant new income and inward investment to be grasped enthusiastically. Unfortunately, that has not proved to be the case.

The House of Representatives consulted a wide range of interested par-. People will look for tax loopholes and ways of avoiding tax unless they feel that they are being treated fairly. All expressed support for the proposed amendments. Yet more than a year later, with the economic situation continuing to worsen, we are still waiting for the proposed amendment to become law. We urgently need a change in approach. Rather than increasing the burden on the private sector, which risks choking off any prospect of economic recovery, the government should be providing the services sector with the tools it needs to compete internationally.

It should therefore expand, rather than erode, the benefits which Cyprus offers to international business and investors, and expand its network of double tax agreements. It should make sure its voice is heeded in Europe, by being a good European citizen and ensuring that Directives are implemented, but it should resist any moves that are likely to be detrimental to the national interest.

In the short term there is ample scope to replace revenue by eliminating public sector waste and excess. How much will eventually be possible? George Poufos: Our prime objective is eventually to have all our business with the taxpayers carried out online. Legislation was passed recently whereby the submission of tax returns by businesses which have consultants to help them file or discharge tax computation requirements can be carried out online and we are in the process of building the software and the environment to enable this.

We are very oriented towards technology; in fact the Inland Revenue Department IRD has always been a pioneer in this area. Can you clarify the situation? Now, to make things as clear as possible, those international businesses which are owned by non-Cypriot,. Is tax evasion the huge problem that Cypriot union leaders and MPs of all parties claim it is? Interview by John Vickers. This is the final rate they have to pay and it is not a penny more than that.

There is no doubt surrounding the reality of this and the true tax burden of these companies. We do this because we want to stimulate the distribution of profits and the consumption of those profits. There is a very clear economic reason for this particular regime and it has proved very helpful for the Cypriot economy.

Gold: Do you see a possibility of lowering it even further? What is being discussed, promoted and engineered, through proposed directives and discussions at vari-. Every country has its own legislation and every country has its own corporate tax base — in other words, whether a particular income, activity or area of the economy is taxed or not.

Here in Cyprus we have a reasonable tax base, customized to our specific needs. There has been no discussion whatsoever about harmonization of the rates. Of course, it could be argued that the shaping of a common tax base is an indirect method of affecting the rate but this remains to be seen. Gold: The island has signed double tax treaties with around 50 countries but some competing jurisdictions appear to be offering more favourable provisions than Cyprus.

Does the IRD keep a close watch on what the competition is doing in terms of what it can offer in the context of double taxation and legislation? Those responsible for framing the provisions of such agreements have to take the whole economy into consideration but, at the same time, the micro-environment of the economy too.

It takes two to tango, as they say! So each one is something like a reconciliation; it requires a give-and-take approach, mutual understanding and consensus. So yes, we know what our main competitors in the provision of financial services — Luxembourg, the Netherlands, the UK, Belgium and Austria — are doing and, of course, we pay attention to what is going on elsewhere. Sometimes it is not possible to include things in an agreement that another jurisdiction may have included but there are also instances where we have included things that others have not.

As you know, some people have a tendency to talk about the problems rather than the positive aspects of the situation. Let me also clarify that the responsibility for carrying out double tax agreements lies with the Ministry of Finance.

The IRD is an administrative organ and its role is not to frame the agreements but to implement them. Is it? And could the IRD do more to prevent it? Equally, though, it cannot be claimed that there is zero tax evasion. As always, the truth lies somewhere in the middle. First of all, we cannot eliminate it. We can combat it and confine it but we cannot eliminate it totally and there is no country in the world that does not face this problem.

This group of people covers a vast area and big numbers — So we are clearly making an effort. Could we do better? Of course. There is always room for improvement, no question about it. Gold: What precisely can be done? So on this issue, I say to the politicians that if they want to judge me, they should pass the necessary laws and then judge me on the results. Secondly, the state has to invest in the IRD, in technology and in database administrative systems.

We have to take all the practical steps to achieve this. And finally we have to invest in people. With the technology and the people it has, and with the legislation in its arsenal at present, the IRD cannot yet fulfil what I would describe as the expectations of society and what the average person would like us to do.

But we are trying very hard with what we have. Would the Russian model work here? If you really think about it, who pays tax? The wages you take. Now, a good tax system should have the virtue of not making a distinction regarding the vehicle by which one does business. Now, because the tax system is a distortion to the economy, that distortion should be minimized. So a decision needs be taken on the question of whether the corporate tax rate, for example, or the corporate tax base, should be the same as that for income tax.

I have always been an advocate of the idea that if we want to pick up distortions and throw them out of the window, thus liberating the economy, the marginal rates of income tax should be equal to the marginal rates of corporation tax. In Cyprus we have a mosaic of rates and this facilitates planning.

If you have an administrative deficiency, that facilitates tax evasion. Although we have this mosaic of rates, we still have an efficient system and we have an efficient services sector because of the system we have in place for foreign-owned businesses. So while I can appreciate much of the thinking behind the Russian idea, I would approach it with caution. Gold: On average you are issuing rulings a year, all free of charge.

And there is also the view which says that rulings are a service that we have to offer to the public, and this goes along with our philosophy of providing free public services wherever possible. It is ultimately a political decision whether we charge for our rulings and we have, in fact, discussed it a couple of times with the Ministry which does not think that this is the right moment to change our policy. I introduced these rulings in and they have been very helpful to the economy and to the supply of services.

