ICT is an important driver of productivity, growth and economic performance crossing horizontally all sectors of the economy. The government of Cyprus has identified ICT as one of the country’s priority growth sectors and has developed a Digital Strategy and Action Plan for immediate implementation. Furthermore, in order to promote applied research, development, innovation, technology and entrepreneurship in Cyprus, the Government is looking to promote the establishment of a new large scale Science Technology Park (STP). It is a high impact project, that will host research centres, business incubators, spin-off innovative enterprises and other local and international knowledge based companies, with the aim of promoting new and more competitive knowledge-based products and services.
Main advantages and opportunities of the ICT sector:
- ICT Ecosystem: Major multinational firms in the ICT industry, including ICT consulting firms, operate regional headquarters in Cyprus using the country as a regional base and gateway (into and out of the EU) for corporate services, such as sales and marketing, project management, software development, systems integration, testing services, training and development, disaster recovery and business continuity, as well as joint R&D among countries of the region.
- Skills and Expertise: Existing knowledge base and available expertise of highly educated and experienced resources. Cyprus has a very high number of university level educated ICT professionals with international experience and expertise in various technologies and industry sectors. Cyprus has the 2nd highest percentage within European Union countries of University graduates, which reflects the high quality of professionals.
- EU Research Funds: As an EU member state, Cyprus attracts EU research funds for Industry-University partnerships. Invest Cyprus acts as a catalyst for the provision of advanced R&D infrastructures and Cypriot talent to foreign companies, who wish to establish Industry-University partnerships with the Cyprus network of Universities and Research Centres. The Cyprus Research Promotion Foundation is currently evaluating and funding companies and projects that have their R&D facilities in Cyprus
- Taxation: Cyprus offers an attractive and fully transparent tax regime, fully compliant with EU, OECD and international laws, with one of the lowest corporate income tax rates in the EU at 12.5% and an attractive IP regime.
New IP Box main features:
- Cyprus IP box is fully aligned with the OECD/G20 BEPS Action 5 report.
- The regulations will provide that qualifying IP types will include patents and copyrighted software.
- 80% deductions is provided for qualifying profits from qualifying IP.
- In effect, only 20% of the qualifying profits will be taxed at the rate of 12.5%.
- A taxpayer may elect not to claim all or part of the available 80% deduction for a particular tax year.
- Qualifying tax losses in the new Cyprus IP box are restricted to 20% of their amount.
- The closing of the old Cyprus IP box with transitional rules up to June 30, 2021.
Cyprus welcomes and has the know-how to support Foreign Direct Investment for expansion and development of projects on e-Government, e-Business, e-Learning, e-Inclusion, e-Health and overall ICT services. The country has aligned its ICT and innovation strategy with the flagship initiatives “Digital Agenda for Europe” and “Innovation Union” of the “Europe 2020” growth strategy of the EU.