ICPAC Accountancy Cyprus 2017

101ACCOUNTANCY CYPRUSREGULATIONhigh quality staff. to governments wishing to decisions that will foster cial development of energyWhile there is no “quick establish regulatory agencies. confidence and legitimacy sectors, particularly withand easy” energy regulatory Emphasis should always be in the eyes of investors and regard to deregulation andmodel that can be applied, given on the independence consumers alike. wholesale markets.there are some best practice of the energy regulator Whilst the nature of energy Overall, a well-functioningprinciples emerging from from external influence and sectors, political structures regulatory agency needsinternational experience hence establish credibility and legacy arrangements adequate resources, an ap-that can provide guidelines and transparent regulatory varies in different countries, propriate legal mandate and meaning that the functions clear agency values and op- The principal source of of energy regulators dif- erating procedures. Energy financing for many regulators fer, they do have the same regulators can be funded byis the government, leaving them general purpose which is taxes or by levies to the en- at least partly vulnerable to to monitor competition in ergy market, mainly through the energy market, to assist price-regulated entities. political influence in the implementation and development of national and Independence international energy policy, and to assist in the commer- Regulatory autonomy or independence usually means having a regulatory body free from influence from external sources in its decision mak- ing. This often means inde- pendence or autonomy from the government. Ensuring that political oversight is not seen to impede the function- ing of the regulator can be crucial in establishing the credibility of a newly created regulator. However, it is commonly accepted that balancing regulatory autonomy and/ or independence with the sustainable financing of regulatory agencies is a diffi- cult task and there is seldom a perfect answer. Sometimes, the principal source of fi- nancing for many regulators is the government, leaving them at least partly vulner- able to political influence. One way suggested to partly mitigate the issue of dependence on govern- ment funding is to have

102 ACCOUNTANCY CYPRUSring-fenced funding for the • is the key to attracting and The absence of regulatoryregulator. Further, the only retaining efficient investment transparency is potentially vastway a regulator can be truly • creates confidence in and could severely undermineindependent is if it has been the credible commitmentprovided with the tools from the government and investor confidenceand resources essential for the regulator to a set of fairdelivering on its mandate. A policies both now and in erations. The utility has the market prices.weak regulator, for example, the future obligation (via licensing) to The purpose of regulation isin terms of financial or hu- The financial impact of the provide a service under the to ensure that price reflectsman resources, will find it absence of regulatory trans- approved tariffs and quality the least cost of service,very difficult to remain au- parency is potentially vast standards. Consumers have given mandated qualitytonomous. and could severely under- an obligation to pay for that and reliability standards.Regulators do not have mine investor confidence. service to ensure the finan- The role of the regulator isexclusive control over the One method for the regula- cial viability of the sector. to promote the long-termindustry. For example, the tor to promote transparency For example, the review of objectives established by thecompetition authority, in- is to prepare and distribute tariffs and costs (one of the government, while balanc-ternational competition law, to stakeholders and the gen- core functions of a regula- ing the interests of all threeinternational agreements eral public an annual report tor) is central to protecting stakeholder groups (govern-and directives and ministries on regulatory activities and consumers and facilitating ment, suppliers, consumers).all have authority of one sector performance. investment. The regulator The long-term sustainabilityform or other. It is natural must also be wary of the of the sector depends onfor there to be some tensions InvesTor and consumer emergence of monopolies looking beyond the immedi-between the objectives of the proTecTIon that could have enough ate interests of each of theenergy regulator and that of influence to set higher than groups.the other bodies. The basic role of the regula- tor is to balance the interestsTransparency of three stakeholder groups: • The Government,Transparency means trans- • The electricity (or energy)parent regulatory decision- service suppliers, andmaking and robustness, • Customers.expediency, quality and Each of these groups haspredictability of regulatory potentially conflicting in-decision-making. The fol- terests. The government islowing might be regarded subject to short-term politi-as a wide and dynamic cal pressures from variousdefinition of the concept constituencies. For investorsof regulatory transparency: to commit to long-term“Tools and measures that investments, the regulatorfoster confidence in and un- must be free from unduederstanding of the regulatory influence. For example,processes and decisions by all suppliers want high returns,stakeholders”. and an unchecked, non-Regulatory transparency is regulated monopoly willmore important in weak charge too high a price.institutional environments Customers, conversely,with less investor confi- want reliable electricity atdence. The idea is that the low prices.openness of the regulatory Therefore, a key elementprocess to stakeholders pro- of the regulator’s role ismotes legitimacy. However, striking a balance betweenit is recognized that there encouraging investors andshould be a balance between protecting consumers,transparency and respect for while fulfilling governmentthe requirements of inves- objectives. The regulatortor confidentiality. In brief, should ensure that bothtransparency: suppliers and consumers• is crucial to the legitimacy uphold their obligationsof the regulatory process relating to commercial op-

MagazineThe official magazine of the Institute ofCertified Public Accountants of Cyprus (ICPAC)The Institute of Certified Public Accountants of Cyprus (ICPAC)and IMH are collaborating on the publication and distribution ofthe quarterly magazine Accountancy Cyprus, which deals withissues pertaining to economics & finance, business, accounting,taxation, audit, compliance, news of the Institute and muchmore. The magazine is being redesigned and upgraded withadditional content to ensure that it remains a point of referenceas the most reliable source of information for news of the sector.Accountancy Cyprus will now provide a modern and dynamicinformation platform for members of ICPAC, the business world,the political leadership and government officials.Accountancy Cypus is published 4 times a year and mailed freeof charge to more than 9,000 subscribers in Cyprus and abroad.The first issue of the magazine to be published under the new CollaborationICPAC-IMH arrangement will be available in July.For further information contact:IMH, 5 Aigaleo Str., 2057 Strovolos, P.O.Box 21185, 1503, Nicosia, CyprusTel.+357 22505555 Fax. + 357 22679820, E-mail: [email protected],