Registration in Cyprus is not decisive. Foreign-source income derived by resident companies is subject to corporation tax in the same way as Cyprussource income. Non-resident companies are taxed only on Cyprus-source income. Branches are taxed the same way as domestic companies. Expenses incurred for the production of taxable income are tax deductible provided that they are supported by invoices or relevant receipts. Losses brought forward or surrendered by other group companies group relief may be set off against taxable profits.

Dividends received by a Cyprus resident company from another Cyprus resident company are exempt from the Special Contribution for Defence, unless such dividends are paid from profits which are more than four years old. Dividends received from a non-resident company are also exempt from the Special Contribution for Defence.

The carryback of losses is not permitted. Certain types of income i. When a treaty applies, the treaty provisions apply if more beneficial. Reconfiguration Example Figure A-l. RTE-IVB is a powerful operating system that offers considerable flexibility in its operation and configuration.

It supports program execution in background, time-shared, and batch environments. Multi-user interfaces are provided to manage concurrent user access to system resources. As the system manager, you are responsible for system planning, generation, installation, and initialization as well as maintenance of the system after it is operational.

The following steps should be performed: 1. Evaluate the system user base. Plan the system architecture. Install and bootstrap the newly generated operating system. Initialize the system and appropriate subsystems. Maintain the system. The whole process and the corresponding references for details are shown in Figure The major steps are described in the following paragraphs.

Evaluate User Base The system manager should be cognizant of user requirements before generating the system. SM or MTM or neither may be selected during system generation. The choice depends on user requirements and the capabilities offered by the appropriate package. Both packages allow multi-terminal access to the operating system. Either one but not both may be generated into the system for a multi-terminal or multi-user environment. Portions of this manual apply to only one multi-user interface package and are so noted.

Unless stated otherwise, this chapter applies to both interface packages. System Management Procedural Overview Cont. A copy of the File Manager is available as soon as log-on is successful. The user must provide this information in order to log-on to the system. Each File Manager and operating system command has an associated capability level. Users must have a capability level greater than or equal to the command capability level in order to execute the command. This file is created using the system accounts program.

The system manager has control over the account structure and resource access. This session control block contains all the pertinent information about the user's session, including: cartridges that are mounted to that session, system resources in terms of logical units the user may access, the user capability level, and possibly other pertinent session related application information.

This is accomplished by various means. For example: cartridges are mounted to specific users or groups ; only those users or group members may access them. Tnis mode is entered when the user causes an unsolicited interrupt by striking any key on the terminal. Session Monitor will then read a user command and process it, or if appropriate, send it to the operating system for processing.

Only commands with capability levels less than or equal to the user's level will be accepted. The system will then update the account file with the user's CPU and total session connect time and release system resources e. When the user's copy of the File Manager is dormant and he strikes any key on his terminal, MTM will schedule this copy to run from the user's terminal. This allows full access of the system. This mode is entered when a user causes an unsolicited interrupt by striking any key on his terminal.

MTM will then read a user command and, if appropriate, send it to the system for processing. The user may issue virtually any system command from his terminal. Each user may access all file cartridge directories in the system and there is no automatic means to separate one user 's file activities from another. Furthermore, every user may enter all possible system commands and accordingly adjust system parameters.

The implication of this feature is that users must agree among themselves to restrict their system activities to prel-defined domains. System Planning Information obtained in the user base evaluation is used for system planning.

This requires the use of the information supplied in the generation chapter of this manual, the On-Line Generator Manual, and other appropriate documentation as required by your particular system. Refer to Chapter 4 of this manual for details. However, be sure to backup your disc so that you always have a working operating system in case of trouble i.

Run the reconf igurator to correct generation errors if necessary. Maintaining the System After the system is operational, you may wish to alter various system definitions. Determining User Requirements It is suggested that the potential system users be interviewed to find out what their needs are.

A sample user questionaire is shown in Figure This questionaire is provided as a guide. You should modify it to suit your specific needs. The primary function of the questionaire is to determine user requirements. Most users will not think in terms of disc tracks, memory or disc resident programs, or priority levels when describing their needs.

The questions should be such that the users can readily understand them and furnish the necessary information. You can then translate the information into data useful for system generation, initialization, and maintenance. This section, whicn is applicable primarily to users of the Session Monitor, defines four levels of sophistication. The first level is that of a technician or data entry operator. Users in this group interface to the system only tc the extent, of operating specific programs or procedure files.

No programming Knowledge is necessary and very little knowledge of the system is required, users are expected to follow pre-defined procedures when dealing with the computer. Tne next level of user sophistication is that of a secretary or word processing operator. Users at this level may require knowledge of tne editor and cursory knowledge of the file system. Only limited access to system functions is needed. Tne next level is for the general programmers. Most users of RTE will fall into this category.

They have knowledge of operator commands, programming calls, etc. Tney are expected to take advantage of most system capabilities. This will include operation of compilers, managing data bases, manipulation of the file system, performing network operations, etc. However, they are not concerned with the activities of other users on the system. Furthermore, detailed system knowledge will not usually oe required.

Users of the nignest level of sophistication will include system programmers and support personnel. These users will have a good working knowledge of system operation. They are capable of changing overall system operating parameters. System Applications Tne second section of the questionaire deals with intended system applications.

Users snould be queried as to their terminal and real-time response requirements. Based on their inputs, modules may be given higher priority levels, generated into tne system as memory resident, or assigned to partitions.

