Investing in Cyprus

According to Wall Street Journal, „Cyprus offers a strategic location, favorable tax environment, educated work force, excellent telecommunications, modern banking and legal infrastructure which make the country the perfect business bridge for the European Union and the Middle East”.

Strategic location

Upon membership to the European Union, Cyprus is being transformed into a key outpost in the eastern Mediterranean, serving as the springboard for investment between Europe, Africa, and Asia. Cyprus facilitates partnership between Europe and the Middle East; two different regions bound by mutual interests. The Middle East region with its oil-rich soil, coupled with the potentials that a wealthy market holds, provides excellent opportunities for European business. Similarly, the Middle East manufacturers and traders can gain easier access to the prosperous EU market via Cyprus.

Foreign Direct Investment Policy

In order to attract foreign investments in Cyprus, the Government has fully liberalized the Foreign Direct Investment (FDI) Policy for both EU and non-EU nationals. Limitations as per the minimum level of investment and the foreigners participation percentage have been abolished, in most sectors of the economy. Based on UNCTAD, World Investment Report 2004, the FDI inflows in Cyprus have increased by 35.2% in 2003 compared to 2002, reaching at US$ 830 millions.

In addition, administrative procedures have been simplified and bureaucratic intervention has been reduced. Foreign investors may now address directly to the Registrar of companies for establishing a company without any prior approval. A company may be registered within a week, while a company´s name may be registered within four days. Moreover, all Cyprus-based companies are treated equally; no distinction is being made between companies conducting business domestically or abroad.

Fiscal incentives

While Cyprus tax system has been reformed to comply with the EU acquis communautaire, the appropriate actions have taken place to maintain Cyprus´ competitiveness as an international business centre and enhance its attractiveness as a suitable jurisdiction for holding companies.

Cyprus – based enterprises may benefit from a favourable tax regime and enjoy the lowest corporate tax rate in the EU (10%). Moreover, various tax exemptions apply for both corporate and personal tax; such as, exemptions in respect of dividends received from local and foreign subsidiaries, profits of permanent establishments abroad, capital gains derived from the disposal of securities, outward dividends, company reorganizations, disposal of securities, and other.

Grant schemes

The government having extensively considered ways for the development and reconstruction of the economy, with an emphasis on the industrial sector, has introduced various grant schemes; for example, schemes related to the encouragement, strengthening and reinforcement of entrepreneurship, the upgrading of the manufacturing sector, the export promotion of industrial products, the technological upgrading of Cypriot enterprises, and the development of high technology products.

Human Capital

Cyprus ranks among the first countries in the world in terms of university degree holders in relation to the population, with 70% of secondary school graduates in 2000 continuing their studies. Cyprus offers a well-educated, skilled, and bilingual labour – force; whereas, labour costs are significantly lower compared to the EU average.

International services centre

Cyprus role as an international services centre supported by the presence of so many multinational companies is being further enhanced and plan are underway to promote the island also as an international high technology centre.

• Banking: Cyprus has been developed into a regional banking center through the years. Currently, approximately 30 foreign banks have established presence and over 1200 International Business Corporations (IBCs) currently maintain fully-fledged offices in Cyprus.
  
  
• Shipping: Cyprus is a highly reputable international shipping center; ranking as the sixth leading maritime nation in the world with a merchant fleet exceeding 26 million gross tonnage.
  
  
• Tourism: Over 2.5m tourists visit Cyprus annually, mainly from UK, Scandinavia, Germany, Russia, and Greece. The construction of new marinas, theme parks, football stadiums, the reconstruction of the island´s two international airports, and the reconstruction of the Larnaca´s port are included in the plans of the Government to reinforce the already developed sector of tourism.
  
  
• Telecommunications: In the area of telecommunications, Cyprus is considered as one of the most important telecommunication hubs in the region. In light of liberalisation process, the telecommunications market in Cyprus has undergone profound changes, which present enormous opportunities to foreign investors.
  
  
• High Technology: New investment opportunities arise through Cyprus´s high technology investment programme related to the establishment of Business Incubators as well as a Technology Park; thus, facilitating the creation of new ventures, especially in high technology sector. Moreover, in enhancing the field of science and technology, cooperation agreements have been signed with the Albany State University of New York, the University of Southern California, and the Harvard University.

Investors assistance

The Foreign Investors Service Centre (FISC) operates, under the auspices of the Ministry of Commerce, Industry and Tourism, as a “One-Stop Shop” for foreign-based companies investigating investment opportunities in Cyprus. The Centre constitutes the central agency of information, support, and foreign investors relations.
Further information can be found in the Website of “Investors Service Centre” or contact directly the FISC at Tel. +357 22 86 71 43, Fax. +357 22 37 55 41, or email: pkoulia@mcit.gov.cy