“Cyprus its low tax rate was not up for discussion with European officials when trashing out terms of a bailout to prop up the Greek exposed banking system”.

“As fears have been expressed over a possible change to the corporate tax rate the government stresses that this issued is not part of the negotiations”, said a finance ministry statements.

It said the government was “optimistic that within the framework of negotiations it can secure the best possible terms that benefit the Cyprus economy”.

Cypriots are worried that it might have to endure severe tax hikes and job losses endured by close neighbor Greece.

“This move (bailout) secures the stability of the banking system with the acquirement of necessary capital for recapitalization and continued unhindered operations”.

At 10% Cyprus has one of lowest corporate tax rates in Europe and sees it as vital to attracting foreign investment and keeping its international business sector thriving, such a shipping.

Officials from the European Commission, the IMF and the European Central Bank are expected to arrive on the island to assess the situation of the banking system and any other fiscal requirement the government requires. Negotiations will set the amount needed by Cyprus as well as spell out the reforms it would need to carry out in return to put its financial house in order.

The finance ministry expects this assessment to be concluded in a month.

The eurozone said it was ready to bail out embattled Cyprus in coordination with the International Monetary Fund. The decision followed a formal request for aid from Cyprus which became the fifth eurozone member to apply for emergency funds. Financial assistance would be through the eurozone’s rescue fund, the European Financial Stability Facility (EFSF), or its successor the European Stability Mechanism.

The recession-hit island’s banking system has been badly affected by the country’s relatively large exposure to Greek debt. Already struggling to reduce a budget deficit that exceeds EU ceilings, the government is unable to borrow on international capital markets, with the three international ratings agencies having classified its bonds as junk.

Its tow largest bank Cyprus Popular – the worst exposed to Greek debt – and Bank of Cyprus require a total of 2.3 billion euros in state support to recapitalise under European authority regulations.

President Christofias said he is still seeking help from a third country, either China or Russia, from which it secured a low – interest 2.5 billion euro loan last year to cover refinancing needs for 2012