General notes on Cyprus
Foreign Trade Regime
The trade regime has become increasingly liberalised in line with EU rules. Trade regulation and standards policy is now fully harmonised with the EU. Cyprus has been a World Trade Organisation (WTO) member for a decade. Local companies are enjoying the EU member status as its opening new markets by removing physical and technical barriers to free movement.
The operation of the Larnaca Free Zone Area, very close to the Larnaca International Airport, serves as the main conduit for transit trade. There is some note worthy incentives by the government to promote the Free Zone in its effort to build a solid infrastructure for transit trade.
Facts on the Larnaca Free Zone
Application to the ministry of Trade for approval. Maximum response time is two months.
Provision of fully serviced sides at a nominal rental of CY 1 / 1000 square meters per year for the first five years
After the 5 years there’s a yearly fee of USD 1,000 for every 1,000 square meters
Installation of Electrical power (maximum demand) free of charge
Installation of any number of telephone lines free of charge
Tax Regime
Low taxes have long been an attractive feature of Cyprus’ investment climate for offshore business, but the need to comply with EU norms has altered the regime in recent years effectively eliminating offshore business advantages. However, corporate taxes are still the lowest in the EU.
Corporate Tax
Corporate tax on profits for both international and local companies now stands at 10%
Value Added Tax (V.A.T)
Cyprus charges 15% VAT on most goods and services, one of the lowest in the EU
Developments to watch
Cyprus joining the EURO zone. Furthermore, the accession into the EU has opened numerous windows of new opportunities for investment in Cyprus;
Major investments by the government to upgrade logistics infrastructure
Emergence of Logistics companies
Planned effort by the Ministry of Commerce and Industry to upgrade the Free Zone areas
MSC contract with Cyprus Port Authority
Turkish trade barriers lifted as a result of the EU harmonisation of Turkey
