Cyprus is favourably located for access to both EU, Eastern European, African and Middle Eastern markets with excellent air and maritime transportation links. Its legal system is based on English law and follows English accounting rules and practices. It has a well-educated and adaptable work force with a high concentration of business professionals and a tradition of trading with external partners and the provision of service/leisure industries. It has the highest proportion of graduates (predominance of US and UK education) to its population within the EU.
Cyprus has an open-market economy with the private sector comprising the backbone of economic activity. Private enterprise is greatly promoted and supported by decades of consistent government policy. Key is the stability of its tax law, the consistency in interpreting its tax legislation following OECD guidelines and its low tax rates, providing financial incentives for business startups, has established tax treaties with numerous countries including Russia, providing opportunities for the site of both head and subsidiary businesses on the island .
Potentially, whilst the following investment opportunities proposed in this report are currently seen as higher risk ventures which, with the exception of Shipping (see below) potentially require significant capital investment into infrastructure projects, they offer up the possibility of higher returns over the longer term.
1) Tourism – Cyprus has a long established tourism industry. Key areas to target are premium sector (target Middle Eastern and Eastern European clientele), green tourism (Europe) and retirement market (EU 55+ age group).
Tourism has been established as a major contributor to the Cypriot economy since the 1970s. Initially providing hotels and resorts serving the burgeoning European package deal market and tourists from Russia and Eastern Europe since the 1990’s, it has since diversified its offerings, benefiting from affluent EU retirees attracted by its EU status and its proximity to the Middle East has resulted in influx of investment witnessing a property boom since the 1990’s.
Cyprus is ranked 17th for Tourist arrivals (per capita) by country [World Tourism Organisation, 2008] with over 2,403,750 tourists and revenue estimated at €1.79 bn.
Recommendation: Due to the current economic crisis and wider EU economic recession, considerable opportunities will exist to acquire premium tourism businesses at discounted prices, including hotels and other tourist developments/infrastructure.
2) Shipping – Cyprus has historically offered an extremely tax efficient commercial base for the registration and operation of merchant fleets; providing flag of convenience within EU confides.
The Cypriot fleet is the tenth largest in the world and the third in the European Union. At the same time, Cyprus is one of the largest ship management centres in the world and the largest in Europe . No tax is imposed on profits from the operation of Cyprus registered ships, or on dividends received from a ship-owning company.The corporate tax system, introduced in March 2010, allows customers to pay tax based on the tonnage of their ships, providing a highly tax efficient environment for shipping groups and an ideal holding company location .
Recommendation: Relocating the management of the company’s shipping assets to Cyprus could provide significant financial benefits both in terms of operating costs and future profitability.
3) Energy – Gas exploitation of recently discovered offshore gas fields with current projected reserves of at least 200 billion cubic metres.
The Cypriot government has undertaken a second bidding round with global gas exploration companies with a view…