104 ACCOUNTANCY CYPRUS BUSINESS IN CYPRUS26GUERRILLAMARKETINGTACTICSTHAT REALLYWORK! Business development for professional accoun- By Demetris Stylianides tants can often seem like a never- ending search DipLC, CT, CTM, FAIA, FCCA, CPA, to find a method that “really works”. While it Internationally Certified NLP Trainer may never be that simple, the list below can get you started on launching your first lead genera- tion marketing campaigns. Whether you have a huge client database or you’re an accountant who is just getting started, the following tips can provide an extra lift to your guerrilla mar- keting efforts. Pick a few, try them out and be consistent. Dedicate a few weeks to running the campaign. Marketing is a matter of consistent, value-driv- en messaging and positioning to the marketplace. If you try something once, the chance of it succeeding is very small. As professional accoun- tants, we always need to remember and apply the rules of professional conduct and avoid unfair competition or advertising flaws that could

105ACCOUNTANCY CYPRUS The ultimate question is: “How are you making your service, firm or practice more friendly and referable?”instigate disciplinary pro- be prominently displayed. around for a call to come eration. After all, this is thecedure against us. Even if you work from back, so it’s essential that first impression a prospect home you can still have you are readily available in will get! Put on your best1. Start by having a well- signage in your front yard case that next call is a soon- suit and visit a professionaldefined image of the ideal or even use your car as an to-be-valued client. If you photographer’s studioclient you are seeking. advertising board. Creat- do miss a call, make sure to get a few digital high-2. Signage: Do you have ing general awareness is an you have voicemail with quality photos that can bea shop front or do you important way to attract clear instructions for alter- used on your social mediarun your business from new customers, so any native methods of reaching profiles.home? Your business is a method you can use to you such as your e-mail or 9. Groups: Join LinkedInfree advertising board, so get your business name in website and make sure you Groups for your niche ormake the most of it. Your front of possible clients is return the call as promptly target market. Post rel-business name should be going to be beneficial for as possible. evant articles and answereasy to see by drivers as the business. 4. Be different: When questions. I am talkingthey pass by and the ser- 3. Return calls: First-time introducing yourself and about a short article (200-vices you offer should also clients often won’t wait the firm, explain what 400 words) per month that differentiates you. Make is relevant to your audi- it crystal-clear how the ence. firm adds value for clients 10. Check your existing beyond the services you connections: We often deliver. overlook just how power- 5. Prepare: When con- ful our network is. People necting with prospects, do change careers, move or your best to get to know start their own business. decision- makers and influ- Look at your existing net- encers in the company. work, especially on Linke- 6. Listen: When creat- dIn, to see if there are any ing your meeting agenda, clients or prospects you always start by listening. could connect with. Once you have heard what 11. Run LinkedIn Ads: If really matters most, read your practice or firm has between the lines before professionals as the target you respond. client, then an alternative 7. Reconnect: When you to the high maintenance of leave the meeting, agree on LinkedIn Groups can be to the next steps; do not leave run ads. without scheduling a date to 12. Optimize Your Pro- reconnect. file (1): A couple of simple tweaks to your profile can Linkedin make it more attractive for a prospect. First, you 8. Photos: While “looks” want your main LinkedIn may not be everything, a “headline” to be descrip- poor LinkedIn picture can tive but also benefit- be damaging for lead gen- driven. This is so that any prospect can immediately understand who you serve and what you do, along

106 ACCOUNTANCY CYPRUS BUSINESS IN CYPRUSwith your official title. the same way as LinkedIn, offer to give a free financial specific and be clear.13. Optimize Your Pro- e-mail, or any other form. workshop for your target 24. Testimonials: Adding afile (2): Add Testimonials 18. Run Twitter Ads: market. So not only do testimonial can be one of theto your Summary: I’m a Twitter ads can be a cheap you get in for free but now most effective ways to buildhuge fan of testimonials, way to reach people you’d you’re put on stage and trust and credibility. Weas they can dramatically never know otherwise. You seen as the financial expert. recommend putting a testi-increase the speed at which can target specific loca- 22. Referral Systems: monial on every single page,a prospect will view you as tions, areas, followers or Whether it’s a simple e-mail with a picture, and name ofcredible. Put testimonials specific accounts. signature, a weekly outreach the person who gave it.in your summary, so that event, a phone call or even 25. Navigation: Havingwhen a prospect scrolls neTworking asking in person, you need simple, easy-to-read tabsyour profile, they see the a system that you know can and fonts is critical fortestimonials about your 19. Chamber Meetings: be used to build referrals and keeping someone on yourfirm and your service. Local chamber meetings can reviews. The ultimate ques- website. Nothing can turn be a great way to meet local tion is: “How are you making someone off faster than aFacebook business, build referrals, and your service, firm or practice confusing layout, making learn more about the needs more friendly and referable?” it difficult to actually find14. Create a of the community. the content they need orFacebook page: 20. Business Journals: websiTe want to read. Keep basicThis is the cornerstone of Reviewing local newspa- tabs at the top, and makelaunching Facebook efforts, pers and business journals 23. Headline: When some- sure this is the “primary”because not only does it can be a great way to see one lands on your website, highly sought-after contentgive you the ability to post, upcoming events outside what is the first piece of con- on your website.but more importantly it of chamber meetings. tent they see? Is it a generic 26. Call to Action: Hav-gives you the ability to cre- “Welcome”? Or is it scat- ing a clear “call to action”ate specific landing pages evenTs/conFerences tered everywhere across the is critical for convertinginside Facebook, as well webpage? The importance of visitors into prospects.receive additional advertis- 21. Attending your tar- a clear, benefit-driven head- To put it simply, a call toing options. get market’s conference: line cannot be understated. action is a specific instruc-15. Run Targeted Face- While this might seem Much like a newspaper or tion that is clearly labelled,book Ads: The ever-grow- strange, keep this in mind: a magazine, your website on what you want the visi-ing and evolving Facebook At this conference, you headline is what helps skim tor to do next. It could bead platform is one of the will most likely face little readers know if they should to schedule a consultation,most powerful paid chan- or zero competition. In continue to invest their time subscribe to the blog, etc.nels online. fact, you might even be in reading. Just remember, This is a good list to con-16. Look up your friends: able to get in for free if you your website is competing for sider as it will help keepFor most people, their clos- the attention of your pros- you focused and account-est people in their life now Adding a pect and, in doing so, com- able –two key ingredientsand in the past are on Face- testimonial petes against all social media, for successful businessbook. If you haven’t already can be one news, sports and every other development!exhausted your existing of the most website on the Internet. Benetwork on LinkedIn, defi- effectivenitely look to see if any of ways to buildyour friends are in the mar- trust andket and worth talking to. credibilityTwiTTer17. Ask yourfollowers forreferrals: If you know of afollower that is a good fitfor your service, asking fora referral on Twitter works



