Driving Manufacturing Innovation in Cyprus MILLWOOD KANE INTERNATIONAL
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Acknowledging the importance of attracting innovative manufacturers, Cyprus is now providing incentives for investments in fixed assets and industrial equipment. Additionally, for innovative projects there is funding from the country.

Having as a mission to develop innovative products that will eventually contribute to the development and competitiveness of the Cypriot industry, the Ministry of Energy, Commerce, Industry and Tourism, has announced the Cyprus holistic and integrated national industrial strategy. The strategy focuses on increasing industry’s innovation and productivity through digitalisation and the development of digital skills.

It turns out that Cyprus is the ideal place for a manufacturer. Cyprus’s largest and most important trading partner is the European Union, which accounts for 50% of all Cypriot trade flows followed by Middle East destinations which account for 20% of exports from Cyprus. Cyprus mostly exports citrus fruits, cement, potatoes, clothing and pharmaceuticals. Exports from Cyprus went up 0.4 percent year-on-year to EUR 264 million in September of 2018, as sales to EU countries rose 8.3 percent to EUR 76.9 million. Since its inception in the 70s, the Cyprus pharmaceutical industry has grown as the major manufacturing industry in Cyprus with significant exports.

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The opportunities are undeniably huge for factory establishments in Cyprus, such as, cheaper manufacturing operations, highly educated workforce, logistics infrastructure and one of the lowest corporate tax rates at 12.5%.

Cyprus currently maintains double tax agreements (DTA) with more than 63 countries, which is considered among the strongest DTA networks in the world. Most of the conventions provide reduced rates of withholding taxes on dividends, interest and royalties paid out of the contracting state, or the avoidance of double taxation in the case where a resident in one of the contracting states derives income from the other contracting state. This is what makes Cyprus a unique and respectable business centre.

For manufacturing owners in Middle East, Africa and Asia, Cyprus, due to its geographical location is the closet country to the European market - the largest trade market in the world - making it easier to expand their business. Another important thing is that Cyprus wants to become a hub for solar innovation thus the electricity bills will be low, as it is one of the major expenses a manufacturing business has.

Opening a manufacturing business in Cyprus, is a big journey and a major investment. The Cyprus Action Plan for Growth is encouraging investment, creating a growth-oriented entrepreneurship ecosystem by simplifying many procedures. For example, simplifying the procedures for granting employment visas to highly skilled third country nationals. A start-up visa scheme has already been finalized. Another example is a tool that has been prepared for the investor’s journey, which covers all the licensing procedures which investors must follow for the construction and operation of such investments. Furthermore, a general Investors’ Guide has been prepared.

Additionally, for better transparency, the justice system in Cyprus has reformed and has promoted several measures to improve and expedite its administration. They indorsed changes in the procedural rules and administrative processes including changes to reduce the delays encountered in litigation and to reduce the complexity of the system of civil procedure thus improving the ease of doing business in Cyprus.

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