For example, in a real-time environment, response considerations may dictate that certain programs be memory resident at all times. If this is the case, you must ootain these modules before generating the system. If users will be running large application programs, partitions generated should be large enough to execute these programs. For some applications, HP supported subsystems will require larger partitions for their execution i.

Refer to chapters 4 and 5 for specific subsystem or utility memory requirements. User application programs making use of the EMA feature will require mother partitions of at least a certain size to be generated into the system. Therefore, user should be queried about the maximum EMA array sizes used in application programs. If so, how many and how big? Does the user require disc space on a permanent or temporary basis. This will give an indication of the amount of disc space if any to be allocated to the user and of the disc cartridge subchannel sizes required in the system.

Will this user access other user's files? Which users? Does this user have files that cannot be shared? These questions are important in systems using the Session Monitor because file cartridge access can be restricted to the individual users, members of a group, or made available to all system users. System scratch tracks which are managed directly by the operating system on LU2 and LU3 are used in many system functions. If this usage is heavy, then a greater proportion of the system disc space should be allocated for scratch tracks when the system is initialized.

Certain peripherals i. You should determine if possible the number of devices attached to the controller and how these devices will be addressed. This will facilitate setting up the logical unit and subchannel designations during system planning. In systems with the Session Monitor, peripneral device access can be restricted to specified users. Therefore, what devices each user, or group of users, will need to access must be determined. This information is primarily useful in the Session Monitor.

This may be accomplished by interviewing your users. Details are discussed in Chapter 1. Groups will include sets of users with common characteristics or requirements. For example, groups might be composed of members of a project team or users performing similar functions. If desired, users can be members of more than one group. This organization will serve as the basis for the overall account structure. An account planning matrix worksheet is provided in this chapter to aid you in this process.

This will depend on your account structure, user application requirements, and the degree of file independence required by various users of the system. This chapter discusses the various ways disc cartridges can be mounted in the system and how they are accessed in both session and non-session environments. You should have a thorough understanding of this information before planning your cartridge configuration. A requirements worksheet is provided to aid you in cartridge configuration planning.

The Session Environment Session Concept Before any user can gain access to the system, he must "log-on" by supplying the system with an account name. The system will then set up a specific operating environment for that user based on his account and the particular terminal at which the user logged on. Once logged on, the system will permit only those user peripheral access requests and commands allowed within the operating environment. In addition user's can access many of their peripherals with default logical unit numbers.

This eliminates the need to know system logical unit assignments. For example, each user's terminal is referred to as LU 1 rather than by the actual system logical unit number assigned to it. The system will update its record of the users cumulative CPU and connect times and clear its record of the user session from internal tables. The process of logging on, interacting with the system, and logging off is refered to as a "session".

With careful planning by the System Manager, each session should provide a secure, "friendly", and productive problem solving environment. The System Manager may define his account structure such that users have varying degrees of access to system functions, files, and peripheral resources. These Account definitions can be based on user applications, levels of sophistication, and other special requirements. The importance of good planning here cannot be over emphasized.

Session control blocks will be created for all currently active sessions in the system. The SCB is the primary means used by the system to check user requests for validity and restrict access to system resources. This allows the session user to access peripherals without requiring knowledge of system logical unit assignments and also system logical units greater than Every peripheral that the session user may access must be defined in his SST.

The feature can be used to restrict the users access to a predefined subset of system peripherals. Account Structure The Session Monitor maintains two types of accounts: user accounts and group accounts. Group accounts are used to assign selected peripherals and disc cartridges to specific sets of users. User accounts provide the system with the information necessary to set up and maintain the operating environment for that user.

Every session user must be assigned at least one user account. The user account may specify which group account it is to be associated with. A user account can optionally include the resources assigned to its group account. If desired, you can assign an individual several user accounts belonging to different groups. These accounts can be structured such that the same set of private resources will be retained in the user's operating environment irrespective of the group he is currently logged on with.

Accounts structured in this manner are said to be "linked". The System Manager's account is treated specially by the system; it is given access to all system functions and resources. Within groups, the user identifier must be unique. An example account structure is shown in Figure As can be seen from the example, the account structure is broken down into three levels: System Manager, Group, and User.

Note that, in the diagram, Jones is a member of three groups and has three separate accounts. Note that linked accounts need not be share the same user names. This program is run during system initialization by the System Manager and is also run automatically at boot-up to allocate system resources for the session monitor. It may be run at any time to maintain the account structure. Using ACCTS, you can: define all groups and their associated resources ; all users and their associated resources, capability levels, etc.

It contains four major sections: user account definitions, group account definitions, the Configuration Table, and system global information. The group account definitions contain additional SST definitions. These definitions are optionally placed in each group members user account definition. In addition to user and group accounts, the account file contains global session monitor parameters and tables, including the Configuration Table.

In this manual, the term station refers to the session terminal and its associated peripherals. It will be used interchangeably with terminal. For example, a terminal with cartridge tape units could have SST definitions equating default session LU's to their system LU assigments. Refer to Chapter 7 for details of the session account file. These programs process break mode commands. They provide a means of interrupting program execution, examining system status, etc.

LOGON prompts the user for an account name and password if required. An attempt is made to match this name to an existing user account stored in the account file. If a match is found, a session control block is created for the session, and the user's session is initiated. When a user has completed his session and logs off, the LGOFF processor updates the session account file with the CPU usage and connect time and deallocates system resources for the session.

Operating System In the session environment, the operating system message processor MESSS will execute only those commands having equal or lower capability levels than the level specified in the user, 's SCB. User capability level assignments are made by the System Manager when the user account is defined; File Management System All file manager commands have capability levels associated with them similar to operating system commands.

