Cyprus is situated in the northeastern basin of the Mediterranean Sea at the crossroads of Europe, Asia and Africa. It is 65 km south of Turkey, 96 km west of Syria, 385 km north of Egypt, 980-km southeast of Athens and 328 km west of Israel. The strategic location of the island has played an important role in its continuing development into a financial center.
With an area of 9,251sq km, Cyprus is the third largest island in the Mediterranean after Sicily and Sardinia.
Cyprus enjoys perhaps the best type of Mediterranean climate with about
340 warm and sunny days a year. The light rainy season is confined to
the period between November and March.
Population
The estimated population of Cyprus is 750 000 Greek Cypriots, who form
by far the largest ethic group, accounting for about 80 per cent of
the population. Turkish Cypriots comprise the second largest group (at
18 per cent), while the British, Armenians, Maronites and others make
up the rest.
History
Cyprus has a long and varied history. Its strategic position
made it an object of contest among the great powers ruling the world
at different time periods. As a result the island was occupied through
the ages by many different races the main ones being the Greeks, Egyptians,
Romans, Byzantine, Francs, Venetians, Turks and British. Each one of
these races, in its own way, left its mark on the island but the Greek
character of the island remained the predominant and lasting influence.
Also, the British, who were the last to control Cyprus before the island eventually became an independent sovereign republic in 1960, have unmistakably left their mark on commerce, law, public administration and business life in general, all of which have developed along the British model.
Political and social environment
Cyprus, under its Constitution, is an independent and sovereign
Republic with a presidential system of government. The elected President
of the Republic is the Head of State and takes precedence over all persons
in the Republic. His term of office is set for a five-year period but
he may be re-elected for an unlimited number of terms.
Legislative power lies in the hands of the House of Representatives, the members of which hold office for a period of four years.
The Cyprus legal system has been structured on its English counterpart. English case law is closely followed and all statutes regulating business matters and procedures are based essentially on English laws.
The Cyprus economy
The Cyprus economy is based on the free enterprise system.
The private sector is the backbone of economic activity with the Government's
role being limited to safeguarding the system, indicative planning and
the provision of public utilities.
In recent years the economy has been growing at an average annual rate of over 6 per cent. The set back of 1991 caused by the adverse repercussions of the Gulf war was quickly reversed and in 1992 GDP grew by around 10 per cent to pass the US$8,6 billion mark. The 1995 rate of growth was 5 per cent.
1996 inflation remains at relatively low levels whilst in 1995 it averaged 2,6 per cent. Near full employment conditions prevail.
The per capital income of the Greek Cypriots, at around US$14.000, is today one of the highest in the Middle East. This is an impressive performance, considering the economic situation of the country immediately after the 1974 invasion of the island by Turkey.
In the post 1974 period the economy has undergone major structural
changes. The manufacturing and services sectors have become increasingly
important as indicated by their contribution to GDP and their share
in employment, while the importance of agriculture is declining steadily.
\Foreign trade
International trade is of considerable importance to the Cyprus
economy. On the production side, the lack of raw materials, energy resources
and heavy industry for the production of capital goods, necessitates
the importation of such input. On the demand side, because of the small
size of the domestic market, exports are vital in supplementing aggregate
demand for Cypriot agricultural, mineral and manufacturing products.
The European Union and the neighboring Middle East countries absorb the majority of Cyprus exports.
Cyprus imports large quantities of durable consumer goods, capital
equipment and raw materials mainly from the European Union and oil from
the neighboring Middle East countries in order to satisfy its growing
domestic market and industrial needs.
Transit trade
The development of the container transshipment business in
Cyprus started in the late 1970s. Because of the island's strategic
position, efficient port facilities, minimal customs formalities, advanced
business infrastructure and stable political environment, container
transshipment has dramatically increased in throughput and expanded
in scope. It is widely acknowledged that Cyprus offers a safe and reliable
gateway to the region and that it can play a significant role in the
effort for reconstruction and generally the development of the area
for reconstruction and generally the redevelopment of the area.
Cyprus is one of the leading transit centers in the Mediterranean and
the most important in the Eastern Mediterranean. It serves its immediate
region but also ports further away, with about 62 per cent of its transit
trade being from/to East Mediterranean ports and the remaining 38 per
cent from/to ports in Western Europe, the Baltic and the areas expanding
South of the Suez Canal to Japan. It is notable that about 16 per cent
of the Mediterranean, Middle East, Far East and Australia trade are
served through Cyprus ports. Some 100 shipping lines call at Cyprus
ports on route to and from the five continents.
The island is located at the crossroads of major international trade
routes between Europe, Asia and Africa. This makes it the natural transshipment
load center for shipping lines delivering/receiving cargo to/from any
combination of European and Middle East ports in the Mediterranean.
Furthermore, it can act as a central depot for distribution to the markets
of Europe, the Middle East, the Gulf and North Africa.
Foreign investment
Cyprus is an attractive place for industrial investment. The
strategic location of the island, its excellent climate, the reasonably
well developed infrastructure and the plentiful supply of high quality,
well-trained labor are some of the advantages Cyprus has to offer. In
addition to these, various tax and other incentives given such as a
free industrial zone area, make Cyprus an ideal location for manufacturers,
especially those with Middle East/North African export activities.
As a consequence of the Government's general policy of non-intervention in business operations, there is no legislation governing foreign investment as such. The official government policy is welcoming to foreign investment and, through a set of regulations, aims to encourage foreign investment in selected "desirable" areas. The investment must not endanger national security, must not have adverse environmental effects and must not create a burden to the Cyprus economy.
Foreign investment in the manufacturing sector is allowed for up to 100 per cent participation. Applications for which foreign participation does not exceed 49 per cent and the investment is for less than CY£750.000 are examined and approved solely by the Central Bank. For applications where foreign participation exceeds 49 per cent or the investment is for more than CY£750.000, the Central Bank liaises with the Ministry of Commerce, Industry and Tourism in order to grant approval.
Permission for foreign participation of up to 100 per cent is granted for exclusively export oriented businesses, bonded factories and undertakings established in the Larnaca Free Zone Area. Customs and Import Regulations
The Department of Customs and Excise is responsible for the collection of customs and excise duties as well as the Temporary Refugees' Levy and Value Added Tax.
Cyprus will become a full member of the European Union as from April 2004. The business opportunities are expected to increase further and therefore Cyprus Companies will gain competitiveness as truly European Companies.
Visiting and living in Cyprus
Hospitality is a way of life in Cyprus. This, coupled with the fact that Cyprus enjoys perhaps the best type of Mediterranean climate with about 340 warm and sunny days a year, make Cyprus an ideal location to visit and live.
Foreign employees of International Business entities may enter the Republic under the status of expatriate employees of International business entities. Aliens wishing to retire in Cyprus are granted residency permit provided they could satisfy the authorities that
Cyprus is an advantageous offshore financial center because of:
• The low corporate tax
• The possibility of deferring tax payment in the home country
• The use of double tax treaties to collect income at reduced
withholding tax rates