Invest Cyprus is actively involved with initiatives to build Cyprus’ regulatory framework and to simplify administrative procedures to make life easy for foreign investors. In a detailed interview, the Director General of Invest Cyprus George Campanellas covers the key elements of that make the country’s investment climate attractive and the role of Invest Cyprus in developing it.
What is Invest Cyprus?
Invest Cyprus is the national body responsible for promoting Cyprus abroad as an investment destination, as well as attracting and facilitating Foreign Direct Investment in a wide range of economic sectors. We advocate for reforms that will lead to the continuous improvement of the business environment, and render it truly welcoming and encouraging to foreign investment. Our experienced staff is available to international investors for any kind of enquiries, and are always eager to offer guidance and support throughout an investment cycle. In close collaboration with both the private and the public sectors, Invest Cyprus also acts as a bridge between investors and government authorities, facilitating communication and putting forward investors’ needs and requests.
Since 2004, Cyprus has been rapidly developing into a continental business hub. How progressive has been the investment climate over the last three years?
Cyprus has made remarkable progress in the last three years. Overcoming difficult economic challenges, the island is now marching on a solid growth path and it is among the top five Eurozone economic performers, with a remarkable GDP growth rate of around four percent. The strongest confirmation of Cyprus’ positive economic outlook though comes from the consecutive upgrades from credit rating agencies, with the country dynamically re-entering investment grade in2018. This upward trend is expected to continue and it is indeed reflected in renewed investor interest and increasing FDI inflows in a variety of sectors. Significant investment has been materialized, especially in the real estate and tourism sectors, with the development of luxury resorts, marinas, golf courses and of course the first integrated casino resort in Europe, which is expected to open its doors in 2021. The strong Cyprus maritime cluster continues to expand, while Cyprus is fast growing into an attractive investment funds jurisdiction within the EU. Indicatively, I would mention that assets under management increased by 70% in the last three years. And the list goes on! The investment climate is definitely positive and we will do our utmost to keep it that way.
How does Invest Cyprus help boost the country’s investment appeal internationally? Can you give an example?
As part of our organisation’s mandate, we strive to help the country reinforce its competitiveness. This is what we believe is the most valuable asset Cyprus has to demonstrate abroad and certainly it is a prerequisite for attaining long lasting and sustainable economic growth. Enriching and strengthening our offering and thus Cyprus’ competitiveness is amongst our highest priorities. Invest Cyprus is involved in a variety of initiatives to improve the country’s regulatory framework, either through horizontal reforms such as simplifying administrative procedures. We are also involved in advocating for and drafting of relevant regulations as well as introducing general and sectoral incentives for investment. Most recently, we undertook a coordinating role in an initiative involving all the actors in further improving the Cyprus Investment Programme, which is an important incentive for FDI. Moreover, we were actively involved in drafting the newest package of incentives for the film industry and we are also chairing the Cyprus Film Commission.
Can you elaborate on FDI strategy of Cyprus?
In a highly competitive and constantly evolving international economic environment, it is essential to continuously diversify and enrich our offering. Our goal is to attract value added investments, which create jobs, increase productivity, and lead to economic growth. We are generally focusing on attracting companies to set up their corporate bases in Cyprus. Our geostrategic location between three continents supports our offering in the strongest way. Cyprus can serve as a gateway for investment not only into the EU, but also to other high-growth markets. Currently, we are aiming at attracting companies from the dynamic segments of Information and Communication Technologies (ICT) and Internet of Things (IoT). With the necessary ingredients being there, a number of multinational technological companies have already chosen Cyprus to establish their operations, giving a vote of confidence in our country’s potential for development into a main technology cluster, particularly for software development.
What is the Cypriot government doing to ensure the country’s economic progress?
The Cyprus Government has shown its commitment to the country’s economic progress in a number of ways. Through a number of initiatives, structural reforms and a sound, prudent yet growth-friendly programme, the bureaucracy has been tackled and procedures have been simplified. The results are evident now. Strong economic growth, strong future economic projections, continuous upgrades of the Cyprus economy are all worth mentioning. The government’s comprehensive plan has resulted in a solid, modernized, and restructured state that ensures speed and ease of doing business. Stability has been consolidated and international confidence in our financial system and banking sector has been regained. The effort is tireless and continuous. And we will continue to implement and support this growth-friendly economic model, placing Cyprus high on the global investment map.
Is there a compelling value proposition for foreign investors? If so, can you explain?