Users may perform only those file management commands whose capability levels are equal to or less than the level assigned to the user. The file management system also restricts user access to disc cartridges. Users may access only the cartridges which are specifically mounted to their session. Checks are made to restrict the number and type of cartridges which may be mounted to the session.

Planning Your Account Structure User Accounts Use the account planning worksheet to list all the individual users of your system. For planning convenience, you should assign a unique identifier up to 10 characters to each user. A sample account matrix is shown in Figure Sample Account Matrix Group Accounts Once you have listed your system users you should divide them into various groups.

Members of a group will usually share one or more common attributes. Some of the criteria that may apply here are explained belcw. You may find it convenient to follow an existing organizational pattern. Your account structure could reflect the actual groups in your user community. Users who must share files or data bases with each other can be included in the same group. Disc cartridges can be associated with a group such that they may be accessed solely by memoers of the group.

Groups can be formed around special peripheral access requirements. These peripherals may be defined to the account system such that they will automatically be added to the list of peripherals individual group members may access. Users performing similar tasks could then share related files and peripherals.

As a starting point in dividing your user community into groups, you might pattern the account structure after a group structure already existing in your user community. You might also want to form groups based on common peripheral or data base access requirements. Make a list of all such resources and the users requiring access to them. You should only form new groups when the list of users sharing a common resource is composed of users from two or more existing groups.

If not i. The information gathered here will be used later on to initialize and maintain the account system. Assign a name or an identifier, up to ten characters, to each group in your user community. This identifier must be unique.

It will be used by members of that group to identify themselves to the system. List each group in the diagonal group column in the account planning matrix, see Figure Next, indicate the members of each group. Note that there is no restriction on the number of groups that a user may belong to.

This may be a requirement in situations where individuals need to access resources owned by several different groups. Disc Cartridge Management The following sections will discuss how cartridges are allocated and accessed both in and out of the session environment. You should be familiar with this material before determining your disc requirements and cartridge configuration. Cartridge Types Before users can access files, their associated cartridges must be mounted on the system. Cartridges may be mounted in one of four ways: 1.

Cartridges mounted in this manner may be accessed by all members of the same group. Group cartridges allow members of the same group to share programs, data bases, information files, etc. When a cartridge is mounted to a private user, only that user or other users linked to his account may access that cartridge.

Private cartridges permit file security and are designed to prevent users from inadvertantly accessing each others files. These cartridges, known as System Global cartridges, are accessable to all users of the system. The primary system cartridge LU2 and the auxiliary cartridge LU3 are always mounted to the system. SYS account. With the exception of LU2 and LU3, files residing on System Global cartridges may be both read from and written into by any user of the system.

Files on LU's 2 and 3 are subject to special access restrictions described later. These cartridges can be accessed by programs not under the control of the Session Monitor. Non-session cartridges are mounted from a FMGR operating in non-session mode e. Note that in most cases LU2 and 3 are system type cartridges.

They may however, be made non-session cartridges see DC command. In this case they may be neither read nor written on by session users. It should be emphasized that all file manager cartridges have the same format. The method cartridges are mounted determines the access restrictions imposed on them. For example, one user may mount a cartridge to his group e. Another user may mount the same cartridge to his private account :MC,,P. The cartridge and its contents might remain the same; only the list of users who could access it would change.

If necessary, you may permanently dedicate certain cartridges to groups and users. This will depend on how your account system is set up. Spare Cartridge Pool In many cases, private users and groups may not need to have cartridges permanently allocated to them. They may need use of the cartridge disc space for only relatively short periods of time.

The Session Monitor recognizes this need by maintaining a spare cartridge pool. This pool consists of cartridges to be allocated when users request scratch private and group cartridges i. When dismounted from the system, the scratch cartridges are returned to the spare cartridge pool. The cartridge pool may be setup when the account system is initialized or altered. Cartridge Mounting Considerations A cartridge is defined to be mounted to a session when it is defined in the system cartridge list as being mounted to that session's group or private account and the cartridge LU is defined in the session's SST and SCB cartridge list.

This will include system cartridges LU2 and LU3 unless they have been changed to non-session cartridges. The total number of private and group cartridges mounted to a users session at any one time is controlled by a parameter in each user's account definition. This parameter, called the disc limit, is included in the user's SCB when he logs-on. If the user attempts to mount more private and group cartridges to his session than is permitted by this limit, he will receive an error message.

The system will also warn him of this condition at log-on if more cartridges can be automatically mounted to his session than is permitted. System Global cartridges are not included in the user's disc limit. This insures that low capability users i. Once the cartridge is mounted, it will appear in the system cartridge list as belonging to the user's private or group account, depending on MC command parameters.

Note that if a previously uninitialized cartridge is mounted in session, the MC command will initialize it. The system will not allow a user to mount a cartridge to his session if it is already mounted to some other group or private user account or as a non-session cartridge. When scratch cartridges are requested with the AC command, the system first checks to see whether a cartridge with the requested CRN is already mounted to the user's group or private account or as a system global cartridge.

If so, this cartridge is merely added to the users session. Otherwise, the spare cartridge pool is searched for an unmounted cartridge of at least the requested size. The first cartridge that meets the size requirement will be allocated from the pool. Note that this is not necessarily the best fit. If none can be found, an error is issued and no further action is taken. Otherwise, the cartridge is initialized according to the parameters in the AC command. All files previously stored on that cartridge are purged.

