According to the 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"
Cyprus’s 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.
Cyprus has a record of successful economic performance, reflected in rapid growth, full employment conditions, external and internal stability. In 2005 the island was classified by the World Bank among the high-income countries. The annual rate of growth for the year 2005 was 3,8%, while inflation and unemployment rate stood at 2,6% and 3,8% respectively. The tertiary sector of services is considered as the backbone of the Cyprus economy, accounting for about 77% of GDP.
The tertiary sector of services is considered the backbone of Cyprus economy attributing for 76,3% of GDP
Quality of Life
In addition, Cyprus was ranked 29th in the United Nations 2005 Index of Human Development. Considering other socio-economic indicators such as the excellent housing conditions, pollution free environment, and low crime rate, one may conclude that Cyprus is positioned favorably among the rest European Union member-states in terms of quality of life and standard of living.
Foreign Direct Investment Policy
In order to attract foreign investments, the Government has fully liberalized the Foreign Direct Investment (FDI) Policy for both EU and non-EU nationals in most sectors. Limitations as per the minimum level of investment and the foreigners´ participation percentage have been abolished in most sectors of the economy. Foreign Direct Investments during the period of 1998- 2004 based on the UNCTAD World Investment Report 2005, were in the region of US$ 5.619 billions, showing an upward trend from US$ 264 million in 1998 to US$ 1146 millions in 2004. Cyprus’ Foreign Direct Investments originate mainly from European countries (87%), out of which EU-25 account for 81,5%, while the majority of the FDIs (96%) are directed towards the services sector.
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, company reorganizations, free repatriation of profits and capital, and other.
The Government having extensively considered ways for the development and reconstruction of the economy, in light of the challenges inherent with the intensification of competition and the globalization of the economy, has introduced various Grant Schemes. Such schemes and incentives, inter alia, aim at the encouragement, strengthening and reinforcement of entrepreneurship, the technological upgrading of the Cyprus enterprises, the export promotion of industrial products, the technological upgrading of Cypriot enterprises, the development of technologically advanced products and services and the attraction of capital-intensive foreign investments.
Cyprus ranks among the first countries in the world in terms of university degree holders in relation to the population, with more than two thirds of secondary education graduates continuing on to tertiary studies (2004 statistics). Overall, Cyprus offers a well-educated, skilled, and multilingual labour–force, whereas labour costs in Cyprus 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 plans are underway to promote the island also as an international research and development center.
- Banking: Cyprus has been developed into a regional banking centre through the years. Currently, approximately 30 foreign banks have established presence and over 1200 International Business Corporations (IBCs) maintain fully-fledged offices in Cyprus.
- Shipping: Cyprus is a highly reputable international shipping centre; ranking as the ninth leading maritime nation in the world, with a merchant fleet exceeding 21 million gross tonnage and nearly 1100 ships.
- 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 Larnaca´s port, as well as the fostering of special theme tourism such as golf, spa, conference, and agro tourism are included in the Government’s plans to reinforce the already developed sector of tourism.
- Telecommunications: Due to its advanced telecommunications network with superb regional and global connectivity on offer, enhanced by an extensive submarine fibre optic cable network as well as an extensive satellite telecommunications network, the island is considered as one of the most important telecommunication hubs in the Eastern Mediterranean and the Middle East region.
- Research and Technology: New investment opportunities arise through Cyprus high technology investment programme related to the establishment of Business Incubators as well as the planning of launching a Cyprus Technology Park with the cooperation of French Riviera Chamber of Commerce and Industry and the Sophia Antipolis Science and Technology Park; thus, facilitating the creation of new ventures, especially in developing and commercializing innovative products and methods. Along these lines, a Joint International Institute on the Environment and Public Health is to be established in cooperation with the Harvard School of Public Health (HSPH).
Cyprus has developed into one of the World’s leading shipping centre
Research and high technology are growth sectors in the economy of Cyprus
"Harvard School of Public Health wants to make greater contribution to research, technology transfer, and education internationally. We believe our efforts in Cyprus will strengthen environmental science throughout the Mediterranean region"
James Ware, Dean for Academic Programs, Harvard School of Public Health
One of the primary objectives of the Government’s development policy is to foster the infusion of foreign investment in all economic sectors. Towards this end, a Foreign Investors Service Centre operates under the auspices of the Ministry of Commerce, Industry and Tourism, located at the Ministry’s headquarters in Nicosia.
The Foreign Investors Service Centre assists foreign-based companies investigating investment opportunities in Cyprus. The Centre constitutes the central agency of information, support, and foreign investors´ relations. Recognizing the importance of serving the already established foreign-based companies, the Centre also provides aftercare development aimed at anchoring existing investors and encouraging them to upgrade their activities in Cyprus.
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