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INVESTMENT OPPORTUNITIES IN CYPRUS
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CYPRUS TELECOMMUNICATIONS AUTHORITY
by Yiannis Koulias, Assistant Manager, CytaGlobal
Acknowledgement presentation prepared in
co-operation with the Foreign Investors
Service Centre, Ministry of Commerce, Industry
Tourism
March, 2006
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Republic of Cyprus

• Positioned at a strategic location in the Eastern
  Mediterranean at the crossroads of Europe, Asia
  and Africa, Cyprus serves as a bridge between the
  European Union and the Middle East...

ASIA
EUROPE
AFRICA
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Republic of Cyprus (contd)

• Established on 16/8/1960, full member of European
  Union on 1/5/2004
• Bilingual (Greek/English), highly qualified and
  skilled work force
• Regional telecommunications, air-transport and
  services centre

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Republic of Cyprus (contd)

• Modern and efficient legal, accounting and
  banking services
• International Financial and Business Centre
• 1,200 International Business Corporations (IBCs)
• 6th leading maritime nation in the world
• 30 foreign Banks

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Cyprus Economy

• Main Social Economic Indicators
• Total area 9,250 sq. km
• Population 2004 (est.) 837,300
• Rate of growth 2004 3.8
• Unemployment 2004 3.6
• Inflation 2004 2.3
• Per Capita GDP 2004 EUR 17,239

Source UNCTAD World Investment Report 2005
Sources Statistical Service of Cyprus, Central
Bank of Cyprus
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Foreign Direct Investments

• Sample Top Foreign Investors, 20032005
• Bank of Beirut, Lebanon (Financials)
• Starbucks, USA (Restaurant)
• GFI, UK (IT Software)
• Regus, UK (Consulting Services)
• DAT, United Arab Emirates (Energy)
• Boutaris, Greece (Agri-food)
• Lidl, Germany ( Retailer)
• Scancom, Lebanon (Telecoms)

Source Central Bank of Cyprus
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FDI Policy

• Since 1/10/2004, FDI Policy is fully liberalized
  for both EU and non EU nationals, in most sectors
  of the economy
• no limitations on foreigners participation
  percentage
• no limitation on minimum level of investment
• Simplification of administrative procedures
• Companies can be established by direct
  application to the Registrar of Companies

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Telecommunications in Cyprus

• Telecommunications Market in Cyprus is fully
  liberalised as from 1/1/2003
• Cyprus Telecommunications Authority (CYTA)
• the main telecommunications provider in Cyprus
• provides the whole spectrum of electronic
  communication products, ranging from fixed and
  mobile telephony to internet service provision
  and broadband applications
• offers probably the best telecommunications
  network in the Eastern Mediterranean region and
  the cheapest telecommunications in Europe

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Telecommunications in Cyprus (contd)

• provides an impressive global submarine cable and
  satellite infrastructure
• is committed to meeting the area's ever expanding
  needs and business goals via a portfolio of
  competitively priced and flexible products
• CYTAs key statistics (Dec., 2005)
• Direct exchange lines (density) 53.71
• Postpaid mobile telephone service (density)
  45.29
• Prepaid mobile telephone service (density)
  53.02
• Internet access customers 47,189
• Broadband access customers 35,433
• ISDN customers 27,252

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Fiscal Incentives

• Tax reform (in effect as from 1/1/2003)
• conforms with European Union regulations and OECD
  requirements
• maintains Cyprus competitiveness as an
  International Business Centre
• enhances Cyprus attractiveness as a suitable
  jurisdiction for holding companies

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Fiscal Incentives (contd)

• Favourable tax regime
• no tax on dividends
• no tax on profits from permanent establishment
  outside Cyprus
• no tax on profits from reorganizations
• no tax on capital gains from disposal of
  securities
• tax free repatriation of profits and capital
• favourable tax treatment of losses

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Fiscal Incentives (contd)

