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Incentives

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Cyprus Investments incentives- Invest in Cyprus

At a time of increasingly intensified international competition, the Cyprus Government has taken several measures to enhance Cyprus’ competitiveness, both in the international and local market; to achieve steady and self-sustained growth; and to maximize the country’s Gross Domestic Product. Specifically, having extensively considered ways for the development and reconstruction of the economy, the Cyprus Government has introduced a framework of incentives within the EU harmonisation process and the acquis communautaire in general.

The basic goals, which form the central core of the Cyprus government’s incentives framework, are:

  • Attraction and development of new high-tech industries and skill intensive products
  • Assistance and reconstruction of Cyprus traditional economic sectors
  • Improvement of productivity and labour skills
  • Attraction of capital-intensive foreign investment


The main incentives and schemes available and introduced by the Cyprus government are briefly described below. Please note that the various grant schemes may be subject to alterations.

Research

The Research Promotion Foundation (RPF) – an initiative of the Government of the Republic of Cyprus – was established in order to promote the development of scientific and technological research in Cyprus. One of its main activities is the development of a national framework programme for financing Research and Development and Innovation (R&D&I) projects.

A large number of research projects and supporting activities are financed through RPF’s programmes. The budget is expected to grow substantially in the coming years. The R&D&I supporting programmes are categorised under five Strategic Areas:

  • Strategic & Multi-thematic Research and Development
  • Growth of National Scientific & Research Human Capital
  • Applied Research Development and Enterprise Innovation
  • Research Infrastructure Development and Large Scale Investments
  • International Networking and Collaboration in the field of R&D&I


Industrial Development

Industrial development in Cyprus has been amongst the primary objectives of the Government, as it constitutes a vital component of economic policy. Cyprus’ accession to the EU provides Cypriot enterprises with the opportunity of participating in the various community programmes concerning industrial technology; product development; marketing; professional training, etc, thus further enhancing the process of restructuring.

The Industrial Development Service (IDS) of the Ministry of Commerce, Industry and Tourism, aims at accelerating the rate of growth of the manufacturing sector in Cyprus and enhancing its competitiveness under free market conditions. IDS has introduced a framework of investment incentives, a brief description of which is provided below:

Technological upgrading

The scheme aims at assisting the technological upgrading of existing and newly established manufacturing enterprises in Cyprus through government grants. Any manufacturing enterprise, excluding those located in selected rural areas, investing in new machinery, new equipment and know-how within a period of three years, is eligible to apply.

Manufacturing in Rural Areas

The programme is co-financed by the European Regional Development Fund and aims to support, develop, and promote the Cyprus manufacturing sector through grants for the expansion and modernisation of existing and/or creation of new viable Small and Medium-sized enterprises, which are located, or will be located in specified rural areas.

Relocation of Small Enterprises

The aim of this programme is to motivate the already existing Cyprus small enterprises engaged in manufacturing activities, or specified service activities, to move from residential or inappropriate for their activities areas to other authorised areas. Authorised areas are those where an enterprise can legally have its premises and engage in manufacturing or service activities, such as industrial areas, industrial zones, handicrafts zones or any other authorised area.

Government Guarantee for Loans Granted to SMEs

The aim of the scheme is to assist SMEs in the Cyprus manufacturing sector,which do not have adequate collateral to obtain loans. Government guarantees may be granted for loans given by any commercial bank or financial institution, and will be utilised for:

  • Restructuring and/or expansion in the case of existing enterprises; and
  • Establishment of a new manufacturing unit preferably engaged in the production of new products and/or high technology products.


Women / Youth Entrepreneurship

The programme is offered under the De Minimis Rule11, and aims to develop, support and encourage the entrepreneurship of women and young people in manufacturing sectors and/or in specific activities in commerce, services and tourism. Above all, it concentrates on the creation of new modern viable enterprises in Cyprus , the development of innovative projects, new technologies and new products, as well as the support of services that enhance quality and the development of tourism.

Agricultural Products

The programme is included in the Agricultural Development Plan and is co-financed (50%) by the European Agricultural Guidance and Guarantee Fund. Among the programme’s objectives is to provide investment motivations for improving the quality of agricultural products, as well as trade and manufacturing procedures. In addition, the programme aims to direct production according to foreseen market trends, or alternatively to encourage the adoption of new channels for the distribution of agricultural products.