Their CRNs must be unique to all the cartridges in the system cartridge list. A type file 6 may oe purged only by the specific user wno created it. He may read, write, modify and purge all files, including type 6 files. Programs operating outside the session environment i. They are given complete access to files on these cartridges, including LU's 2 and 3.

Non-session programs, however, cannot access mounted session Group or Private cartridges. Likewise, programs operating under session control cannot access non-session cartridges. Since System Global cartridges can be accessed in both non-session and session environments, they may be used for file sharing on a system wide basis.

For example, programs operating in the non-session environment performing data communication or acquisition functions could update files on a System Global cartridge. Session users would then have full access to these files. SYS account, is given complete access to all cartridges mounted on the system. At the end of their session, it is suggested that users back up these cartridges on magnetic tape using WRITT.

This will return the disc space to the available disc pool. Once dismounted from the system, files on a pool cartridge may not be recoverable. The cartridge will be completely reinitialized i. Dedicated cartridges are allocated to users on a longer term basis. Dedicated cartridges should be dismounted from the system only when they need to be physicaly removed or transferred to different accounts.

This will prevent unauthorized access and will cause the system to automatically mount these cartridges to the users session at log on. Disc Planning The following sections will help you to estimate disc cartridge requirements and plan your cartridge configuration.

To perform this planning function you should: 1. Estimate the size of your primary and auxiliary system disc subchannels LU 's 2 and 3. Determine the number and size of globally accessible cartridges in your system. Remember that LU2 and LU3 can not be greater than tracks.

Determine the number and size of cartridges that will accessed outside the session environment. Determine the number, size and allocation of cartridges that will be dedicated to users and groups operating in the session environment. Determine the number and size of cartridges in the spare cartridge pool. Cartridge Requirements Worksheet The cartridge requirements worksheet is provided to help you allocate your disc space and assign cartridges to various users.

The information gathered here will be used in Chapter 3 when you determine your disc subchannel layout and in Chapter 6 when you initialize the session account system. An example worksheet is shown in Figure This will depend on both the type and number of discs you have.

Using this total track size as a base, start allocating cartridge space for your system global, non-session, dedicated group, dedicated private, and disc pool cartridges. Circle the intended use of the cartridge alongside the cartridge size allocation as shown in the example.

As you fill out this worksheet, the right most column tracks left should reflect the number of unassigned tracks remaining on the disc at that point. When you finish filling out the worksheet this value should be zero. Ihese will be mounted to groups or private users on an asl-needed ba s i s. Tne following sections will discuss some of the requirements and special considerations to be taken into account when planning each of the various cartridge types. Use the information provided in these sections along with your account planning matrix, and your general knowledge of the user base, to fill out your cartridge requirements worksneet.

NOTE Use the cartridge sizes specified in your cartridge requirements worksheet as a guideline for your disc subchannel layout discussed in Chapter 3. The actual cartridge sizes will depend on additional considerations such as disc type, spare track allocations, and the physical layout of subchannels on your disc. Many users will require relatively little disc space say less than 30 tracks in order to hold source files, documentation, relocatables, etc.

On the other hand, if the project is large, or many versions must be kept on disc at the same time, you will want to allocate more tracks to the cartridge. If the user or group will be storing large text files on the cartridge, more tracks should be allocated. You might multiply the intended number of users of the cartridge by some track constant say 20 tracks to give a rough estimate of the cartridge size.

The primary system subchannel is limited to a maximum of tracks. The first tracks of this subchannel will be used to contain the operating system, and its size will be determined by the number of modules included in the system at generation time. This figure is displayed by the On-Line Generator when it has completed the system generation process. The remainder of the subchannel must then be divided at system initialization into the system scratch track and FMP areas.

It is recommended that the maximum size of tracks be allocated for the primary subchannel in active systems or when many files will be stored on the LU2 FMP area. You may want to put LU2 and LU3 on fast discs for high speed scratch work and program swapping. The auxiliary system cartridge is optional. Its use is recommended if your system will be heavily loaded to provide additional swapping tracks.

A maximum of tracks may be alloctated for the auxiliary system subchannel. These cartridges can be used for file sharing on a system wide basis. In particular, global cartridges are very useful in cases where files must be shared by different groups or by both session and non-session programs.

Global cartridges should also be used for message and spool files. Even if you can foresee no requirement for global cartridges at this time, it is recommended that you dedicate one disc cartridge for this purpose. This will give users in different groups a means to share files with one another when the need arises.

Non-Session Cartridge Requirements Certain applications require that programs be run outside of the session environment. Programs in the time list, or that operate continously, should not be associated with a session since they will be terminated by the system whenever the session user logs off.

Programs will operate in the non-session environment when they are dispatched from the system console in non-session mode or by detaching themselves from their session using library calls. These programs may then access system and non-session cartridges. You should determine the disc storage required by programs and subsystems operating in the non-session environment. If desired, this storage can be partitioned into more than one cartridge to isolate different non-session subsystem files from each other.

If you decide not to allocate cartridges for this purpose, non-session programs will use the file space on LU's 2 and 3 and the other system global cartridges in your system. Cartridges are allocated to users by defining the cartridge LU s in their group or user account SST definition.

These dedicated cartridges should not be specified in any other account SST unless the cartridges will be traded between different group and private accounts. Chapters 6 and 7 describe the account definition process in detail. It may be advantageous to allocate at least one cartridge to each group. This will be used by group members to share files with each other and to save information on a permanant basis.

