Attracting foreign investment

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Attracting foreign investment
Theo C Parperis, head of tax and legal at PwC Cyprus.

Even as the economic growth slowed in the second half of 2019, according to reports, the Cypriot government is leaving no stone unturned to bolster its economy with attractive tax regimes, robust legal system and business-friendly environment

By Theo C Parperis

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Published: Mon 16 Dec 2019, 1:30 PM

Last updated: Mon 16 Dec 2019, 3:37 PM

The Cypriot economy has witnessed a robust recovery, since the 2013 financial crisis, driven by services (primarily tourism, shipping, education and financial services), private consumption and foreign direct investment. Over the recent years, Cyprus has established itself as an international business hub which is ideal for headquartering and attracting investments.
Cyprus' attractiveness as a business center is attributed primarily to the country's international orientation, strategic location and ease of doing business, which is supported by a pro-business tax and legal system, modeled on the English common law.
In addition to the above advantages, Cyprus has all the ingredients to succeed as a regional business centre and as an investment hub because of its modern infrastructure, strong availability of multilingual, high quality professionals across various competencies, wide use of English as the business language and being one of the top five safest countries in the world, with a pleasant climate and hospitable population.
There are a number of other factors that allow Cyprus to be at the forefront of attracting foreign direct investment. Its full alignment and harmonization to the EU regulatory framework make Cyprus a solid entry-point for investments into Europe. 
The introduction of a range of fund vehicles (AIFs, RAIFs, etc.) has contributed in addressing the growing needs of investors, which demonstrates the willingness of the State to create the appropriate legal structures to match investors' demands. 
Other sectors which have contributed to the country's ability to appeal to foreign investors is the positioning in the shipping industry as well as the buoyant real estate sector.
Cyprus is the largest ship management centre in the EU and in the top five ship management centers worldwide. The island's strategic location, coupled with the competitive tonnage tax regime which has been in place for decades, make Cyprus the ideal choice for ship-owners, charterers and ship-managers. It is anticipated that the country will continue to strengthen its position in the world economy by maintaining and enhancing its sound maritime infrastructure.
As far as the real estate sector, it is undoubtedly one of the key pillars of the economy, contributing significantly to the country's GDP for 2018, attracting foreign investors in the high end residential projects as well as in hotels and other tourism projects.
The country aims to attract more international businesses with real presence in Cyprus, in line with the stringent international tax developments. The transparent and tax efficient corporate system, as well as the wide range network of more than 60 double tax treaties, make Cyprus an attractive location for setting up presence of international groups.
At the same time, Cyprus has introduced incentives for high net worth individuals in order to facilitate the physical relocation of key decision makers and business owners to the island. This solidifies the country's positioning as a regional hub to headquarter and manage international businesses.  
We have recently seen a number of Middle Eastern investors interested in using Cyprus as a logistics, shipping and trading center, as it offers a number of advantages for business and investment purposes.
Moreover, the interest in real estate has been increasing, attracting investors in residential and commercial projects, as well as using Cyprus as their personal base. This is due to Cyprus':
Geographic location - close proximity to both the EU and Middle East;
Being part of the EU - strategic gateway to Europe;
Effective tax rate - corporate tax of 12.5 per cent and more than 60 double tax treaties;
Attractive Non-Dom tax regime;
Legal framework - based on the English common law system.
The outlook for the future is overall optimistic, with key to the country's economic success being the state's commitment to long-term, sustainable working practices, reflected in a modern and well-functioning regulatory framework, aimed at increasing Cyprus' competitiveness in this challenging international economic environment.
Despite the demanding economic realities that Europe and the world are facing, Cyprus is strategically located to assert its position in the global business market and be a driving force for international investment.
PwC Cyprus, and the professional services sector as a whole, remains focused, committed and motivated to continue servicing our country's investors.
The author is the Head of tax and legal at PwC Cyprus.

Cyprus continues to bolster its economy and make the nation more attractive to foreign investments and tourists.
Cyprus continues to bolster its economy and make the nation more attractive to foreign investments and tourists.

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