Cyprus offers companies a unique value proposition that combines ease of doing business with daily life elements. The country’s geographical position in close proximity to major markets and our EU membership helps companies to use Cyprus as a regional hub or investment portal into other growth markets. Cyprus has a simple and effective regulatory structure in place, as well as an attractive tax system. We also offer a wide range of advantages, exemptions, and deductions for both individuals and corporations of all sizes and access to a broad network of double tax treaties with more than 60 countries, including Finland. The island offers one of the lowest corporate tax rates in the European Union at 12.5% and has a competitive IP regime. Specific tax packages apply for innovative companies and investment funds. Also, with English widely spoken, we offer a cost-effective but quality business support services from a highly skilled workforce. In addition, businesses will find low operating and living costs which help Cyprus provide companies with an ideal framework to develop and excel. Last but not least, quality of life is of the highest standards and makes the island an ideal place not only to do business but also to live. Moreover, a pro-business growth model and the government’s dedication to continuous improvement and investor satisfaction are critical elements in creatingCyprus into an attractive investment destination.
It seems, Cyprus provides incentives to enhance its investment climate. What are they?
Cyprus has in the last years introduced a number of incentives, both general and sectoral. These include tax benefits for corporates and individuals, as well as measures to promote startups and innovations such as an attractive IP regime, a special tax incentives package for investment into innovative companies and the introduction of the startup visa. Moreover, a comprehensive programme for the promotion of the film industry has been developed, as well as an enhanced framework regulating investment funds. The Cyprus Investment Programme is also a key tool in attracting foreign direct investment and is being continuously enhanced, just like all of our incentives’ framework.
Is the tax and regulatory framework making headway to reinforce the investment culture?
Cyprus offers an attractive and transparent tax regime, fully compliant with EU directives, OECD requirements and international laws and regulations. In addition to a low corporate tax of 12.5% and access to a wide network of more than 40 double tax treaties, the Cyprus tax framework offers a variety of benefits, deductions, and exemptions for both corporates and individuals. Completing the package are an attractive IP regime, the tonnage tax system for shipping companies, and tailor-made elements for the investment funds industry. Complementing these are incentives for investments into innovative companies as well as incentives for filming in Cyprus, a new industry in which we see great potential. As regards the legal and regulatory framework, Cyprus’ system is widely recognised as a business-friendly and effective system that ensures transparency and reliability in business practices. Based on English Common Law principles, it offers foreign businesses a familiar and reliable framework with which to operate. Cyprus’ legal system is also fully compliant with the EU, the Financial Action Task Force on Money Laundering (FATF), OECD, the Foreign Account Tax Compliance Act (FATCA), the Financial Stability Forum laws and regulations and the EU anti-money laundering(AML) directives.
What are the opportunities for international companies in Cyprus?
Cyprus offers great potential for investments in a variety of sectors. Shipping, tourism, real estate and financial services have traditionally been the driving forces of the island’s economy. Energy, investment funds, startups, ICT, education, and filming are now sunrise sectors that are creating new, exciting opportunities. The goal is to enhance our edge in areas where we traditionally excelled, while also diversifying our offering through developing new sectors, and, subsequently creating new opportunities for investment. As far as Cyprus is concerned, businesspeople and corporations worldwide realise there is much more to this island than a ‘sun and sea’ destination. Cyprus is a business and academic centre of excellence, hosting a world class maritime cluster and possessing a strong flag. It provides enriching tourist experiences and advanced strategic infrastructure projects. Companies can explore the prospects of encouraging oil and gas discoveries in the island’s Exclusive Economic Zone. We are currently targeting the global film market. Cyprus is also a fast growing investment funds centre, with assets under management witnessing a 70% growth in the last three years. We aim to create a knowledge-based economy and we are one of Europe’s leaders in emerging technologies. Cyprus’ focus on ICT and innovation is established by the launch of the Innovation Hub, and the creation of accelerators and research centres. We are trying to attract more companies to choose Cyprus for their operations. In general, we aim to encourage development of corporate regional headquarters in Cyprus and we are interested in increasing the number of new and established companies that locate their regional or global headquarters on the island. Few other countries enjoy such easy access to the EU and other high-growth markets surrounding the Mediterranean. We do see an increase of multinational companies wishing to explore alternative EU jurisdictions, especially in view of Brexit, as well as an increase of companies actually deciding on Cyprus being the best choice to set shop.