Cyprus has been recognized for many years as being a tax haven (Cyprus taxation). Cyprus achieved an astonishing level of economic development, changing in a few decades from a backwards, agricultural economy that saw the burdens of war, to a developed market economy, part of the Eurozone, and a regional tourist and financial services centre. Cyprus is a member of the European Union, and constantly receives praise for its active finance sector. Formerly an offshore tax zone, Cyprus negotiated to receive low tax capability for its International Business Companies in order to maintain and attract new clients. As a result of this, Cyprus has the lowest corporate tax rate in the European Union and the lowest non-offshore corporate tax rate in the World. Unlike the other “tax havens” that exist, Cyprus doesn't have the typical negative associations, due to the fact that it is a full member of the European Union.

Cyprus has attracted so much Foreign Capital due to its favourable taxation schemes (Cyprus taxation). There is a 10% corporate tax rate, for all companies, regardless of whether they're local or I.B.C.(International Business Companies). Shipping Companies who own ships registered under the Cypriot Flag enjoy a 0% rate. For individuals, the income tax is progressive, starting from 0 until 30%. Employers are bound by law to deduct tax from an employee's salary every month, and to contribute 6.3% of the salary to the Social Security Fund. The Employee must also contribute 6.3% to the Social Security Fund.cSelf employed individuals are taxed 11.6% of their income. (Cyprus taxation)