108 ACCOUNTANCY CYPRUS BUSINESS IN CYPRUSTIME FOR A NEW The role of manufacTuring indusTry in economic growTh By Andreas Antoniades Director of Industry, Nicosia Chamber of Commerce and IndustryThe instability reflected in of patents and the majority indicative and enable us to international markets, due to of US exports, contributing draw some conclusions. the slowing of the Chinese significantly to the country’s The overall Industry Turnover economy, and the sinking recent economic recovery. Index (which, in addition to of oil prices highlight the manufacturing. includes min- interrelation and interdepen- Manufacturing industry ing and quarrying, electricity, dence of the world economy, in cyprus water supply and material re- thereby stressing the need covery) shows a slight decrease for economies with multiple Despite the fact that the but it is worth noting that the growth pillars in order to be manufacturing industry has part of the index relating toable to sustain economic crises. experienced a significant exports has a positive growthThe manufacturing industry remains a critical force decline in our country in of 5.6%. The manufactur-in both advanced and developing economies. The recent years, it still makes a ing industry sector index is ofmanufacturing industry makes a significant contribu- noteworthy contribution to particular interest as it revealstion to the economies of many countries and has a GDP and employment as a significant increase in excessmuch greater impact on economic growth than its well as providing support to of 8% with regard to exports.actual magnitude. According to a report by Mck- other sectors of the econo- The same positive outlook isinsey (“Manufacturing the Future”), manufactur- my. Data of the Industrial reflected in the industrial Pro-ing contributes disproportionately much higher to Turnover Index for 2015 areexports, innovation and productivity than the actualsize of the sector itself.World Bank data shows that, in Japan, manufacturingrepresents 19% of GDP, in China it is around 36%,in Singapore 18%, in Germany 23%, in Italy 15%, inPortugal 13%, in Spain 13% and in Estonia 16%. TheEuropean Union manufacturing industry average is15% but corresponds to 80% of exports and private sec-tor investments in research and development (R&D).In the US, manufacturing constitutes only 12% ofGDP but has 70% of private sector R&D, over 90%

109ACCOUNTANCY CYPRUSSTRATEGYduction Index. industrial goods of agricul- economy. Domestic ex- develop actions and mea-Domestic exports from tural origin and industrial ports are no longer limited sures that will increase pro-Cyprus have shown a grad- products of manufacturing to halloumi and pharma- ductivity and reduce costsual increase in recent years origin. These elements ceuticals but include a across the entire productionand totalled €732 million are especially important as greater variety of products. chain, in order to enhancein 2014 and more than they demonstrate the abil- both the competitiveness€830 million in 2015. Of ity of the manufacturing growth policy and of the manufacturing in-this amount, only 13.2% industry to compete with Manufacturing industry dustry and the potential forrepresented agricultural imported products but also increased exports, thus con-products while the rest to export abroad, thereby The experience of other tributing to the improve-came from exports of supporting the overall countries clearly indicates ment of income inflow how important the con- from abroad and addressing Domestic exports are no tribution of the manufac- the negative trade balance.longer limited to halloumi turing industry is to their Such measures include the economies. Undoubtedly, reduction of energy costs and pharmaceuticals Cyprus cannot evolve into a for production, the intro- country with heavy industry duction of an attractive and but it can most certainly stable tax framework for utilize the potential benefits investments in industry and of a healthy manufacturing incentives such as acceler- industry. It is evident that, ated depreciation, the im- besides its contribution to provement of infrastructure the country’s GDP, the and mechanisms to facilitate manufacturing industry has exports, the promotion of an important impact on incentives and support mea- employment, research and sures for internationalisation development, exports and and exports, tax exemptions the trade balance but also for investments in Research provides support to other and Innovation in industry, sectors such as agriculture, urban planning incentives construction and tourism. for industrial developments, The manufacturing industry reduction of the administra- must be an essential part of tive burden, etc. the country’s new develop- Conditions are now ripe for ment policy as it constitutes revisiting the manufacturing an integral component for industry policy and formu- economic growth. Cyprus lating a new strategy for the also has an obligation to the sector. It is necessary to have EU to ensure that industry a well-documented long- reaches 20% of European term structured policy with GDP by 2020. Given the integrated actions and mea- potential of the manufactur- sures that will inspire confi- ing industry in Cyprus, it is dence for investment in the imperative that the sector be manufacturing industry in given the necessary attention order to support economic and support. growth and development in It is essential, through a Cyprus. well-structured strategy, to