When required, users can allocate additional disc space for themselves by requesting cartridges from the spare cartridge pool. This space should be used on a temporary basis and will be returned to the pool when dismounted from the system. If possible, users should save files accessed infrequently on magnetic using WRITT so that pool cartridges will be available for other uses.

It is recommended that all group cartridges be dedicated rather than from the spare cartridge pool. When allocated from the pool, the group runs the risk of losing all files on that cartridge if it is inadvertently dismounted from the system by a group member. If you have users who will be inserting and removing private disc packs from the system, the cartridges on those packs should be dedicated to those users. They must NOT be included in the spare cartridge pool.

Cartridges that may be mounted to different private users or groups at different times, where files on those cartridges need to be preserved, should be dedicated. It is recommended that a cartridge be dedicated to a user when he will be accessing the same files on a long term basis and does not wish to place these files on a group or global cartridge. This will free the user from the risk of losing his files if the cartridge is inadvertently dismounted and returned to the spare cartridge pool.

Examples of applications which might fall in this catagory are long term data base access, large word processing functions e. Users requiring specific cartridge sizes or storage on specific disc areas should have those respective cartridges dedicated to them. Spare Cartridge Pool After you have allocated space for your system global cartridges, non-session cartridges, and your dedicated group and private cartridges, the remaining space on your disc should be divided into cartridges for your spare cartridge pool.

These cartridges will be allocated to private users and groups on an "as-needed" basis. Since disc storage needs are sometimes difficult to anticipate, it is suggested that there be a broad spectrum of cartridge sizes in the pool. One way to plan the pool is to divide half your total remaining disc space into relatively small cartridges say 20 to 50 tracks.

These cartridges can be used by users to save a relatively small number of temporary files. Divide the other half of your disc pool area into successively larger cartridges. These cartridges can be used by individuals requiring relatively large amounts of disc storage.

The allocation of cartridges from the spare pool will depend on the order of cartridge LU 's in the pool specified during accounts setup and the parameters specified by the user in his allocate cartridge :AC, CRN command. Meeting Changing Cartridge Requirements System disc storage utilization is a dynamic variable and will vary as user applications and levels of sophistication change.

When a user or group of users runs out of cartridge space, you can accommodate their needs via several means listed in order of preference. This will require exchanging the files on those cartridges and modifying affected user accounts. Certain applications will require all files to be on the same cartridge. If the cartridge can no longer accommodate all these files, you may be forced to regenerate the system specifying a new disc subchannel mapping. This has the disadvantage, however, that files on LU3 and other cartridges affected by the subchannel redefinition will have to be saved before the new system is installed.

Obviously, this will require adding more disc storage units to your system. The system generation process can be broken down into the following steps: 1. Determine your disc subchannel configuration. If you have Session Monitor in your system, use the disc requirement worksheet filled out in Chapter 2 of this manual as a basis for planning your disc.

Prepare responses to the Online Generator by filling in associated worksheets. Generator responses are explained in this chapter in the context of these worksheets. Backup your newly generated system, if possible. After all these procedures have been followed and you are confident that your operating system has been properly generated, install the new system by following the procedures described in Chapter 4 of this manual. Note to the New User Your first attempt at system generation should be as simple as possible.

Generation information is contained in this manual, the On-Line Generator Manual, and other appropriate configuration documentation, such as the subsystem configuration manuals. Build an answer file by modifying the sample answer file on the Primary System disc to suit your application. Follow the recommended generation guidelines unless you have specific requirements which cannot be met. Since most subsystems require additional steps, it is suggested that you exclude all non-standard subsystems any subsystems not included in the RTE-IVB product from your first generation.

An overview of the generation process is given below. This is an important part of generation. You must always be sure that you have a working system available. The Primary System disc shipped with your system contains an archival operating system that must not be altered; it is the working system on which you can always rely.

The working system that you generate also be treated as archival software, and should always be backed up as described in the utility manual. If you back up your disc by copying it to another disc, be sure that you do not overwrite any part of the factory-generated disc. There is an alternative to disc backup, which is useful only if your disc drive has a fixed platter.

Initialize the fixed platter using the FMGR and copy your newly-generated system file to that platter. Then, at the point in the switchover procedure where you are directed to place the proper disc cartridge in the disc drive, remove the factory-generated disc and place another one in the drive, making sure that the drive has come up to speed before continuing the switchover process. Another technique, which also requires a fixed disc surface, is to modify the generation answer file so that the system is generated to run on the fixed platter.

If the factory-generated disc is to remain in the disc drive, ensure that it is protected by means of the hardware protect switch. Then transfer the new system as described in Chapter 4 of this manual. Set the factory-generated cartridge aside in a safe, clean place, to be used only when generating systems.

Place another disc pack into the drive, which can be used for storing data. When the system is booted up, test it according to the instructions in Chapter 5. If you notice anything peculiar, note the specific symptoms, and continue testing until you are satisfied that it has been well tested. Pay particular attention to those questions you answered differently from those shown in the examples.

When you've identified the problems, replace the factory-generated cartridge in the disc drive, boot up that system, purge all copies of the previous generation and list file, pack the disc, edit the answer file, and re-run the generator.

Consult the appropriate subsystem manuals and configuration guides for the generation requirements of each subsystem. Generate the new system using this answer file and the procedures outlined in the first part of this chapter. Boot the new system up, and test it, using the procedures described previously and the information provided in the system manuals.

