Cyprus Tax System Cyprus has earned its independents in 1961, after the United Kingdom has permitted it to isolate and construct a sovereign nation. Since then, Cyprus has become a well developed island, with a strong and stable economy, and become a member of the European Union on 1st of May in 2004, adopting the Euro as its national currency on the 1st of January in 2008. The Cyprus economy has a well developed and progressive infrastructure, making its per-capita GDP more than the European’s Union average. The Cyprus economy however, is much depends upon tourism, international investments and business. One of the most important reasons for the foreign investment and trades within Cyprus has been the convenient Tax and Corporate Codes that are held in the island. According to Cyprus law, only a company who is controlled and managed from inside the island is considered as Cyprus resident company for taxation. However, in order for a company, incorporated in Cyprus, and not to be considered as a Cyprus company but treated as foreign resident company, it must supply the authorities with an official recognition and certification for payments in its country in which the company is situated. This will make possible for the company situated outside of the Cyprus district to avoid taxation in Cyprus due to the legislation that foreign companies are taxed only for revenues borne from inside the island of Cyprus. Furthermore, tax charges in Cyprus are low and many exemptions exist. An example of this is the Corporate Tax in Cyprus which is only 10%, whilst exemptions exist for dividends from other shared entities and capital revenues. Additionally, Cyprus based companies and organizations are obliged to pay a 3-15% Contribution of Defense Tax, those foreign resident companies in Cyprus does not have to do so.