Economic Overview
A primer gauge uncovered that the economy changed into a lower gear in the subsequent quarter, with development relaxing to a close to four-year low.
So, it stayed strong and well over the Eurozone normal, impelled by the development, data and innovation, and expert and specialized exercises segments. On the consumption side, solid compensation increments starting late and supported occupation market fixing—which saw the joblessness rate plunge to a more than eight-year low in Q2—likely floated family unit spending, as reflected by solid retail deals information for April–May.
On the drawback, declining vacationer entries in May and June, combined with a more extensive exchange deficiency Q2 from a year back, demonstrates that the outside area likely hauled observably on development.
In spite of the fact that development is anticipated to facilitate this year, it ought to stay strong generally speaking. Tough local interest, bolstered by supported private utilization and a bounce back in capital speculation, ought to support the extension.
An easing back the travel industry, flimsier Eurozone request, high obligation levels, and a huge load of harsh credits troubling the financial framework all burden the standpoint. FocusEconomics examiners see development at 3.2% in 2019, which is unaltered from a month ago’s gauge, and 2.8% in 2020.
Main Sectors of Economy
In the previous two decades, the basis of the Cypriot economy has moved from horticulture to light assembling and, in particular, services..
Cyprus has an exceptionally taught work power of 619,700 individuals out of its 1.19 million populace. The agrarian division contributes around 1.84% of the GDP and utilizes 3.45% of the dynamic populace.
The customary horticultural area experiences an exceptionally dry atmosphere, while just 12% of the land is arable. The principle harvests are wine grapes, potatoes and natural products. Mineral assets are restricted and incorporate chiefly copper, pyrites, chrome, asbestos and gypsum.
The assembling business (mostly mechanical sustenance preparing, paper, compound items, materials, metal items and oil refining) represented 11.4% (counting development) of GDP in 2017 and utilizes 16.93% of the dynamic populace in 2018. The administration plans to twofold a lot of GDP by 2030.
The tertiary area contributes 86.5% of the GDP and utilizes 79.4% of the dynamic populace. The travel industry and oceanic transportation are viewed as the two mainstays of the Cypriot economy. The 2018 figures set an unsurpassed record for number of visitors with very nearly 4 million.
Cyprus has the tenth biggest shipping fleet on the planet and the third biggest in the European Union. Nonetheless, seaward exercises are frequently driven by remote capital organizations situated in Cyprus, whose business exercises are executed only outside the nation. This framework empowers them to appreciate considerable tax reductions. Fund and land have generally been among the most significant administrations.
Taxes for businesses
All companies that are tax residents of Cyprus are taxed on their income gained from all sources in Cyprus and abroad. A non-Cyprus tax resident company is taxed on income gained from business activity that is carried out through a PE in Cyprus and on certain other income arising from sources in Cyprus.
The standard CIT rate in Cyprus is 12.5%.
Starting January 1st, 2019, CFC rules apply, i.e. non-distributed profits of CFCs directly or indirectly controlled by a Cyprus tax resident company may become subject to tax in Cyprus (certain exceptions may apply).
The Cyprus CIT law explicitly provides for a number of exemptions for many and varied types of incomes, profits, and gains.
Instead of CIT, ship owners, charterers and managers pay tonnage tax on the net tonnage of the ships they own, charter, or manage. Also, there is no tax on dividends paid at all levels of distribution by the above persons out of profits subject to tonnage tax and there is no taxation on the sale or transfer of a ship, share in a ship, or shares in a ship-owning company and their distributions.
Investing in Cyprus
Good reasons to invest:
- Low cost of doing business
- Access to markets
- Excellent regulatory structure
- High quality of life
- Positive economic outlook
- Strong business support services
Sectors to invest:
- Energy, oil and gas. The discovery of hydrocarbons in Cyprus’ exclusive economic zone has created new and exciting prospects for the country.
- Investment funds. The financial services sector is diverse, comprising domestic banks, international banking units (ibus), insurance companies, ecc.
- Innovation and startups. Creating value through ideas and having the potential of becoming a key driver of economic growth.
- Tourism and hospitality. tourism has traditionally been a major source of income and a driver of economic growth in Cyprus.
- Real estate. Acquiring property, either as an investment or as a second home, has always been a popular choice among foreigners.
- Shipping. Cyprus is a renowned international shipping centre and home to some of the world’s leading names in the global shipping industry.
- Filming. Cyprus is a natural filming studio in itself.
- Education. The country aspires to become an established educational and research centre of excellence in order to achieve sustainable growth.