International Companies in the TRNC

Facilitations have been provided to investors for the development of the TRNC in the fields of international finance and trade. The key advantages in this regard are as follows:

Confidentiality

Notifications resulting from the activities of international businesses in the TRNC are carried out within the framework of confidentiality.

Customs Duty Exemption

International businesses established in the TRNC are exempt from customs duties on the office and other items they bring into the country.

Location

The TRNC’s location provides advantages due to its proximity to Europe, Asia, and Africa.

Corporate Tax

International companies are subject to a corporate tax rate of 1% on their net profits.

Dividends

Dividends paid by international companies to their shareholders in the TRNC are exempt from income tax.

Company Formation Procedure

For more information on the company formation procedure, please [click here].

The establishment and operation of International Business Companies in the TRNC are the same as for locally registered private and public companies. International Business Companies must have at least two shareholders. Additionally, they must have at least one director, with no conditions regarding whether the director is local or foreign.

International Business Companies fall under the TRNC International Business Companies Law No. 38/2005. As the TRNC has increasingly transformed into an international trade and finance center in recent years, laws necessary for full membership in the European Union that provide the economic infrastructure are being developed, with a significant focus on the regulation of the establishment and operations of international business companies. Under this law, businesses that operate internationally and conduct activities outside their main countries can benefit from tax advantages provided by the TRNC through the establishment of International Business Companies, as well as conduct many of their international activities from the TRNC with a well-educated workforce. Therefore, by implementing regulations similar to those applied by EU member countries, particularly the Republic of Cyprus and Malta, regarding international companies, the TRNC offers an alternative to many international businesses. When examining the taxes imposed by these countries on international companies, it is evident that the tax rates in the TRNC are significantly lower.

The tax applied by the TRNC on such companies is very low. By law, the activities of international companies based in the TRNC must be aimed at foreign markets. However, due to this requirement, in addition to being exempt from taxes applicable to local companies in the TRNC, they are subject to a corporate tax rate of 1% on their annual net profits. This tax rate represents one of the lowest within the European Union for internationally registered and operating business companies in the TRNC. Here are some useful points regarding International Business Companies: Applications for registration of International Business Companies in the TRNC are made to the Ministry responsible for the economy. The minimum capital required for the establishment of International Business Companies is €20,000. The following entities can apply to the Ministry for permission to operate under this law: [click here for the application form].

Detailed information about International Business Companies is as follows:

• Foreign individuals
• Foreign legal entities
• Northern Cyprus citizens residing abroad.

A €500 application fee is charged for applications by International Business Companies. This fee is non-refundable under any circumstances. This amount may be increased or decreased by 50% by the Council of Ministers. International Business Companies cannot request loans from the government or from local or foreign banks and/or investment companies operating in the TRNC for their investment project financing needs. However, they can obtain loans from banks established under the International Banking Units Law currently in force in the TRNC.

International Business Companies conduct their activities without being subject to the rules of the Income Tax Law, Foreign Exchange Law, and Corporate Tax Law. They are taxed at a rate of 1% on the tax base determined according to the Corporate Tax Law and the Income Tax Law, regardless of the tax rates specified in those laws. This tax must be paid to the Revenue and Tax Office within 5 months following each accounting period. In addition to their activities aimed at foreign markets, no taxes, fees, or charges are levied on International Business Companies unless otherwise stipulated in other laws.

International Business Companies can open any type of account, including deposit accounts, in banks operating in the TRNC. The income tax withholding on interest earned from amounts transferred to such accounts or invested in these accounts cannot exceed 1%. This withheld tax constitutes the final tax on the interest income of International Business Companies, and in case of a loss, there will be no offsetting or refund of any such tax. No tax is levied on dividend distributions from International Business Companies. The interest withholding tax paid by International Business Companies to individuals and legal entities operating outside the TRNC is exempt from tax.