Why Cyprus
Cyprus, with a business friendly environment, is strategically located between Europe, Middle East, Africa and Asia at the crossroads of global economy. As a member of the European Union with a modern telecommunications network and tested infrastructure, Cyprus is a gateway to the world of international business. The last two decades have witnessed Cyprus’ gradual transformation into a reputable international business and financial centre. Its attractiveness as a business and investment location is based on the following additional reasons:
- Democratic country with stable business environment, based on the free market
philosophy - Macroeconomic stability, as indicated by stable prices and currency
- Favourable tax policy, including a wide network of agreements for avoidance of
double taxation - Corporation tax rate is 10% (Expected to increase to 12.5%)
- Highly skilled, educated and flexible workforce well acquainted with the use of modern technology. Competitive level of wages and other costs
- Compliance with the European Union Code of Conduct for Business Taxation and with the commitment to the elimination of harmful tax practices according to OECD regulations
- Uncomplicated administrative procedures
- Well developed commercial infrastructure
- Easy access to international markets
- Lowest crime rates in Europe
- Well developed market of professional service
- Competitive banking system
Country Economic Overview
Many developed economies in Europe, including Cyprus, are still struggling to overcome from the financial crisis.
The crisis in Cyprus is not entirely the country’s fault. The country’s exposures to Greece were the main transmission channels of first the global and then the periphery crisis to the domestic economy.
Cypriot banking sector has been severely affected by the broader European economic and sovereign crisis, in particular through its exposure to Greece. The Greek PSI alone cost Cypriot banks nearly 25% of the country’s GDP, because of excessive concentration to Greek debt in the balance sheet of the two largest Cypriot banks. Public finances have also deteriorated rapidly in the last few years and after injecting €1,8 billion of public money into one of local banks in June 2012, the country’s public debt is currently 83,3% of GDP.
Weakening domestic macroeconomic conditions have also contributed to the deterioration in public finances and the significant consolidation efforts made in the last year or so have not managed to correct the excessive government deficit.
As a result, in June 2012 the Cyprus Government applied for financial assistance from the Eurogroup and the IMF and aimed at restoring the health of the financial sector, continuing the on-going process of fiscal consolidation and to implement structural reforms that support competitiveness and sustainable and balanced growth.
Following the election of a reform-oriented government in Cyprus in February 2013, an agreement with Troika reached on the 24th of March, 2013.
According to the latest Central Bank of Cyprus projections, which take into account the measures already agreed with the Troika, real GDP is expected to record a contraction of 2,4% in 2012, while a further contraction is expected in 2013 and 2014 due to the impact of the fiscal consolidation measures set out in the draft Memorandum of Understanding (MoU).
Cost of living and quality of life compares favourably with other European Countries.
Following Cyprus’ accession to the EU, on 1st May 2004, the government of the Republic of Cyprus undertook the obligation to join the Economic and Monetary Union and to adopt the euro as soon as the necessary requirements were fulfilled.
Cyprus joined the European Exchange Rate Mechanism II (ERM2) in May 2005.
On 1st January 2008 Cyprus adopted the Euro which is now the official currency of the country.
The Cyprus taxation system went through a reform to conform to EU entry regulations, and the low rate of corporation tax that applied from 1 January 2003, which is 10% for all companies, have made Cyprus an attractive financial business centre.
Economic Transport infrastructure
Cyprus is an important shipping centre with two ports in Limassol and Larnaca which are used for both storage of containers and break bulk cargo.
It is also connected with air routes to Europe, America, Asia and Africa.
The island demonstrates excellent telecommunication services giving the opportunity of reaching almost any country in the world with an automatic system.