110 ACCOUNTANCY CYPRUS BUSINESS IN CYPRUS THE IMPORTANCE OF EMOTIONALINTELLIGENCE AT WORKMANAGING EMOTIONS CAN HELP ACHIEVE AN ORGANIZATION’S BUSINESS OBJECTIVES By Michael Karasavvas Honorary Consul of St. Vincent and the GrenadinesThe effective management of a person’s emo- In general, high levels of EI relations, well-developed com- tions and high levels of emotional intelligence lead to increased self-esteem munication skills are essential significantly determine the success or failure and optimism, greater flex- and they form the basis for that someone has in his/her life. According to ibility in complex situations, creating business opportunities. Daniel Goleman, emotional intelligence (EI) a better interaction and com- HR departments have under- is the ability to recognize, understand and munication level with the stood the importance of EI for control one’s emotions, and other people’s, in environment, greater initiative achieving corporate objectives order to guide how one thinks and behaves and increased personal motiva- and have, therefore, adopted so as to effectively manage interpersonal re- tion. Conversely, people with appropriate mechanisms andlationships. In the business working environment, in particular, the low EI are characterised as hav- techniques for the develop-way in which people manage their emotions is an important factor ing difficulty in coping with ment and utilization of EI within achieving the organization’s objectives. Each company is based unexpected situations, hostility regard to employees, aiming toon, and depends on, the intelligent management and development in partnerships, an increased maximize their performanceof human resources, as it is the most valuable asset for the satisfac- rate of anxiety and diminished and better serve their customers.tion of the customer and is therefore a key factor for profitability. confidence. Strengthening EI will allow As can be seen from the above, employers to see that theirStrengthening the emotional offering the right solution. it is clear that highly intelligent employees need to be viewedintelligence of human re- Another benefit of high EI is people can contribute and per- as a priority, as greater EI willsources has multiple benefits the individual’s ability to con- form more effectively towards enable them to increase theirfor the operation of a modern trol his/her emotional state and achieving a business’s objec- long-term productivity andorganization. First, people who overcome difficult situations tives. Especially in customer maintain it at a stable level.have increased EI are able to (stress, failure, pressure) effec-understand the emotional state tively and faster. In the business Strengthening the emotionalof another person in order to environment, in particular, this intelligence of humancooperate and be productive ability reduces the potential for resources has multipleand they can understand, man- conflicts between employeesage and better serve the wants and it saves time, leading to benefits for the operationand needs of a customer by more effective partnerships. of a modern organization

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112 ACCOUNTANCY CYPRUSBUSINESS RELAXIN CYPRUS SMARTLY TO WORK EFFICIENTLY CRITICAL INSIGHTS INTO WORK-LIFE BALANCE By Dr. Irene Lokhtina Antoniou PhD, MSc, MA University Lecturer in Business & ManagementTheno- commodating requests, possible utilise your ‘free’ days construc- • Keep healthy eating habits. tion of disagreements due to inequality tively. Here are some sugges- Say ‘no’ to stimulants such as ‘work-life and the nature of work itself. tions: caffeine or minimise their con- balance’ • Allow yourself to relax – a sumption. It is impossible to was in- Moreover, if flexibility has constant focus on work duties relax effectively when substances troduced become more about developing and perfectionism can lead to that stimulate the nervous sys- a couple modern working practices to fit obsession and increased anxiety. tem are present in your blood. of centu- the needs of the 21st century, You should respect your right • Try not to waste hours of ries ago family-friendly working ar- to rest, which will direct your your time in front of the TV.but widely implemented in rangements should not only be energy towards success. It may feel like relaxation whenthe United States at the end of perceived as a certain incentive, • Spend time with your family you are on the couch, keepingthe 20th century with regard to which is practically imple- and friends in order to build and up with TV shows but you areemployees working long hours mented in workplaces. It is also maintain positive momentum. negatively influencing yourat the expense of their family. important to consider its eco- • Be involved in new learning mental activity.Business-oriented people are nomic element, causing signifi- experiences, formally and/or Concluding, there are concur-increasingly aware of the im- cant reductions to employees’ informally. This will help you rent debates around the notionportance of an adequate flexible total compensation packages. engage with new practices and of flexible working arrange-working schedule for their em- However, in light of today’s explore new fields that can have ments but, if you follow theployees. However, is it possible economic instability, which has a large impact on your personal policies of your employer, tryto maintain work-life balance resulted in less available work- and professional development. to utilise your time wisely andin today’s fast-paced business places, individuals are ready to • Look after yourself by exercis- take advantage of the experi-world or is this just a theoretical accept flexible working arrange- ing. Walking or cycling will help ence as a driver of your per-assumption? ments. As such, it is important you break away from routine sonal development. The main to highlight what they should activities. Choose comfortable aim is to become a more pro- Indeed, modern workplaces do in order to benefit from such clothing when you are away ductive and satisfied employee.are continuously evolving, arrangements rather than to from your workplace because A recent study by economistsand a traditional ‘clock in/out’ complain about ‘how to fill the this may liberate your body found that happiness leads topattern of work is less popular gap’, if there are no other work movements. a 12% spike in productivity,compared to a more flexible obligations available. The prob- • Stop being ‘always on’ – turn while unhappy workers proveapproach, which accommodates lem is that some people cannot off your smartphone or do 10% less productive. Use thethe needs and preferences of a utilise their ‘free’ time effectively not be constantly connected above suggestions in differenthighly diverse workforce. There when they are by themselves or to your e-mail. Pay attention combinations to become aare obvious benefits, such as outside their offices. However, to your home-related activities more efficient employee. Itincreased productivity, reduced planning your ‘free’ time is as (have greater control over the may improve your employabil-level of stress, labour market important as scheduling your place where you should direct ity and increase your chancesparticipation, staff retention work agenda since such arrange- your energy). of promotion.and lower absenteeism. How- ments will positively influenceever, looking more critically at your work performance and Planning your ‘free’ timeflexible working arrangements, your self-esteem. is as important as schedulingthere are certain constraints toits implementation such as ad- Consequently, if you have YOUR WORK AGENDAministrative cost, costs of ac- flexible work schedule, you should reflect on whether you

