World Bank Upgrades Cyprus’ “Doing Business” World Position, but more needs to be done

World Bank Upgrades Cyprus’ “Doing Business” World Position, but more needs to be done

According to the annual study, “Doing Business 2020”, by Washington-based World Bank, Cyprus ranks 54 out of 190 countries, for starting a business relatively easy and reducing the cost to register a company. This is an improvement from last year’s rank of 57, but the Cypriot authorities and businesses should do much more to elevate the country to the level it was, ranked at 41 in 2015 (https://www.doingbusiness.org/content/dam/doingBusiness/country/c/cyprus/CYP.pdf) (https://tradingeconomics.com/cyprus/ease-of-doing-business).

“Doing Business 2020” is an annual study, that began in 2002, and measures regulations across 190 economies in 12 business regulatory areas to assess the business environment in each economy (https://www.worldbank.org/en/news/feature/2019/10/24/doing-business-2020-sustaining-the-pace-of-reforms).

It also provides quantitative indicators covering 12 areas of the business environment in 190 economies, with the most recent round of data collection for the project, completed in May 2019 (https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf?sequence=22&isAllowed=y).

These indicators include starting a business; employing workers; dealing with construction permits; getting electricity; registering property; getting credit; protecting minority investors; paying taxes; trading across borders; contracting with the government; enforcing contracts; and resolving insolvency.

It should be noted that economies are ranked on their ease of doing business, from 1 – 190, whereby a high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm (https://in-cyprus.com/doing-business-in-cyprus-a-bit-easier/).

Cyprus has upgraded from last year, receiving a rank of 57, however it still has a long way to go, considering its rank of 53 in 2017, 45 in 2016, and more significantly, 41 in 2015 (https://tradingeconomics.com/cyprus/ease-of-doing-business).

The study further highlights that Cyprus also strengthened minority investor protections by increasing disclosure of related-party transactions, and strengthening shareholders’ rights and role in major corporate decisions.

Cyprus has seen a rise in ratings compared to last year’s, in five points. More specifically, in the category of “Starting a Business”, this year the score was 92.0, an increase of 0.8 from 91.2 last year, and in relation to the solvency process, Cyprus received a score of 72.5, from 72.3 (http://www.philenews.com/oikonomia/kypros/article/809697/-doing-business-beltiosi-tis-thesis-tis-kyproy).

Regarding the process for building permits, the rating may have been 64.2 from 64 last year, although the ranking remains very low, since Cyprus is in 125th place. There was also a slight increase in the rating for electricity supply, and most importantly, the biggest increase was seen in the category of “Paying taxes” with Cyprus ranked 29th, with a score of 85.5 from 80.8 last year.

The study also indicates that Cyprus has made paying taxes easier by implementing an online system for filing value added tax returns and value added tax refund claims, paying mandatory labour contributions, as well as reducing the sewerage duty tax rates (https://in-cyprus.com/doing-business-in-cyprus-a-bit-easier/).

On the other hand, increasing the frequency and number of VAT audits, has made it somewhat difficult to pay taxes, and the stopping of the distribution of historical credit data has made access to credit information challenging.

Ranked at 1 is New Zealand, followed by Singapore and Hong Kong, at 2 and 3, respectively. US ranks at 6, UK at 8, Germany at 22, China at 31, France at 32, Turkey at 33, and Greece at 79 (https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf?sequence=22&isAllowed=y).