• Uniform corporation tax rate at 10
• lowest corporation tax rate in the EU
• 50 of interest income is exempt from tax
• Personal income tax rate up to 30
• no tax on interest and dividends
• Double taxation treaties with 40 countries

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Investment Incentives

• The Government has introduced various Grant
  Schemes as measures to
• enhance Cyprus competitiveness
• achieve steady and self sustained growth
• maximize GDP

• special emphasis
  on the manufacturing industry

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Investment Incentives (contd)

• Basic objectives of the Industrial Development
  Policy
• to attract and develop new high-tech industries
• to improve productivity
• to restructure the Cypriot traditional
  manufacturing industry
• to attract foreign investment

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Investment Incentives (contd)

• Examples of Grant Schemes
• Technology-Incubating Program up to CYP120,000
  for two-year period
• Technological Upgrading Program covers 30 of
  investments
• Protection against industrial pollution grant may
  reach up to CYP150,000

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Investment Incentives (contd)

• National Framework Program for financing research
  and development projects
• total Governments contribution for 2003-2005,
  approximately CYP11.65 million
• Strengthening laboratory infrastructure
• maximum subsidy amount is CYP60,000
• Encouragement of Women Youth Entrepreneurship
• 50 of approved budget, up to CYP35,000 for
  manufacturing, up to CYP25,000 for other sectors

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The Larnaca Free Zone

• Established in 1980, to encourage external trade
  and international commerce
• abolishment of custom duties and taxes
• All kinds of enterprises are allowed (trade,
  transit trade, manufacture, services)
• currently over 25 of total area
  has been leased

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The Larnaca Free Zone (contd)

• Industrial sites in the Free Zone are leased for
  a period of up to 99 years (for the first 5 years
  a nominal rent of CYP1 per year applies)
• Free-of-charge provision of electricity power
  (maximum demand)
• Free-of-charge provision of unlimited number of
  direct telephone lines

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Foreign Investors Service Centre

• Based in Nicosia
• Commenced operations in December 1999
• Under the auspices of the Ministry of Commerce,
  Industry Tourism

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Foreign Investors Service Centre,
Scope

• The Foreign Investors Service Centre was designed
  to provide total solutions and support
• acts as central agency for information, support
  and foreign investors relations
• provides after-care development services
• attracts FDIs in targeted industries and promotes
  Cyprus as an International Business and
  Investment Centre

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Foreign Investors Service Centre,
Mission

• To attract foreign direct investments, thus
  contributing in the enhancement of the production
  capacity and competitiveness of Cyprus industry,
  and to serve the investors needs by providing
  total solutions and an after-care service program

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Foreign Investors Service Centre,
Services Activities

• Provides information regarding financial, legal
  and taxation matters
• Provides advice regarding the various benefits
  on-offer (e.g. grant schemes) and after-care
  development services
• Promotes Cyprus as an international business,
  investment and RD centre

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Foreign Investors Service Centre,
Services Activities (contd...)

• Co-ordinates and acts as liaison with other
  appropriate government departments, and
  facilitates the acquisition of the required
  permits and licenses (e.g. work permits)
• Member Euro-Mediterranean Network of Investment
  Promotion Agencies (ANIMA)
• Member World Association of Investment Promotion
  Agencies (WAIPA)

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Conclusions

• Strategic geographic location
• Availability of high-quality services and
  highly-skilled work force
• Global telecommunications connectivity
• Standardised and simple procedures
• Favourable business envirornment
• Low set-up and operation costs
• Favourable tax regime
• Grant Schemes

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Conclusions (contd)

• Dynamic, liberalised FDI regime and Industrial
  Development Policy
• Availability of Free-Zone bonded factories
• The Foreign Investors Service Centre provides
  total services and support
• European standard of living
• Dynamic free-market economy

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the end
INVESTMENT OPPORTUNITIES IN CYPRUS
thank you