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114 ACCOUNTANCY CYPRUS REAL ESTATELOSINGPROPOSITION The lack of large porTfolios of • Due to relatively higher costs, rate (IPT) is a step in the right invesTmenT properTies is fuelling a small-scale owner may not direction, assuming that the a dispersed and non-viable have the luxury to hire the best House of Representatives does properTy managemenT markeT. skilled workers, consultants, not resort to populist tactics. By George Mouskides, Director, FOX Smart Estate Agency, lawyers, etc. These groups of The market may force things Chairman, Cyprus Association of Property Owners supporting professions will to change. The fact that quiteI n contrast to most other European countries, real estate in Cyprus tends to be in the hands of numerous usually offer more competitive a number of properties will small individual owners, each owning just a few properties. Most investment properties (for rental rates and prefer to work for end up in the hands of banks yield) belong to either individuals or small private companies. There are no institutional investors or big larger clients. through loan restructurings companies managing a large number of properties, theonly exception, perhaps, being a handful of old families that • Finding tenants can also be a might be conducive to the cre-own significant stocks of properties.Hence the management of such properties is also a small- tough job for individual own- ation of Real Estate Investmentscale venture and is usually done by the owners, who havethe responsibility for renting them out and effecting most of the ers, thus the property might Trusts or similar vehicles.maintenance.The lack of Real Estate Investment Trusts (REITs) or other forms be vacant for quite some time, These new groups of inves-of collective ownership of large portfolios of investment proper-ties is fuelling a dispersed and non-viable property management losing income. The right man- tors will need the services ofmarket.Amplified by the financial crisis, bad tenants are growing, mov- agement company will secure a specialized property manage-ing from one property to the other and leaving behind them atrail of unpaid rents to different landlords and damaged prop- new tenant in a shorter period ment companies to help themerties.A small-scale owner, managing a few properties is faced with the of time. promote and maintain thesefollowing challenges:• Due to other occupational activities, there is not enough time Property taxation in Cyprus properties on a larger, moreto properly manage and maintain the properties• The collection of rents from non-payers as well as the mainte- does not allow the creation of professional scale.nance of a property is an increasingly demanding task Property Funds. Moving prop- Given the prevailing con- erties from one entity to anoth- ditions of the rental market, er tends to be expensive as taxes owning and managing a small are unsympathetic. number of properties is proving The Immovable Property ineffective and with decreasing Tax is calculated on the total profitability. value of properties owned by an In conclusion, the emergence entity, the re- of institutional sult being that owners of large large property Owning property portfo- owners fall lios and the con- into higher and managing sequent develop- tax brackets ment of the prop- and end up a small number erty management paying steeper of properties business is a must taxes. The if we are going to recent pro- is proving get a healthy and posal by the ineffective vibrant invest- government ment property for a single flat sector.

115ACCOUNTANCY CYPRUS

3rdCyprus InternationalBusiness SectorThe WayForwardThematic Sessions Full Cyprus Government Policies, Initiatives attendance and Regulatory Bodies New sectors and new opportunities in the of the Forum corresponds service providing industry Markets Status Geographical - Utilizing to a maximum for Cyprus as an international Business destination 4 CPD units Speakers includeManaging Partner, President of theDirector, Alimirzoev & Cyprus FiduciaryZela Shipping Group Trofimov Law Firm AssociationGeorge Mouskas Sergei V. Alimirzoev Christos MichaelThe Forum is addressed toCFA members, Audit and Tax firms, Law firms, Administrative Services Providers (ASPs), Trust Services, JurisdictionalRepresentatives Banks and other financial institutions, Wealth Management Experts Consultants, Government officials. Friday 25 November 2016 | Carob Mill | Limassol For further information & registration contact: IMH, 5 Aigaleo Str., 2057 Strovolos, P.O.Box 21185, 1503, Nicosia, Cyprus Tel.+357 22505555, Fax. + 357 22679820, E-mail: [email protected], website: www.imhbusiness.com

116 ACCOUNTANCY CYPRUSICT CYPRUS AS ATECHNOLOGICALLY DRIVEN TOURISM DESTINATION By Dr. Sotiroula Liasidou Communication Technology) has a three-dimensional approach to business Lecturer, Faculty of Management and interaction. In particular, the Internet Economics – Department of Hotel and Tourism is managing consumers through the Management, Cyprus University of Technology provision of valuable information and the ability to acquire products or New trends in technology within services and pay with credit and debit the tourism industry, along cards. The next electronic platform with the appearance of different is e-working (or the Intranet), which types of tourism products, have involves communication within an transformed and reformed the organization with the employees industry, giving it a more tech- and the dissemination of fast and nological stance. In general, the efficient information, such as product main characteristic of today’s development, recruitment or even business environment, which further organizational expansion. has naturally affected the tour- Finally, e-procurement (or the Extranet) ism industry too, is technological adaptation. provides immediate communication The omnipresence of the World Wide Web (WWW) that with suppliers and has created the notion distributes information quickly and accurately is an impor- of business-to-business relationships. tant tool in business. The tourism product is compatible The utilization of ICT as an enabling with this technology because, firstly, it is information-driven tool and a cost-cutting strategy has and, secondly, perishable in nature (i.e. it cannot be stored armed tourism enterprises with product for later use, e.g. an airline seat or a hotel room). Yield management (allocating the right room or seat to the right customer at the right price) and revenue management (max- imization of the revenues from hotel occupancy) are better utilized with specialized computer software that maximizes both occupancy (rooms and airline seats) and profits. Electronic business has developed a new relationship with customers, employees and suppliers through better orga- nization and planning. The significance of e-commerce (online retailing) has enabled lower distribution costs and access to a wider geographical spectrum through an effi- cient marketing segmentation that targets specific groups of customers and addresses particular needs and preferences. Customer relationship management (CRM) is strengthened through direct e-mail alerts as well as through the creation of customer databases for better research. Technology, or more accurately ICT (Information