When satisfied that the subsystems work, make a copy of your generation answer file for subsequent backup if necessary. The primary purpose of the disc planning section is to configure available disc tracks into one or more subchannels. The operating system further defines the subchannels as system, auxiliary, and peripheral subchannels.

The generator allows you to define a group of subchannels on a single disc controller. A track usage table is maintained by the system for these subchannels. Programs may obtain and release tracks from these subcnannels by using EXEC calls. These tracks are considered system tracks and may be obtained from the system subchannel LU2 or the auxiliary subchannel LU3. The difference between a system subchannel and an auxiliary subchannel is that the configured system including the memory resident system, the generator relocated disc resident programs, and the relocatable library is stored only on the system subchannel.

This feature permits the auxiliary disc to be used as a "swapping disc". Because LU3 can be on another disc or another controller, head movement is reduced, thus optimizing a system for speed refer to Appendix B. The size of a system or auxiliary subchannel is limited to tracks. This size may be reduced, depending on the type of disc used for example, tracks on a disc.

In designating tracks, those that are shared should be included and declared during each system generation. The restriction is that any tracks of an RTE system that are assigned to Logical Unit 2 or 3 the system or auxiliary subchannel must be unique to that RTE system. Remaining tracks on other disc subchannels can be assigned to more than one system.

Note that if no LU is assigned for a peripheral disc, that disc cannot be accessed. Tracks on the peripheral subchannels are not subject to the operating system assignment and release mechanism. Management of these areas can be accomplished directly by user supplied programs or by the File Management Package. Peripheral subchannels to be used by the File Manager can be defined with up to 32, tracks. Therefore, if a system has more than one controller or interface, a table must be constructed before beginning system generation.

Refer to Appendix 3 for multiple disc controller information and assistance in constructing this table. The optional auxiliary subchannel may be placed on a different controller than the system subchannel. The preceding discussion applies in this case with the added requirement that the user specify the number of tracks in the subchannel when the generator inquires about the auxiliary option refer to Chapter 2 of the On-Line Generator Manual.

As an aid to using a multiple CPU system, it is recommended that the subchannel definitions be identical for each CPU. Logical unit numbers should not be assigned to subchannels already assigned to another CPU. Discussion of each disc type is given in the following sections. Refer to the appropriate section for the disc drive used in your system. Table A maximum of four drives may be connected through a single plug-in controller.

Up to 8 subchannels may be defined for this controller. Any combination of eight of these drives may be connected to a single controller. Up to 32 subchannels may be defined for this controller. On a single A interface card, any combination of four of these drives may be connected and up to 32 subchannels may be defined. Each disc platter is a subchannel and is accessed through a logical unit number that is referenced to the Equipment Table EQT entry number of the controller.

Therefore, one controller, containing eight subchannels linked to eight logical unit numbers, can control up to eight discs on four drives. See Figure for an example of the Disc worksheet and fill in the blanks on the worksheet according to the following instructions.

Determine the number of tracks available and the starting track number for each subchannel, and fill in the blanks on the worksheet. Note that the maximum number of tracks available per subchannel for the disc is Locating the system tracks elsewhere will require that the bootstrap loader optionally produced during generation be used each time the system is booted up. Determine which subchannel will be the system and which subchannel the auxiliary if any.

Fill in the appropriate blanks on the worksheet. HP Disc Configuration The HP Disc Drive is a single unit that contains two disc platters, one permanently mounted, and the other housed in a removable cartridge. Each disc platter has two surfaces; however, one surface of the fixed platter is used for timing purposes and is not available for data recording. Therefore, a single HP Disc Drive contains 3 surfaces requiring three heads and 1, tracks in cylinders.

Note that a cylinder consists of one track from each surface. For example, cylinder 3 is made up of the fourth track on surface 0, the fourth track on surface 1, and the fourth track on surface 2. See Figure for a pictorial diagram of the disc platter organization. Each subchannel consists of a group of contiguous tracks on a single drive.

One drive may contain several subchannels, and up to 32 subchannels may be defined for one controller. There is no fixed hardware relationship between a subchannel and a given disc area as on discs ; it is your responsibility to define these relationships. The completed disc worksheet describes each subchannel on a drive i the following terms: unit number of the drive, size of the subchanne in mel in number of tracks, starting head and the cylinder numbers, surface organization, number of tracks, and number of spare tracks.

In dividing up the HP disc tracks, bear in mind that the goal is to assign a logical unit number referencing a group of disc tracks. Tracks on a subchannel must be contiguous. Head movement should be kept to a minimum for fastest response time to sequential tracks. This means that track assignment should alternate between surfaces.

For example, if track of the first subchannel is accessed by head at cylinder 0, and track 1 is accessed by head 1 at cylinder 0, physical head movement changing cylinders is kept to a minimum. If a subchannel includes both fixed and removable platters, flexioility is lost because the absence of either platter invalidates all data on the subchannel.

Also, the rotational alignment between two platters depends on drive orientation when the cartridge is inserted. This makes track-to-track access time across platters unpredictable. In fact, it may be better or worse than on one platter, depending on alignment and the time required for software processing between tracks. If more than one surface is to be used, tracks are cyclically allocated downward and back to the original surface when necessary. For example, a subchannel beginning with head and using two surfaces will use head 0, head 1, and head repeatedly and in that order.

Note that any subchannel using three surfaces must start on head 0. Some tracks on a disc surface may be unusable. When such a track is encountered, another track may be assigned provided spares are available in its place by the system transfer program SWTCH or the disc initialization program FORMT. In this case the disc controller will automatically switch to that track on future references.

