Although Cyprus offers an investor friendly climate and taxes over profits generated by Cyprus companies can be considered to be among the lowest in the European Union, Cyprus is not a typical offshore jurisdiction. Profits generated by Cyprus companies are subject to the same taxation level, regardless of whether the shareholders are based abroad or in Cyprus. Furthermore, Cyprus companies are liable to corporate income tax over their worldwide income, so no distinction is made between income sourced on Cyprus territory and abroad. Cyprus companies are in principle liable to corporate income tax over their profits at a rate of 12.5% (exceptions -and lower effective tax rates- may only apply to the profits of Cypriot ship management and shipping companies whereas Cyprus holding companies usually enjoy tax exemption over their income). The obligation for Cyprus companies to pay corporate income tax over their profits implies an obligation file corporate income tax returns annually. Cyprus companies also have an obligation to prepare and maintain proper accounting records according to International Financial Reporting Standards (IFRS). Our team of accounting experts can assist clients in the preparation of annual financial statements for their Cyprus companies. We also cooperate closely with a few selected independent Cypriot audit firms, which are able to take care of the (legally required) annual audit of these statements and submission of corporate income tax returns to the Cyprus Inland Revenue.