Few jurisdictions in Europe can truly act as an economic bridge between West and East. Cyprus can certainly lay claim to such a position, and just might prove to be the fundamental economic ace card in the years ahead. Cyprus’ geographical location makes it more than just a hub for trade and ideal for so many time-zones. It instils a long history of collaboration and close cultural ties with nearby country markets. Indeed, not to be underestimated in international business relations and professional services.
For centuries, Cyprus has been a stepping stone for many major world powers; both from the West and (Mid) East. Not just a stepping stone, but a nation that has learned to be hospitable to foreigners, and in doing so, facilitating a healthy trade relationship. As such a unique multi layered culture was formed, and one that relates to Europe, the Middle East-Asia and Africa. This is a great asset to have in business and international geopolitical relations. In Europe, this affiliation naturally includes the European Union (EU), with Cyprus being a Member State since 2004 and in the Eurozone since 2008. However, the country also has close relations with Eastern Europe, the Balkans, Russia and the CIS – located towards the East and historically linked to the Orthodox world – exemplified by the many activities in Cyprus driven from this part of the world, as well as by Russia’s recent government loan. In the Middle East, Cyprus maintains healthy relationships with all, and continues to grow its dealings with major emerging Asian countries such as China and India.
Infrastructure for professional services in Cyprus is superlative, no doubt assisted by the nation’s Commonwealth status and take on the British (and to a lesser extent European) legal system. Furthermore, so many accounting and legal professional are educated and qualified in the UK, US, South Africa and Australia, understanding both advanced systems and well versed in the English language. Meanwhile, the not so recent influx of Eastern European and Russian professionals has helped Cyprus better service these markets.
Cyprus should continue to gain points over the next decade as the preferred jurisdiction for tax planning in the European Union, maintaining the lowest corporate tax rate at 10% and an extensive amount of double tax treaties with other nation, among other benefits. Cyprus is also the lowest non-offshore tax jurisdiction in the world. This attractive tax structure should help encourage inward investments to Cyprus and Europe, and act as an ideal bridge to business and investment activity in the Middle East and Africa.
The Cypriot economy has also over the years proven to be quite resilient, and particularly strong in key stronghold sectors that could make the difference over the next year, such as professional services and tourism. Cyprus’ two key contributors to GDP should continue to perform and maintain the economy, even though initial estimates of Real GDP growth will drop for 2012 and only stabilize in 2013. Professional services in Cyprus are some of the most advanced in the world, in terms of infrastructure and corporate tax planning efficiency. In such times, Cyprus might prove to be a good option for tax restructuring and investment strategies. As such, it just might be able to attract inward investments where others can not.
Tourism and hospitality should also continue to benefit. Although global tourism should only stabilize in 2012, and perhaps even drop as businesses cut back on expenses and leisure travelers think twice, people still need to take some sort of vacation – previous downturns have already proven this. In fact, travelers tend to stay closer to home, and within their own region. Thus, Cyprus constitutes a good option for key feeder markets in Europe, such as the UK, Germany, France, Scandinavia, Switzerland, Poland, Russia, Ukraine and CIS, among other. Especially motivated by value-for-money half board or all-inclusive packages, and an increase in low cost carriers flying to Cyprus. Actually only recently leading low-cost carrier Ryan Air announced a base in Paphos and to increase service there. This will boost tourism to Cyprus dramatically, especially as continued instability in many destinations in the Middle East & North Africa further enhance Cyprus’ appeal as a secure European summer destination.
Finally, we must highlight recent developments in natural gas findings in Cyprus, currently being extracted by US-based Noble Energy. This will prove to be a major boost for the local economy, for Europe, as well as other stakeholders. Although this should not have an immediate affect in 2012, even just the prospect of what might happen in the mid to long term should be enough to fuel foreign direct investor confidence in Cyprus and begin the process of new activities. Beyond this, great potential in natural gas (and thus far only fro what has been discovered in one block) should inject a massive multilayer boost to the European and Cypriot economy.
Offshore Gateway Cyprus
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