117ACCOUNTANCY CYPRUSdifferentiation through the achieve- More specifically, techno- The new trend for travellers to postment of higher levels of customer logical advancement was comments, reviews and photographsinteraction and better yields. Thus, forced through as a means on social media (Facebook, Twitter,the trend is the adaptation of Professor of easy transferability of Instagram, Foursquare) has revolution-Michael Porter’s seminal work on Ge- information and greater ized the world of advertising and pro-neric Competitive Strategies (Competi- visibility that meets the vided free exposure to a wider clientele.tive Advantage, 1980) which includes needs of the contemporary Destinations that are proactive andoverall cost leadership, differentiation traveller. In general, the predict emerging trends in technologyand focus as a way to achieve a com- airlines were highly depen- should be able to adapt and utilize allpetitive advantage. An important and dent upon tour operators technological advances. The key to suc-innovative sector of the tourism indus- as an effective distribution cess for Cyprus is to prioritize the usetry are the airlines with the adoption of channel. Over recent years, of technology in tourism and to emergenew models, in particular the low-cost the strategy of the airlines onto the tourism map as a pioneercarriers (LCCs) that fostered and dif- was redirected and recon- destination for technological advances.fused a change in the tourism industry sidered to a new one based Research and development (R&D)towards a more technologically driven on advanced technology should be promoted, with the Cyprusapproach. At the same time, the LCC and the widespread use of Tourism Organization (CTO) becom-model achieved product differentiation the Internet as an effective ing more involved and forging linksand overall cost leadership, effectively distribution tool, targeting with business and academic institutionsbecoming a viable business model that travellers directly and inter- on the island. There are three types ofgained immediate access in the market actively. Electronic booking ‘electronic customer’: the looker, theand competitive advantage. and ticketless travel with browser and the booker. Thus, the aim self check-in has brought should be for Cyprus to be experienced a dramatic change to the in advanced online techniques and to business environment. This turn all Internet users into bookers. is applicable to the hotel This can only be achieved with attrac- industry with the creation tive Websites for a destination, airlines, of attractive, dynamic and hotels and local authorities, in order easy-to-use Websites and to stimulate the interest of potential online advertisements, as a visitors. During their stay and tourism direct channel of distribu- experience, a seamless technological tion to potential customers infrastructure should be updated and expanded to global reach. ready to be accessed from personal de- The era of the technological revolu- vices. The country and all stakeholders tion was further improved through involved in the tourism industry should wireless technology that added more, pursue the goal of establishing Cyprus in terms of business transactions, by as an attractive, technologically driven releasing the consumer from the spatial destination with more independent restriction of wired technology. New travellers booking online. Undoubted- advances with the current omnipres- ly, this will bring beneficial impacts and ence of the Internet have revolutionized multiple effects to all sections of eco- the capabilities of e-commerce even nomic and social life on the island. further and added more benefits to consumers. Wireless flexibility with The utilization connectivity to portable electronic de- of ICT as an vices (4th Generation mobiles, tablets) enabling tool and enables many companies to be in con- a cost-cutting stant interaction with their customers, strategy has armed through the emergence of new market- tourism enterprises ing techniques, which are not targeting with product a specific market segment but a specific differentiation individual. During the travel experi- ence, information can be retrieved and travellers can select their itinerary easily and effectively tailored to their needs.

118 ACCOUNTANCY CYPRUS ICTCREATE STRONGAND REMEMBER THEM!In today’s digital world, we all rely on passwords for accessing our mobile • It is at least eight (8) characters long devices, the alarm system at home, the PC at work, e-mails, online banking, It does not contain your username, real and more. Moreover, stolen passwords are becoming a high-end commodity: name or company name a few weeks ago, Alex Holden of Hold Security discovered 272.3 million • It does not contain a complete word stolen e-mail accounts and their passwords, the majority being users from • It is significantly different from previous mail.ru plus others from Google, Yahoo and Microsoft, as well as a few hun- passwords dred thousands of details from German and Chinese e-mail providers. • It contains characters from each of the following four categories:There are numerous ways of writing may even “protect” the document with Upper case letters, e.g. A, B, Cpasswords but, because the more compli- the same password on the post-it note Lower case letters, e.g. a, b, ccated the password is, the more difficult attached to the monitor! Numbers, e.g. 1, 2, 3, 4, 5it is to remember, people tend to either So how can you create a password that Symbols, e.g. ~, !, @, #, $, %, ^, &, *write down their one and only password will give you maximum protection, and A password might meet all the criteriaand stick it on their PC monitor or, at then remember it? According to Micro- of the four categories above but still bebest, create a Word or Excel document soft, a strong password should meet the considered weak. For example “Account-and put all their passwords in it. Some following criteria: ing1!” But if you replace the letters with numbers and include some spaces, then

119ACCOUNTANCY CYPRUSPASSWORDS...By George Agathangelou,Professional Services Director,IBSCY Ltd Stolen “Acc0unt1ng 1 !” is a strong when you have to remember by the Internet security compa- passwords password. One step further for them and this is where Pass- ny Bitdefender, about 75% of a better password is to think word Manager applications social networking (Facebook, are of a sentence, e.g.“My first job come in. They can store all user etc.) usernames/passwords becoming was in New York, May 1994 credentials securely and en- are identical to those used fora high-end and I was paid $500/week” and crypted, and synchronized over e-mail accounts. Having a longcommodity then use the first letter of each multiple devices (PC and mo- and complicated password word, as well as changing a bile). They enable users to save is good but you still need to few letters into numbers and all their passwords for websites implement additional security adding a few symbols and you and applications and, when you or authentication measures have “MfjswiNY,051994&I- visit a website, they can auto- wherever possible. Two Factor wp$500/w”. This is a password matically enter the password for Authentication (2FA) is the that you can remember and it you. Of course, you still have security process of gaining ac- is very complicated, having 24 to remember a strong password cess to a resource by providing characters. that you will use to access your two different forms of authen- Password Manager! tication, e.g. your password and Having a different password for According to a study carried out an OTP (one-time password), much like most Internet bank- each application, website, e- ing portals. So you should defi- nitely proceed to obtain access mail, etc. makes things difficult to 2FA from your bank if you have not already done so. Most web applications/e-mails (Face- book, Gmail, Outlook, Hot- mail, etc.) offer 2FA through mobile applications free of charge. You just need to enable it and remember to change your passwords every 30-180 days depending on the sensitivity of the data. Changing your pass- word limits how long it is useful to a stealthy attacker. So create complex strong pass- words, use unique passwords, do not reuse passwords, change your passwords often, use Password Manager applications and, where possible, Two Fac- tor Authentication. Your goal should be to render access to your data so difficult that the potential thief will not make the effort to crack your password.

