Cyprus: Ready for Business more than ever

Despite the current crisis, the United States of America remains an indisputable economic superpower. The importance of New York as a financial and commercial heart of the global economy is irrefutable and remains a focal point in the activities of the Cyprus Trade Center.

The mobilization of foreign direct investments (FDI) and export promotion as the essence of advancing interests in other countries, a goal pursued by all countries, is one of the primary objectives of Cyprus.

The Functions of the Trade Center as the commercial arm of our diplomatic representation in the United States, has become increasingly diverse in recent years. In a globalized and interconnected world, the role of our foreign trade representation has evolved into a private enterprise mindset… the Trade Center has come to be the eyes and ears of the business community in the marketplace and it is an important strategic partner for connecting business to opportunities and assisting in the assessment of business risks.

In the past 20 years, the Cyprus economy has shifted from agriculture and manufacturing to a predominantly services based economy. In particular, since Cyprus’ accession to the European Union in 2004, a great many changes have taken place in the way the various sectors and industries of the Cyprus economy operate. Accession to the European Union obliged Cyprus to reform its tax system, and bring it into line with EU requirements and the Organization for Economic Cooperation and Development (OECD) initiative against Harmful Tax Practices. Cyprus is now classified by the OECD under the group of "Jurisdictions that have substantially implemented the internationally agreed tax standard" and are included on the OECD’s “White List”.

In the past we capitalized on the good political and economic relations that we enjoyed with members of the former Soviet bloc to become the principal conduit for foreign investment in and out of Central and Eastern Europe. Cyprus is now well-placed to play a similar role for facilitating investment from the USA in and out of the EU, Middle East and Asia.

The Global economic environment is facing a possible long term financial crisis which has led to a reduction in international investment flows. Nevertheless, opportunities exist even in periods of economic recession. Precisely because of these uncertain times, foreign investors are looking for safe havens and overall more conducive destinations which better serve their business strategies.

Leveraging such opportunities with professionalism and a targeted strategy is imperative.

Cyprus has a robust and transparent legal and regulatory environment which is a key, positive driver in the decision making process when it comes to investors. Cyprus already has a track record in FDI and as an international business center. In recent years, we have seen an ever increasing number of companies being registered in Cyprus, engaged in conducting business in and through Cyprus.

Cyprus has double tax treaties with a number of countries, many of which contain reduced withholding tax rates, principally on dividends, interest and capital gains. As such, the primary uses of Cyprus by US multinational corporations are for corporate holding and financing activities, which result in these multinationals saving withholding taxes in the countries where they have operating subsidiaries.

The use of Cyprus in this manner, not only benefits the corporations but effectively increases the net flow of dividends into the USA which would otherwise have been reduced by such excessive non Cyprus withholding taxes. Examples of countries where US multinationals invested or provided finance and used Cyprus intermediaries to channel such investments are Russia, Ukraine and India.

With increased competition for FDI globally, our challenge today is to focus on matching Cyprus’ clusters of advantages to the needs of investors in key priority sectors of the economy and articulate them through targeted and focused promotion. Promotion, therefore, is perhaps the most important and most complicated aspect of our mission because it touches so many areas, products, geographies, and comes face to face with the tough competition from other jurisdictions. We have to tell our story in a compelling manner that resonates with investors.

To this end, The Cyprus Trade Center actively seeks to foster strong relationships based on mutual benefit with existing and prospective investors by listening to their needs, helping address or resolve their issues by developing and highlighting Cyprus advantages to meet those needs and by encouraging and facilitating their further expansion. In the perfect storm, safe harbors are few and far between… Cyprus is one of them.

Aristos Constantine is the Trade Commissioner of the Republic of Cyprus in New York.

©2009 NEOCORP MEDIA

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