The Creation of a Sustainable Development Model is more necessary than ever
Yanna Raevskaya – Legal Department Manager at Prospectacy LTD
In recent years, Cyprus has embarked on an effort to diversify and expand the productive base of its economy, with the aim of creating a resilient and sustainable development model.
The multiple crises facing the country (inflation, energy, adaptation to the post-COVID era) make it necessary to accelerate this effort in order for Cyprus to emerge unscathed, and as strong as possible from this transition period.
To this end, the State’s policy focuses on attracting companies and professionals from abroad in key sectors, as well as strengthening existing pillars of the economy such as technology, education and research, health, renewable energy sources, financial and professional services, shipping, sports and the cultural industry. The extraction of know-how and capital in different sectors will lead to the enlargement and diversification of the productive base of the economy, creating horizontal multiplier benefits and quality jobs for the local population.
Necessary conditions for achieving these goals are the effective utilization and promotion of the country’s comparative advantages, the promotion of important reforms in the public sector, such as digital transformation and the modernization of the justice system, as well as synergies between the public and private sectors.
Rightly so, the Government, through the Ministry of Finance, announced the strategy for attracting companies to operate and expand their activities in Cyprus, which includes a series of incentives for businesses and professionals who wish to relocate to the country. Particularly important for enhancing the attractiveness of Cyprus are the provisions that facilitate access to the labor market for the spouses of professionals who choose to settle on our island. At the same time, the introduction of the Digital Nomad Visa and Cyprus Startup Visa Scheme strengthen Cyprus’ position as a destination for technology companies.
An ally in the State’s effort to attract investment is the domestic intellectual property regime (IP Box Regime). The IP Box Regime in Cyprus – which fully complies with OECD and EU guidelines – enables companies operating in our country to be exempt from taxation, at a rate that can reach up to 80% of of their profits, which fall under the IP Box Regime, which effectively reduces the tax rate from 12.5% down to 2.5%. The regime includes patents, copyrighted software and other intangible assets.
Despite the difficulties it went through in previous years, the Cypriot economy showed resilience, while upgrading its position as a financial center. Our country brings together a series of characteristics that make it an attractive business destination. In particular, it has an extensive network of double taxation agreements that is constantly expanding, as well as a competitive tax regime. At the same time, it offers high-quality and low-cost support services, while an additional advantage is its geographical location and the fact that it offers access to developed markets in the Middle East and especially to the European market. At the same time, it guarantees a high level of quality of life, safety, mild weather conditions and a suitably qualified human resource. It’s no coincidence,
Building on its comparative advantages, Cyprus must move towards the new era with targeted reforms and policies, to strengthen its resilience in the face of external challenges, in a highly competitive and constantly changing business environment.