An extremely attractive feature of the Cyprus tax system is the exemption from tax of profits from the sale of securities under the Income Tax Law of 2002. In December 2008 the Inland Revenue Department issued a long-awaited circular clarifying the definition of "security" qualifying for exemption. The circular defines "security" much more widely than in the past, to include not only conventional instruments such as shares, bonds, debentures, founder's shares and preference shares, but also options on titles, short positions on titles, futures or forwards on titles, swaps on titles, depositary receipts on titles such as ADRs or GDRs, index participations where these result in titles, repurchase agreements or repos on titles, participations in companies and units of all kinds in collective investment schemes.
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