Business Organisations
The main types of business
organisations in North
Cyprus are:
»
Sole proprietorships
» Partnerships
» Limited companies
Sole proprietorhips are small sized businesses that are run and operated by the sole owner, who remain liable for its debts and obligations. These type of organisations are taxed based on income generated by the owner and are exempt from corporation tax.
Partnerships are unincorporated associations which are not legal entities on their own, separate from people involved in them. The two types of partnerships are general or limited partnerships. Under general partnerships, all partners have unlimited liability for partnerships' debts. Under limited partnerships, at least one partner undertakes unlimited liability on behalf of the partnership. Partnerships in North Cyprus are regulated under Cap.116 of the Companies Law and the number of partners in a partnership cannot exceed twenty.
The kind of companies that can be formed by limited shares are:
»Private
companies
»Public companies
»International
Business Companies
»Freezone entities
At least two or more founding members are required for setting up a private companies but the maximum number of shareholders is limited to fifty. These types of legal entities are not permitted to offer their shares to the public and the transfer of shares is restricted. They are subject to corporation tax rate of 10% together with income tax rate of 15%.
Public companies are required to have at least seven founding members and impose no restrictions on transfer of shares. They are required to hold Annual General Meetings (AGM) once every calendar year and are also subject to 10% corporation tax and 15% income tax.
International business companies can exclusively be formed by non-resident individuals and legal entities and are subject to 1% corporation tax. The minimum required share capital is €20,000 and they are exempt from witholding tax on dividend income, interest and VAT.
Freezone companies are entities that are legally entitled to import and export goods, assemble goods delivered from abroad, be involved in all types of manufacturing activities, provide surveyance, financial and insurance services and undertake shipping and freezone activities. These entities are exempt from both corporation and income tax.