By Adrienne Blume
NICOSIA, Cyprus -- As activity continues in the Eastern
Mediterranean, where an estimated 35 trillion cubic feet of
recoverable natural gas reserves have been discovered,
industry-leading companies are preparing to increase their
regional presence. Exploration, drilling and production projects are underway, and plans for
gas processing and transportation facilities are in progress.
According to industry experts, gas exports could commence as
early as 2019.
At Gulf Publishing Companys inaugural Eastern
Mediterranean Gas Conference (EMGC) in Nicosia, executives from
operating, service and technology companies active in the
region are sharing insight into development opportunities for
this exciting resource area.
The conference, which is taking place from April 810
at the Hilton Cyprus, features speakers from top companies
operating in the region. EMGC media sponsor Deloitte hosted a
workshop on Monday afternoon, Doing Business in the
Mediterranean, which drew over two dozen attendees from
companies around the world seeking to share knowledge and gain
information about regional economic conditions and tax and
customs laws, as well as managing human resource challenges in
the oil and gas industry.
Restructuring Cyprus economy. Marios Tannousis
of the Cyprus Investment Promotion Agency (CIPA) opened the
workshop with a presentation on how Cyprus economy should
be reshaped after the recent, 10 billion bailout
agreement by the Troika, which consists of the European Commission, the European Central Bank and the
International Monetary Fund.
Mr. Tannousis noted that CIPAs role in restructuring
the Cyprus economy includes promotion, advocacy, and investor
support, along with clarifying and harmonizing regulations for
investors. As a non-profit organization, CIPA seeks to promote
foreign direct investment (FDI) in Cyprus as a mechanism for
growth. The government is also seeking to fully liberalize
foreign FDI and ensure equal terms for foreign companies with
Mr. Tannousis asserted that the benefits of oil and gas
extraction will prove catalytic for the future reestablishment
of Cyprus economy, as well as help improve domestic
productivity and competitiveness.
Following Mr. Tannousis presentation, Nicos
Papakyriacou, Cyprus Oil and Gas Leader for Deloitte and head of the
companys Cyprus office, introduced three of his Deloitte
colleagues: Paul Mallis, Cyprus Oil and Gas Tax Leader and
Partner at Deloitte Tax Services; Christos Papamarkides,
Partner, Indirect Tax Services at Deloitte Ltd.; and George
Pantelides, Oil and Gas Specialist and Partner at
Deloittes Human Capital division.
Corporate tax rules. Mr. Mallis first spoke about
corporate tax in Cyprus and explained when and how foreign
firms become tax eligible. He also addressed the tax and visa
implications of sending foreign workers to Cyprus. The
countrys low tax rate of 10%, which will move to 12.5%
after the agreement with the Troika, is an attractive reason
for doing business in Cyprus.
Additionally, Mr. Mallis noted that preexisting tax treaties
between Cyprus and foreign nations can offer significant
benefits for oil and gas companies seeking to establish
operations in the country. As an added bonus, capital
allowances (i.e., tax depreciation) for plants and machinery
can be favorable, at 10% to 25%, with oil barrels falling under
the 25% rate.
VAT regulations. Next, Mr. Papamarkides offered
information on the value-added tax (VAT) rules commonly
followed in Cyprus. He noted that the country generally adopts
the main rules of the EUs established VAT legislation,
and discussed instances where VAT is chargeable and when
companies must register for VAT.
No VAT is charged for goods that are to be used directly on
drilling rigs, Mr. Papamarkides explained. Furthermore, customs
charges are not applied when goods and equipment are delivered
directly to a drilling platform and do not pass through an
airport or a seaport.
Human resource considerations. Lastly, Mr. Pantelides
led a short discussion on employment legislation and
requirements in Cyprus, and elaborated on how foreign companies
can establish a local office in the country. Deloitte provides
both recruitment assistance services and human resources
infrastructure support services for companies seeking to do
business in Cyprus.
The workshop concluded with a Q&A session, followed by a
networking session over hors doeuvres and cocktails.
Workshop attendee and Nicosia-based Deloitte Tax Services
Director Chrystalla Michael praised the workshop as an
important way to let companies know about employer obligations
for taxes and customs as well as human resources, particularly
expatriates. One of the major benefits of doing business in
Cyprus is the low corporate tax, Ms. Michael said. Even with
the move from 10% to 12.5% after the Troika agreement,
Cyprus corporate tax remains one of the lowest in the
More from EMGC. Days 2 and 3 of EMGC will include
technical presentations focusing on the regional implications,
international impacts and market potential of the new energy
resources; LNG and gas processing opportunities; infrastructure
developments; and the future of the Eastern
Mediterraneans energy sector. Additionally, a gala dinner
sponsored by Deloitte will take place on Tuesday evening for
all conference attendees.
Stay tuned for additional coverage of Gulf Publishing
Companys inaugural Eastern Mediterranean Gas Conference
Photo caption: Deloitte Oil and Gas Leader for Cyprus,
Nicos Papakyriacou, introduces speakers at EMGCs Monday