Cyprus, the third-largest island in the Mediterranean, has become a hub for international business. It has a strategic location, connecting three continents, and a favourable tax regime that has attracted numerous companies from around the world. But how did Cyprus become such an attractive destination for international businesses, and what makes it so unique?
The history of Cyprus as a centre for trade and commerce dates back centuries. The island has been a significant trading post for merchants since ancient times, due to its strategic location at the crossroads of Europe, Asia, and Africa. During the Middle Ages, Cyprus was a centre for the production and export of textiles, pottery, and copper. Later, during the Ottoman period, the island became a hub for the export of citrus fruits and other agricultural products.
In the modern era, Cyprus has undergone significant changes in its economic structure. In the mid-20th century, the island was mainly an agricultural society, but it rapidly transformed into a service-based economy by the end of the century. Today, Cyprus is known for its thriving tourism industry, financial services sector, and shipping industry.
One of the key factors that have made Cyprus such an attractive destination for international business is its favourable tax regime. The island has one of the lowest corporate tax rates in the European Union, with a flat rate of 12.5%. Additionally, Cyprus has signed double taxation treaties with over 60 countries, which enables companies to avoid paying taxes on the same income in two different countries.
The favourable tax regime has made Cyprus a popular destination for international companies looking to establish a presence in the European Union. According to the Cyprus Investment Promotion Agency, there are over 3,000 international companies registered in Cyprus, including many Fortune 500 companies. These companies operate in a wide range of sectors, including banking, finance, insurance, shipping, and tourism.
The financial services sector is particularly strong in Cyprus, with over 400 companies offering a range of services such as banking, fund management, and investment advice. According to the Central Bank of Cyprus, the financial services sector contributes around 7% of the country’s GDP, making it a crucial part of the economy.
Another key sector in Cyprus is shipping. Cyprus is one of the largest ship registries in the world, with over 1,000 ships registered under the Cyprus flag. The shipping industry contributes around 7% of the country’s GDP and employs over 4,500 people.
Cyprus’s location and infrastructure also make it an ideal destination for international businesses. The island is located at the crossroads of Europe, Asia, and Africa, making it an ideal hub for companies looking to do business in these regions. Additionally, Cyprus has a modern telecommunications network, excellent air links to major European cities, and a well-developed road and transportation network.
The government of Cyprus has also taken steps to create an environment that is conducive to international business. It has streamlined the process for setting up a company in Cyprus, making it easy for businesses to establish a presence on the island. Additionally, the government has invested in education and training programs to ensure that the local workforce has the skills necessary to meet the demands of international businesses.
In recent years, Cyprus has faced challenges, particularly in the aftermath of the global financial crisis of 2008. The country’s banking sector was hit hard by the crisis, and the government had to take measures to restore stability to the sector. However, the country has made significant progress in recent years, and the economy is growing at a steady pace.
Cyprus has become a hub for international business due to its favourable tax regime, strategic location, and strong infrastructure. The island has a rich history as a centre for trade and commerce, and it has adapted to the changing economic landscape of the modern era. With its thriving financial services sector, shipping industry, and tourism industry, Cyprus is poised to continue to be a hub for international business for many years to come.