During generation, spare tracks can be assigned to eacn subchannel for this purpose. When a bad track is encountered during the system transfer or FORMT process see Chapter 5 , a subchannel may draw from its spares. Mote that spare tracks are allocated on a subchannel basis and belong only to that subchannel; i. You should plan on about 1, usable tracks per drive, dividing the remaining 33 tracks as spares among the subchannels in proportion to their size.

Spares immediately follow the main tracks for the associated subchannel and use the same surface organization. Spares are recommended even though they may not be used on a given disc. A subchannel or complete disc might later be copied to another disc where bad tracks are encountered, and all data would not "fit" if the receiving disc did not have sufficient spares.

A subchannel to be used as the system or auxiliary subchannel LU2 or LU3 must not exceed tracks, excluding spares. A peripheral subchannel may be assigned to be used by the File Management Package may have up to 32, tracks. Subchannels on a given disc controller are numbered sequentially from to Do not skip or duplicate any numbers. The disc ROM loader will boot a system on a disc only if it starts at cylinder 0, head 0, 1, or 2 on drive 0.

Locating the system subchannel elsewhere will require that the bootstrap loader optionally produced during generation be used each time the system is booted up. Subcnannels on the are defined in a manner directly translatable for input to the generator. Refer to Figure and fill in the blanks on the worksheet form according to the following instructions. The generator assumes the disc subchannel organization is valid and performs no checks on the definition.

Remember that when a subchannel covers more than one surface, the starting head is incremented to determine the surfaces covered by that subchannel. In addition, remember that spares immediately follow each subchannel.

To ensure correct subchannel definitions, the second part of the worksheet see Figure must be filled in correctly. Follow the instructions below for each HP drive. STEP 1. A hardware unit number is associated with each drive and is selected by a switch located behind the perforated front panel. Set the switch to the appropriate number and then write the number on the worksheet. No two disc drives should have the same number.

NOTE This hardware switch should not be re-positioned while the drive is loaded i. STEP 2. The second part of the worksheet represents the three surfaces of the disc drive and is provided as an aid in dividing the surfaces into subchannels. For example, for subchannel 0, you could allocate tracks for data and 8 tracks for spares, encompassing two surfaces. This makes a total of tracks, which is cylinders. Divide up the surfaces, grouping the tracks into subchannels.

Allow approximately 6 spare tracks for each data tracks allocated. The number for the first cylinder of succeeding subchannels is found by adding the number of cylinders used by preceding subchannels. To count cylinders, add tracks and spares, then divide by the number of surfaces.

In the example above, cylinders were assigned to subchannel tracks plus 8 spares. Therefore the starting cylinder for subchannel 1 could be cylinder , head or 1 , or cylinder 0, head 2 for a one-surface subchannel only , depending on how you assign the tracks. STEP 3. When the third part of the worksheet is filled out, it will provide the answers to all of the questions that the generator will ask about each subchannel.

For the most part, the numbers are filled in from Step 2. Determine which subchannel will be the system and which subchannel the auxiliary if any and check the appropriate boxes. The HP Disc Drive is a single unit that contains two disc platters, one permanently mounted, and the other housed in a removable cartridge.

Each disc platter has two surfaces available for data recording. One surface of the fixed disc is also used for timing purposes, but it is still available for data recording. Utilization of that surface by the system disc controller is transparent to the user. Therefore, a single HP Disc Drive contains 4 surfaces 4 heads , and cylinders, giving 1, tracks.

For example, cylinder 5 is made up of the sixth track on surface 0, the sixth track on surface 1, the sixth track on surface 2, and the sixth track on surface 3. The following discussion provides the criteria for configuring each disc into subchannels.

Each subchannel will consist of a group of contiguous tracks on a single drive, and one drive may contain several subchannels. In dividing up the HP disc tracks, bear in mind that the goal is to define a logical unit number referencing a group of disc tracks. HP and Discs System Generation Response Preparation If a subchannel includes both fixed and removable platters, flexibility is lost because the absence of either platter invalidates all data on the subchannel. For example, a subchannel beginning with head and using two surfaces will use head 0, head 1, and head repeatedly, and in that order.

Note that any subchannel using four surfaces must start on head 0; any subchannel using three surfaces must start on head or 1 , etc. In this case, the disc controller will automatically switch to that track on future references.

During generation, spare tracks can be assigned to each subchannel for this purpose. When a bad track is encountered during the system transfer or FORMT process, a subchannel may draw from the spares for that subchannel. Note that spare tracks are allocated on a subchannel basis and belong only to that subchannel; i. You should plan on about usable tracks per drive, dividing the remaining 44 tracks as spares among the subchannels in proportion to their size.

Similarly, a peripheral subchannel to be used oy the File Management Package must not exceed 3 2, tracks, excluding spares. Do not skip or duplicate numbers. The disc ROM loader will boot a system on a disc only if it starts at cylinder 0, head 0, 1, 2, or 3 on drive 0.

The RPL feature using the disc ROM loader will boot a system on a disc only if it starts at cylinder 0, head or 2. Subchannels on the are defined in a manner directly translatable for input to the generator. Refer to Figure and fill in the blanks on the worksheet forms according to the following instructions. To obtain the correct subchannel definitions, the second part of the worksheet see Figure must be filled in correctly in step 2 below.

A hardware unit number is associated with each drive. An ICD address number is associated with each H drive.