In line with the 2007-2013 Strategic Development Plan, the above mentioned programmes will be integrated in the various EU structural funds for co-financing. As a consequence, the programmes may be amended, while further programmes may be introduced.

Grant Scheme for Manufacturing Enterprises located within the British Bases in Cyprus

Within the framework of the Strategic Development Plan 2007-2013, the Industrial Development Service of the Ministry of Commerce, Industry and Tourism implements a Grant Scheme for Manufacturing Enterprises located within the area of the British Bases in Cyprus. The Scheme will be implemented for a period of 6 years that is, 2008-2013.

The Scheme’s main objective is to support, develop and promote small and medium sized manufacturing enterprises (SMEs) as well as specific handicraft units. Enterprises dealing with the processing of agricultural, fishing and foresting products are not covered by the Scheme.

Encouraging Exports

The Trade Service of the Ministry of Commerce, Industry and Tourism provides state grants aimed at enhancing the promotion of Cypriot products and services abroad, and at providing know-how to entrepreneurs regarding business tactics in foreign markets.

Promotion of Industrial Products

The state grant covers the following schemes:

  • Financial aid for exploring export potentials in foreign markets
  • Schemes for entrepreneurs / manufacturers participating in trade fairs abroad, either at their own expense or at fairs organised by the Ministry of Commerce, Industry and Tourism
  • Schemes for entrepreneurs / manufacturers participating in trade missions abroad organised by the Ministry of Commerce, Industry and Tourism


Promotion of Services

The aim is to promote and support the services industry through the provision of information to exporters regarding the trading conditions within foreign markets. Two schemes are available:

  • Participation in trade fairs and exhibitions abroad
  • Penetration of foreign markets – market research


Promotion of e-commerce

This new programme for the promotion of e-commerce in Cyprus, is offered under the De Minimis Rule11, and aims to develop, support and encourage the SME’s targeting to take advantage of the possibilities and opportunities that are offered on the internet for the expansion of their business activities.

Special emphasis is given to:

  • Training and familiarization of the staff with electronic and internet technologies so as to fully take advantage of the possibilities and opportunities that are offered on the internet.
  • Provide the necessary infrastructure and support to SME’s for use of electronic commerce.
  • Support of the presence of SME’s on the internet through their own websites.
  • The promotion of e-commerce from SME’s, including the spreading of the approval of e-commerce services to the public and the process of business transactions and procedures through automatic electronic procedures.


Quality Assurance

Within its efforts to contribute to the enhancement of product quality, the Government has introduced a number of schemes:

  • Testing of Products


The aim of the scheme is to assist existing or new SMEs in the manufacturing sector, to cover expenses for laboratory testing, products’ testing and/or analysis, calibration of measurement and testing instruments abroad. The scheme applies in the case where the above needs cannot be met by local laboratories.

  • Laboratory Infrastructure


The scheme’s main objective is to strengthen the laboratory infrastructure through the provision of assistance to existing or new laboratories in order to meet their immediate needs for product testing equipment.

  • The HACCP System


The scheme intends to assist and motivate companies of the food and beverage industry to implement the HACCP system. It is a systematic approach to the risk assessment, as well as the control of microbiological, chemical, and physical hazards related to any food production procedure.

Energy and Environment

The Cyprus Institute of Energy provides financial incentives for the materialisation of investments in the field of energy conservation and the promotion of Renewable Energy Sources. Overall, it intends to expand the usage of financially viable energy technologies, and encourage investments that positively affect the environment.

Energy Conservation

Energy Conservation investments are defined as investments in systems which can lead to at least 10% energy savings on total energy consumption, and investments on Combined Heat and Power and Cooling (CHP) Systems. Investments under the Energy Conservation scheme include:

  • Energy conservation in existing enterprises
  • Energy conservation in existing private households
  • Co-generation of electricity – heating / cooling


RES UItilisation

Recognising the importance of the utilisation of Renewable Energy Sources (RES), the Cyprus Institute of Energy has introduced the following programmes:

  • Wind systems for electricity production
  • Solar / Photovoltaic / Hydroelectric systems
  • Biomass utilisation
  • Desalination using RES


Environmental Protection

In addition to the above, the Energy Service of the Ministry of Commerce, Industry and Tourism operates a scheme for the protection of the environment from industrial pollution. The scheme covers part of the initial investment cost incurred by enterprises for qualified projects in the industrial sectors of mining and quarrying, manufacturing, car maintenance, packaging, the processing of recycling of waste and the washing or dry cleaning of textiles.