- Legal profession in the second year of the pandemic:
The second year of the pandemic left no stone unturned and of course the legal profession could not remain unaffected. The restrictions in gatherings, working remotely, the rapid development of electronic authorisation of transactions and a boost in the use and application of fintech across markets and sectors, brought changes, many of which took the form of legal and tax updates. The second year of the pandemic was full of contradictions. On the one hand, fundamental liberties were once more severely curtailed, and on the other hand, e-commerce saw a profound global increase of over 38% year-over-year reaching $876 billion in the first quarter of 2021, as reported in Forbes. Several improvements to the way in which legal services are offered, have been made or at least, initiated.
- Improvements prompted as a result of the pandemic:
The digitalisation of the core commercial public services (website of the Registrar of Companies and Intellectual Property, Tax Department, Department of Merchant Shipping) and a commitment to finalise and utilise the i-Justice system, are indicators that the legal profession in Cyprus is moving in the right direction in becoming more accessible, more efficient and less costly. Local and international businesses and organisations have more incentives to invest in key sectors of Cyprus, which now include alternative energy, education and medical services, in addition to the traditional real estate sector.
- Challenges country and sector-specific in Cyprus:
The professional sector in Cyprus is required to keep pace with technological developments taking place, on the one hand at the speed of light and on the other, at a geopolitical landscape marred with controversy and uncertainty; especially surrounding the exploration, extraction and supply of natural gas from Cyprus legally owned reserves. The OECD suggestion for the adoption of a common taxation rate of 15% by multinational entities, approved by 136 jurisdictions (out of 140) members of the OECD BEPS Inclusive Framework, in October 2021, already paved the way for the long overdue overhaul of the Cypriot tax system. The spike in supply of online services and viewings, has ushered a necessary review of the value added tax system and its application EU-wide, with Ecofin recently approving the application by members states of reduced VAT rates in specific circumstances. Finally, the EU Sustainable Disclosure Regulation gained considerable tracking in the course of 2021. Financial market stakeholders and experts are now required to document how they evaluate sustainability risks when making investment decisions and be compliant with regulation requiring transparency. A new IFRS standard is being developed and expected in 2022 that will audit the reporting process, and a European Single Access Point, which will represent a single access disclosure database. A rise in the use and applications of cryptocurrencies based on the advancement of blockchain technology caused member states to consider introduction of regulation such as the requirement to register with the Cyprus Securities and Exchange Commission of the Crypto Asset Services Provider.
- Ways to respond and rise up to the challenges:
All these changes require the professional sector to keep up with updates and to respond with educating staff and associates. Additionally, to provide an elevated standard of service encompassing multidisciplinary awareness, while adopting a resilient growth mindset. It is an interesting time to be in the professional services sector as we will be witnessing fundamental changes in the way in which services are being rendered. We expect to see a reduction of bricks-and-mortar service points and an advancement of freelance expert demand and supply for services.
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Taking this opportunity to issue you and your families a great holiday season and a Happy New Year 2022.