To promote Cyprus as a Technology Hub it has elaborated a national digital strategy and developed Artificial Intelligence and Blockchain. The studies and national economic policies, NRRP investments directed towards Digital Transition, changes in the tax system, and initiatives directed towards sustainability, make Cyprus a destination rich in opportunities for ICT (Information Technology Communication) companies and startups.
Furthermore, it implemented the deployment process with tech solutions for social care, health records and payments, which helped a lot during the COVID-19 period.
Digitisation is now focused on increasing incentives for startups, investors, scientific projects and large tech companies. Technical visas for IT professionals, work permits for their spouses and grants for labour costs for digital and innovation centres have been expanded. As well, to connect academia and business, €30 million will be allocated to six centres of excellence. These projects have been funded by the Horizon 2020 Teaming Programme over the next 15 years.
Financing Digital Programmes
The 2021-2030 Corporate Tax Programme provides for a system that attracts investment. This is articulated in imputed interest deduction (NID) on investments in Cypriot companies; no tax on profits from the sale of securities. Furthermore, 12.5% corporate tax rate; no capital gains tax under certain conditions; no withholding tax.
Dividend payments are exempt from taxation, allowing most technology entrepreneurs to minimise their overall tax burden. Investments in small innovative companies can be deducted from taxable income, up to an annual limit of €150,000; there is an option for tax resident startups to carry forward the tax year’s debt for the next five years and pay it out of future income.
As far as income taxes are concerned, for those above €100K/year, there is a 50% personal income tax exemption for new residents. This is applied for the first 10 years of employment in Cyprus. For incomes below €100K/year, a personal income tax exemption of 20% applies, up to a maximum of €8,550 per year for 5 years until 2025; the tax-free band goes up to €19,500 and applies to all residents in Cyprus.
Cyprus Business Friendly Island
In addition to European funds, grants, and incentive programmes, there is a legal and regulatory framework. It is based on the principles of English Common Law and conferred by the EU states, which makes Cyprus business-friendly, transparent and reliable in commercial dealings.
A key role to make Cyprus a Technology Hub has been taken by the TechIsland Association. It is a non-profit organisation that brings together over 65 Cypriot technology companies. Its mission to promote and accelerate the growth of the technology and innovation ecosystem in Cyprus.
The sectors in which it operates are firstly tourism, commerce, transport (shipping); financial and professional services. Secondly, in public administration, defence, education, and health. Thirdly, ICT; real estate; manufacturing; agriculture, forestry and fishing; entertainment, arts and other; mining, water supply and electricity.
TechIsland aims to be a partner to the government and voice of the industry, to spawn innovative companies on a global scale in the digital economy, provide guidelines to create new international partnerships, support the development of techno startups and create conditions to attract domestic and foreign investment.
The Technology Sector
“I am confident that this organisation will play an instrumental role in promoting ICT, and digitalisation throughout Cyprus’ industry, economy and society. Its objectives are fully aligned with those of our ministry. This will enhance our growth potential leading to a sustainable competitive economy and a more inclusive and resilient society. The technology sector will play a key role in helping the government transform the economy by contributing to a new sustainable growth model,” commented Deputy Minister of Research, Innovation and Digital Policy Kyriakos Kokkinos.
Thanks to its strategic geographical position, Cyprus will be able to attract the markets of Eastern Europe and establish itself as a technological hub in the Mediterranean, while on the other hand, Italy will be able to act as a bridge to Western Europe.
The Chamber’s Events
The Italian-Cypriot Chamber of Commerce has been working for a long time alongside the Cyprus Chamber of Commerce and Industry, as well as with the reciprocal institutions, to achieve the development of the technology in various sectors (culture, health, agriculture, industry…). Moreover, it is active in creating useful meetings for the exchange of proposals, projects and professional knowledge.
Accordingly to the Smart Talk in February 2021, which hosted the Deputy Minister for Research, Innovation and Digital Policy, H.E. Kyriakos Kokkinos, to the 4th Cypriot-Italian Business Forum in September 2021, dedicated to ‘Italian-Cypriot NRRPs: Relaunching the Mediterranean Economy through Cooperation’, the Chamber’s initiatives aimed at the tech sector have been ongoing.
During the Smart Talk, Deputy Minister Kokkinos described Cyprus as a Technology Hub and a model of sustainability. In fact, using technology can be a lever for competitiveness in order to create jobs and business. As well, as focusing on cooperation with Italy, with which it shares the Mediterranean culture and the economy based on SMEs.
Interesting opportunities for economic growth arose from the 4th Cypriot-Italian Business Forum, organised in September 2021 by the Chamber of Commerce. Among its speakers was the General Manager of the Tech Island Association, Marios Giorgoudis, who spoke on ‘Building a Technology Ecosystem in Cyprus’.
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Last modified: May 4, 2022