An Offshore Banking Unit (now known as an International Banking Unit – IBU) is a Cypriot limited liability company, or a branch of a foreign bank, which has obtained a banking license from the Central Bank. In Cyprus, non-Cypriot banks are offered the status of IBU, being restricted to banking operations with non-residents in foreign currencies, and with Cyprus-registered non-resident companies and their expatriate staff. The Central Bank issues IBU licenses and normally requires fully-staffed operation. If the IBU is controlled from abroad, and there is no local permanent establishment, there will be no profits tax.
The following forms are permitted:
Branches of foreign banks
The Central Bank favours this arrangement; there are no liquidity or risk ratio requirements, and there is no reserve requirement.
Subsidiaries of foreign banks
These are supervised more closely, and liquidity and risk ratios may be imposed.
Representative Offices
Representative Offices may be formed under the Companies Law, but may not conduct banking business except with clients of their parent bank.
Administrative Banking Units (ABUs)
These units carry out their banking business through local Cyprus banks but are otherwise similar to branches or subsidiaries.
Commercial banking arrangements and practices follow the British model.
by lawtax.net
