Cyprus

Ease of Doing Business Rank: 54

Overview

 

Geographic location

The Republic of Cyprus is an island country in the Eastern Mediterranean Sea. Turkey lies to the north, Lebanon and Syria to the east and Israel and Egypt to the south.

Spoken language

The official languages of Cyprus are Greek and Turkish. Greek is spoken by 80.9% of the population, while Turkish speakers only account for 0.2%.

Minority languages include Armenian, Cypriot Arabic and Kurbetcha. The first two are formally recognized by the government.

English is the most widely-spoken foreign language (73%), followed by French (11%) and German (5%).

Population

The 2019 population estimate is 1.2 million.

The largest city in Cyprus is Nicosia (200,452), followed by Limassol (154,000). All other cities and towns have populations of less than 100,000.

Popular industries

The top industries in Cyprus are tourism, light industry, construction, agriculture, financial, oil and gas and shipping.

Education

The Times Higher Education World Rankings includes two Cyprus universities in the top 500 in the world.

The Legatum Prosperity Index ranks Cyprus’ education system 36th out of 149.

Popular entity types

The most common type of business entities in Cyprus are Sole Proprietorship, General Partnership, Limited Partnership, and Limited Liability Company.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Cyprus incentives for business

Cyprus offers a foreign tax credit to offset taxes paid abroad based on income type. They also offer tax exemptions on dividends, interest and royalties paid abroad.

The country also offers a low corporate tax rate of 12.5% on interest income for finance companies. Cyprus also provides an interest deduction on new equity investments up to a maximum of 80% of the taxable profit generated.

Cyprus also provides intellectual property box provisions which include an 80% deduction on qualifying IP profits such as patents, copyrighted software, utility models and other activities. Businesses must remain within revenue limits.

Cyprus Alternative Investment Funds (AIFs) and Undertakings for Collective Investment in Transferable Securities (UCITS) also offer benefits for collective investments in transferable securities and/or other liquid financial instruments within the country. This includes no capital gains on the sale of fund units, providing the fund does not own immovable property in Cyprus or the fund is listed on the stock exchange. Fund units are not subject to stamp duty or VAT on management fees either.

Qualifying audiovisual companies may enjoy a corporate tax exemption on 35% of eligible production expenses, up to a maximum of 50% of corporate tax payable. SMEs investing in audiovisual infrastructure and technological equipment may enjoy a deduction on their taxable income of 20% for small enterprises and 10% for medium-sized enterprises. Unused credits may be carried forward for the subsequent five years, but the company must remain in the country for at least five years.

History & Features

 

Main cities for business

Limassol is a large industrial and shipping center, while Nicosia is the major financial area.

Popular historical & tourist attractions

Cyprus is best-known for its temperate climate and beaches, but also has a varied history and many archeological wonders including 3 UNESCO World Heritage Sites.

The partially-excavated Neolithic settlement of Choirokoitia dates back to between the 7th and 4th millennium B.C. and is considered one of the most important prehistoric sites in the eastern Mediterranean.

Paphos was a center built by a Mycenaean cult in the 12th century BC to worship Aphrodite. Many of the palaces, tombs, villas, fortresses and mosaics remain intact. The Troodos region features 10 churches from the Byzantine Empire adorned with richly decorated murals.

The Kourion archaeological site features a magnificent Greco-Roman theater built in the 2nd century BC. A private villa on the site called the ‘House of Eustolios’ includes well-preserved mosaic floors from the 5th century.

The Byzantine castle of St. Hilarion sits high atop the Kyrenia Mountains separating the seaside from the central plain. It offers stunning views of Nicosia and much of the ramparts and chambers remain.

Areas such as Larnaca, Agia Napa, and Paphos are seaside havens offering outstanding beaches, water sports, restaurants and entertainment. Crystal clear warm water and plenty of sun make these areas popular tourist destinations.

History

Cyprus has been home countless civilizations as early as 4,000 BC. At one time it was part of the Assyrian, Persian, Greek, Roman and Byzantine Empires.

Cyprus prospered under Byzantine rule, but as the empire began its decline one Byzantine prince declared Cyprus independent. However, England captured Cyprus during the Crusades.

In 1192, the Templars sold Cyprus to a French knight loyal to the King of England as compensation for territory he had lost. Cyprus became a feudal state and it remained under the French family’s rule for 3 centuries.

During the 14th century, Genoa and Venice grew in power and threatened Cyprus’ independence. In 1489, the last of member of the French ruling family sold Cyprus and it became an overseas colony of the Venetian Republic under oppressive rule. However, Ottoman Turks raided one area of the island the same year and continued until they’d conquered the entire island in 1571. Cyprus remained under Ottoman rule until 1878.

In 1878, the United Kingdom was granted the island in exchange for their military support of the Ottoman Empire, should Russia attempt to take possession of Ottoman territories in Asia. Cyprus became a British protectorate.

In 1914, Britain annexed Cyprus in response to Turkey’s alliance with Germany and Austro-Hungary in World War I and by 1925 it was a British Crown Colony.

During the 1930s, Greek Cypriots wanted to unify with Greece (enosis), while Turkish Cypriots wanted British rule to continue. Greek Cypriots fought for the British during World War II and demanded enosis at the end of the war.

Tensions came to a head in the 1950s when bombings, inter-communal clashes and massacres occurred. British occupation ended in 1960, and Britain, Greece and Turkey signed a treaty guaranteeing an independent Cypriot state. However, peace did not last.

Turkish and Greek Cypriots clashed throughout the sixties. The UN tried to reach an agreement between the two parties to no avail. In 1974, Turkish forces invaded Northern Cyprus. By 1975, they declared to area the Turkish Federated State of Cyprus. In 1983, it became the Turkish Republic of Northern Cyprus (TRNC). However, it was not recognized by any country except Turkey and was officially boycotted.

UN-sponsored talks during the nineties did not result in an agreement. In 2003, the line between the two parts of Cyprus was partly opened after 30 years. The sovereign Republic of Cyprus joined the European Union in 2004, but this agreement only covered the area under government control, not the occupied north.

UN brokered peace talks resumed in 2015, but Cyprus remains a divided nation. The President of the Republic of Cyprus is in his second term as the head of state government, the only EU state with a full presidential system of government. The Republic of Cyprus has a high-income economy.

Other relevant facts

According to the 2011 census, most Cypriots identify as Greek (98.8%), followed by Turkish (0.2%), Armenian (0.3%), Maronite (0.5%) and others. Most Greek Cypriots live in the Republic of Cyprus (99.5%) along with other nationalities. Most Turkish Cypriots live in Northern Cyprus (99.5%)

The same census found most Cypriots are Orthodox Christians (89.1%), followed by Roman Catholic (2.9%), Protestant or Anglican (2%), Islam (1.8%) and other religions (4.1%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Cyprus is the 37th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Cyprus 44th globally and states, “…progress has slowed on reforms undertaken by the government to improve fiscal discipline and such other structural reforms as the sale of state assets to improve the efficiency of state-owned enterprises and raise funds to reduce government debt.”

World Bank’s “Doing Business” rankings rate Cyprus 54th for ease of doing business in the world.

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