120 ACCOUNTANCY CYPRUSPROFESSIONAL ACCOUNTANTS REMAIN MOST NEWS TRUSTED ADVISORS TO ENGINE ROOM OF GLOBAL GROWTHNew Online Content from IFACFeatures Profiles of Professional It has long been recognized that small- and medium-sized enti-Accountancy Organizations, ties (SMEs) power the global economy. And accountants workingAdoption of International Standards in small- and medium-sized practices (SMPs) remain their most trusted advisor, according to a report by the International Federa-To further support the transparency, adoption and implemen- tion of Accountants (IFAC).tation of international standards, as well as the public interest, Informed by a comprehensive literature review, the report illus-the International Federation of Accountants (IFAC) has pub- trates the important relationship between SMPs and their clientslished comprehensive profiles of IFAC member organizations – primarily SMEs. It examines the key drivers of the advisor-clientand the jurisdictions in which they operate. relationship, including demand for, and supply of, SMP businessThis in-depth information demonstrates the widespread use advisory services. Growth implications for SMPs, as well as howof international standards and the efforts of IFAC member professional accountancy organizations (PAOs) around the worldorganisations to encourage adoption, advance implementation, can support them, are also explored.and support the businesses, communities, and governments Among other findings, the report reveals the following insights:in their nations. It also emphasizes the crucial role of IFAC • A number of factors influence SMEs’ demand for advice, includingmember organisations in further strengthening the quality of both external factors, such as competition and regulation, and per-the accountancy profession and the need to strategically focus sonal factors, such as the relationship and level of trust betweenattention and resources. the SMP and the SME owner-manager, as well as the size andProfiles of an initial 62 IFAC member organisations and 48 nature of the entity;countries are now available on the IFAC website. Each coun- • Dependent on their size, competencies, location, and appetitetry profile includes a description of the regulatory and legal for risk, SMPs are continuing to increase and diversify the array oflandscape for the accountancy profession in that jurisdiction business advisory services they provide to meet SMEs’ needs;and an assessment of the adoption of international standards • Despite competition from other service providers, accountants,for audit, ethics, education, and public and private sector ac- especially SMPs, remain SMEs’ preferred advisors; andcounting, as well as the establishment of quality assurance and • Due to the multitude of factors involved, client-advisor interac-investigative and disciplinary systems. Member organization tions between SMEs and SMPs are complex, but generally theseprofiles also include information on compliance with the IFAC relationships are long term and based on a solid foundation of trustStatements of Membership Obligations. and communication.RESTOR- Global economic stability can institutions that help underpin ance, which in both the publicING TRUST, be greatly enhanced by stronger the world’s financial markets,” and private sectors is at theINCREASING governance across both public said IFAC Chief Executive Of- heart of accomplishing theTRANSPAREN- and private sectors, and a sta- ficer, Fayez Choudhury. G-20 objectives of recovery,CY: CRUCIAL ble regulatory environment. “The G-20 has new oppor- growth, and stability, as well asFOR G-20 These principles form the basis tunities to create an environ- combatting fraud and corrup-COUNTRIES of recommendations to the ment of sustainable, inclusive tion and restoring public trust& GLOBAL Group of 20 (G-20) by the growth that benefits the world’s and integrity.ECONOMY International Federation of citizens. IFAC has consistently • Promoting and adopting Accountants (IFAC), ahead of urged policy consensus and principles for good regula- the G-20 meeting in China in on-going cooperation between tion to create a more consistent, September. government, business, and the effective international regula- “The global economic recovery regulatory community. On tory environment. is uneven, and social and politi- behalf of the global profession, • Acknowledging the impor- cal destabilization risks remain we renew that call today and tance of international stand- high in many parts of the ask the G-20 to put trust and ards across all jurisdictions, in- world. To fortify the recovery, transparency at the heart of the cluding international standards citizens and markets urgently world’s economy,” he said. for accounting, auditing and need to see greater transparency IFAC called on the G-20 to assurance, professional ethics across all organizations, which address: and education, and public sec- will help restore trust in the • Strengthening govern- tor accounting.

121ACCOUNTANCY CYPRUSCALL FOR OUTCOME-FOCUSED REGULATION AND ity and professionalismREGULAR REVIEWS AT IFAC-ICAEW ROUNDTABLE with rule-following andA “box ticking.” In addi- during the discussion, These are essential to tion, this culture can Fayez Choudhury, IFAC restore the public’s trust lead to overreaction and Chief Executive Officer, in government and both risk aversion, stifling noted that, “There is a the public and private risk-taking that is essen- critical need to review sector, which continues tial for entrepreneurial- and evaluate regulations to be a vital goal. ism and growth. on an ongoing basis, “How can we ensure a ICAEW Chief Executive Michael Izza said, “We and to ensure purpose- duty of care to markets all agree that getting the future of regulation right built regulation going and society?” asked is vital for the global economy. Regulationlmost a decade after the forward, in order to roundtable partici- must be proportionate. We need to avoid on theglobal financial crisis, strengthen the global pant Baroness Sharon one hand growing to a scale where compliancemore than 50 thought economy and financial Bowles. “If you get is so complex and costly it is a barrier to all butleaders from across the system.” corporate governance the largest firms, and on the other obsessivepublic, private, and aca- The group emphasized right, it can eliminate simplicity to the extent that it no longer protectsdemic communities have that—while governments the need to regulate against systemic failure. It will be important forcalled for balanced regu- acted decisively and every eventuality—the everyone to work togeth- er and innovate to findlation targeted to specific much has been achieved corporate governance the best solutions.”social outcomes, as well since the crisis—regula- space is as importantas stronger checks and tion alone cannot solve as the regulatory space.balances, such as sunset problems. It must be And the professions thatclauses or impact analy- partnered with stronger advise businesses play anses, to measure regula- corporate governance, important role.”tion’s effectiveness and and embedding ethics The current compliancefitness for purpose. and values in organiza- culture, participants said,Speaking from the floor tions from the top down. has replaced responsibil-IFRS FOUNDATION MONITORING BOARD ANNOUNCES NEW MEMBERThe IFRS Foundation Monitoring Board, to four members, primarily from major include, among other things, the re-responsible for oversight of the IFRS emerging markets. The application from quirements of new and amended IFRSFoundation, has appointed the Ministry China had been placed under a pro- Standards such as IFRS 15 Revenueof Finance of the People’s Republic of cess of extended screening, which was from Contracts with Customers andChina (China MOF) as a member, with formally concluded by the decision de- IFRS 16 Leases. The quiz is based onthe United States Securities and Ex- scribed above. Membership of the China the 2016 Pocket Guide to IFRS Stand-change Commission (SEC) abstaining MOF was approved pursuant to the ards: the global financial reportingfrom the vote on this issue. The appoint- revised membership criteria approved by language. It provides students, educa-ment became effective upon signature the Monitoring Board in February 2016. tors and other interested parties withof the China MOF to the Charter of the IFRS releases updated version of its a free-of-charge resource to assessIFRSF Monitoring Board on 11 August popular online quiz their knowledge of IFRS Standards,2016. In its “Final Report on the Review First launched in 2014, the IFRS quiz the IFRS Foundation structure, and theof the IFRS Foundation’s Governance” on IFRS Standards is available in both standard-setting process.published in February 2012, the Monitor- English and Spanish and has been Take the quiz at:ing Board had announced its intention taken more than 45,000 times. Now, an http://www.ifrs.org/use-around-the-to expand its membership to include up updated version has been released to world/pages/IFRS-Quiz.aspx

