Chapter 1: Doing Business in Cyprus
:The government-controlled area of Cyprus offers good business and financial services,modern telecommunications, an educated labor force, good airline connections, a sound
legal system, and a low crime rate. Cyprus’s EU membership, its geographical location,
low tax rates, and modern infrastructure make it a natural hub for companies looking todo business within the EU and with the Middle East, Eastern Europe, the former SovietUnion and North Africa. A liberal investment regime has also helped increase the flow ofdirect investment in Cyprus in recent years. The inflow of total direct investment in
Cyprus in 2008 (including “brass plate” companies) reached USD 4.0 billion in 2008.
Intellectual property is protected under modern copyright and patent legislation, althoughbetter enforcement of these laws is needed.In 2009 growth in Cyprus declined as the effects of the global crisis hit Cyprus. It isestimated provisionally that the economy contracted by about1.5% in 2009, compared topositive growth of 3.8 percent in 2008. The outlook for 2010 remains weak, with agrowth forecast of 0.5 percent. Public finances also recorded a sharp deterioration in2009, deviating considerably from the governm
predictions at mid-year. The
government’s hopes of containing the deficit below 3.0%
, and thus avoid supervisionfrom Brussels have been dashed, as 2009 closed with the deficit running at 6.1%, from asurplus of 0.9% in 2008. The outlook for the deficit in 2010 and beyond depends on the
outcome of the government’s
current efforts to contain spending and boost revenue.Total public debt grew from 48.4% of GDP in 2008, to 55.2% in 2009, and is poised toreach 60% in 2010. In the last couple of years (2007 and 2008) economic growth has
Since 1974, the southern part of Cyprus has been under the control of the Government of theRepublic of Cyprus, while the northern part has been administered by a Turkish Cypriotadministration, which proclaimed itself
the “Turkish Republic of Northern Cyprus” (“TRNC”) and
has not been recognized by any country except for Turkey. A substantial number of Turkish
troops remain on the island. A buffer zone also known as the “Green Line,” patrolled by the U.N.
Peacekeeping Force in Cyprus (UNFICYP), separates the two parts. The United Statesrecognizes the Republic of Cyprus as the Government of Cyprus. It is also U.S. policy to betterintegrate the Turkish Cypriot business community into the global economy and to promoteeconomic growth and opportunity in the Turkish Cypriot economy in order to pave the way for acomprehensive settlement and reunification. For clarity of presentation, this report outlines thedifferent circumstances that pertain in these separately administered parts of the island.