Europe’s Middle Eastern outpost

Cyprus’ strategic location at the crossroads of three continents has been a major factor in shaping its history throughout the centuries and its development into an international business centre during the recent years. Upon membership into the European Union, Cyprus is being transformed into a key outpost in the Eastern Mediterranean, facilitating partnerships and serving as the springboard for investments among Europe, Africa, and Asia.

Building on decades of steady development, underpinned by a formidable reservoir of professional and administrative talent, and blessed by one of the sunniest climates in the world, the Republic of Cyprus is becoming known as a place where money works and where things get done"

Forbes, 2005

Euro Adoption

Cyprus has joined the Eurozone as of 1st January 2008. The conversion rate is set at 0.585274 Cyprus pounds to the Euro, which corresponds to the current central rate of the currency within the EUs exchange rate mechanism. II (ERM II).

The entry into Eurozone is expected to boost foreign direct investments due to, among others; the enhancement of macroeconomic stability and investors confidence, the reduced transactions costs for exports and imports, the elimination of the exchange risk and the anticipated lower interest rates that will lead to lower cost of financing.

Highly qualified labour at a comparatively low cost  
Cyprus ranks among the first countries in the world in terms of university degree holders in relation to the population. Based on Eurostat statistics, the percentage of people between the ages of 25-29 that possess tertiary education qualifications in Cyprus (44%) is substantially higher to that of the EU 25 average. Overall, Cyprus offers a well-educated, skilled and multilingual labour–force, whereas labour costs in Cyprus are significantly lower compared to the EU average (Eurostat 2006).

Macroeconomic stability

Cyprus has a record of successful economic performance reflected in; rapid growth, full employment conditions, external and internal stability. The annual rate of growth in 2006 reached 3.8 percent, while inflation (2.2%) and unemployment rate (4.6%) were maintained at low levels. In terms of per capita income, estimated at CY£11.192 in 2006 (US$ 24.323), Cyprus is classified by the World Bank among the high-income economies.

Favorable tax regime

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 can benefit from the favorable 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 and company reorganizations.

Liberal foreign direct investment policy

The Foreign Direct Investment Policy (FDI) is liberalised for both EU and non-EU nationals in most sectors of the economy, hence limitations as per the minimum level of investment and the foreigners´ participation percentage have been abolished.

FDI performance

Cyprus has performed well in attracting foreign direct investments; it ranks among the front runners of the world according to the latest UNCTAD "World Investment Report 2007", indicating both high FDI performance and high FDI potential. The FDI inflows for 2006 were above 1.4 billion dollars continuing an upward trend for the third consecutive year; showing an increase in the range of 23% from 2005. The leading sources of FDI inflows to Cyprus in 2006 were the European countries (50%) followed by Asian countries (35%). Finally, the services sectors remained the main recipient of FDI inflows to Cyprus in 2006 (94%). 

Efficient professional services

As a result of the high educational level of the population and due to historic and economic links between Cyprus, Britain and other European countries, legal, accounting, management, computer and other services are of the highest standard in Cyprus.

Advanced Telecommunications

Due to its advanced telecommunications network and the superb regional and global connectivity on offer, the island is considered as one of the most important telecommunication hubs in the Eastern Mediterranean and the Middle East region. This is also enhanced by an extensive submarine fibre optic cable network, and access to major satellite systems, which rank amongst the best in the world.

Reputable International Shipping Centre  

Cyprus is a highly reputable international shipping centre, ranking among the 10 leading maritime nations in the world; with a merchant fleet exceeding 21 million gross tonnage and nearly 2000 vessels. It constitutes one of the largest ship management centres in the world, with around 50 ship management companies and marine-related foreign enterprises conducting their international activities. Furthermore, Cyprus has long developed into a transshipment centre for Asia Pacific trade with Europe as well as with shipping markets situated along the coasts of the Levant and Black Sea, or the North Adriatic.

Special Interest Tourism Projects

The island of Cyprus is among the world’s best loved holiday and retirement destinations. The island hosts more than 2.4 million tourists per year; generating revenue of more than 1.7 billion Euros and making a contribution to the GDP of about 15-20%. The Government is currently implementing a New Tourism Strategy aimed at developing special interest tourism and creating a high quality tourist experience. This presents numerous investment opportunities such as; sports tourism, nautical tourism, conferences and incentives tourism, wellbeing & pampering, medical Tourism, rural tourism, theme parks, and managed attractions.

Transformation of the island into an R&D Centre

The Government of Cyprus has placed special emphasis in the recent years in transforming Cyprus into a Regional Hub for Research and Development. The Harvard School of Public Health (HSPH) and the Government of Cyprus have established an international research, education, and technology initiative for the environment and public health. A national framework programme is in place for financing Research and Development and Innovation (R&D&I) projects. While other initiatives include the technology-incubating programme, the operation of the School of Engineering of the University of Cyprus as well as the Cyprus University of Technology. Based on a Eurostat study (1/2006) Cyprus demonstrates the highest increase of employment in the high-tech knowledge intensive services during the last 5 years, among all EU member states.

Launching of One-Stop Shop

“In its effort to facilitate, accelerate and simplify the process of setting up a business, and reduce the level of bureaucratic intervention, the Government has recently set up a One-Stop Shop under the auspices of the Ministry of Commerce; Industry and Tourism, for both local and foreign based companies. Consequently, from now on investors and businessmen will only need to be in contact with one single point to obtain almost all the required permits in one streamlined coordinated process rather than having to go through different governmental services.

Creation of Cyprus Investment Promotion Agency

The Cyprus Government has undergone thorough structural reforms in order to create an effective institutional framework for investment promotion, by establishing the Cyprus Investment Promotion Agency (CIPA) as non-profit private limited company. Its mission is the attraction of foreign direct investments in targeted sectors and the utilization of Cyprus as a business bridge linking the European Union with the Middle East, Asia and Africa. CIPA will place special focus on the Government's strategic priorities and in such other fields which may be deemed essential for the upgrading and enrichment of the productive fabrics competitiveness.

www.investincyprus.gov.cy