122 ACCOUNTANCY CYPRUSOUT OF OFFICETAX, LEGAL AND...TRIATHLONAll ICPAC members naturally have a life beyond accountancy and, in each issue of the mag- Despite what some people think, beingazine, we take a look at how one of them spends his free time. Theo Parperis, Partner, Head an accountant and a business advisorof Tax & Legal services, PwC Cyprus, has been taking part in marathons, half marathons and gives you tremendous job satisfactiontriathlons for over 10 years, eventually progressing to the gruelling Ironman Triathlon – a 2km and a great sense of achievement. On theswim, a 90km bike ride and a 21km run – that takes him around 6 hours to complete. other hand, I admit that the feeling you get from testing your physical limits isIs this all about testing your physical What’s the best you’ve ever achieved unique.limits or are there other attractions? (time or finishing place)?I have always liked challenges. Neverthe- In the international events there are Is it an expensive hobby?less, being a partner in a Big Four firm and 3-4,000 participants, including profes- It can be, primarily due to the need for athe Head of Tax & Legal services and thus sional athletes, so it is very hard to finish good bicycle. Ideally, it should be an aero-having a demanding schedule at work, in a “good” position. I have achieved high dynamic, carbon fibre bicycle and theytraining for my first Ironman race was a positions in my age group. At the end of can cost from €2,000 to €10,000 forreal test of my limits, since I had to train the day, you get maximum satisfaction by amateurs. As a beginner, however, you canminimum 12-15 hours a week and have exceeding your own targets and records. It buy a good second-hand one for underthe mental strength to fight the tiredness is a race against your own limits. €1,000.and challenges during the race. Tiring butdefinitely worth it! Do you ever wish you’d become a What do your colleagues and friends professional athlete rather than an ac- think of your hobby?How much preparation do you need countant? I think they are proud of me and theyfor something like that? When I completed my first Ironman in appreciate the fact that, despite theIt depends on how fit you are when Belgium (one in 10 participants don’t work pressure, I find the resilience andyou start. A fit person needs a mini- manage to do so), I was so excited and stamina to train and take part in suchmum of 6-9 months of intense training proud that I shed a couple of tears of ex- challenging events! I also try to raisefor a full marathon or Ironman Triath- hilarating happiness on crossing the finish money for charity and, in August, alon, and you should have already com- line! It was not surprising after 6 hours of PwC colleague and I took part in thepleted a couple of half marathons. continuous effort and technical problems London Triathlon and managed to raise during the race, such as having two flat over €12,000 from PwC colleagues, cli-How far do you run every day/week? tyres and effectively being temporarily out ents and friends, which was donated toI normally run between 20 -30 km per of the race until I manage to fix them. a Cypriot charity for sick children. Thisweek but if I’m training for an event I That said, I love my profession and my gave me tremendous satisfaction andrun a lot more, depending on the pro- job and I am grateful I chose this career. the energy to train and take partgramme. in the competition. I should mention thatWhat’s your favourite race? the swimming legThe Olympic triathlon which is a of the London1.5km swim, 40 km of cycling and a Triathlon takes10km run. place in the cold and dirtyWhat’s the hardest one to do? waters of theThe full Ironman: a 4km swim, 180km River Thames!of cycling and a 42km run.

123ACCOUNTANCY CYPRUSGlobal experience, localapproach in the FundsIndustryKPMG provides comprehensive audit, risk advisory, tax and regulatory services tofund managers in setting up and operating through Cyprus. Our clients look to usfor leadership and guidance in areas such as: fund set-up and structuring; regulatoryinterpretation and support; proactive tax advice; investment acquisitions and duediligence; fund liquidation, re-domiciliation and/or restructuring.Our local practice is at the forefront of industry issues, working closely with theindustry and its representatives and actively participating in the firm’s global productdevelopment programmes.The combination of a strong local practice, with significant professional and industryexperience, along with the global reach of KPMG International fund services networkplaces us in an optimal position to provide added value service to our clients as theyaddress the industry challenges, and guide them in grasping opportunities.For more information please contact:Christos VasiliouDeputy Managing DirectorPrimary ContactT: +357 22 209 113E: [email protected] AngelidesSenior AssociateRegulatory & ComplianceT: + 357 22 209 227E: [email protected]©2016 KPMG Limited, a Cyprus limited liability company and member of the KPMG network of independent member firmsaffiliated with KPMG International Cooperative (”KPMG International”), a Swiss entity. All rights reserved.

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