
Mossi Happy To Play Grinch For A Stronger Central America
In a turnaround from 2022, the Central American Bank for Economic Integration's latest infrastructure bond offering is proving popular with investors.
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Diversifying the Economy | |||
Tourism has long been the mainstay of the Cypriot economy, and services (of which most is tourism) account for 72% of GDP, according to Droushiotis. “Tourism remains the engine in terms of foreign currency,” he says. But the failure of visitor numbers to recover to pre-9/11 levels has focused attention on other areas of the economy. “We don’t have our eggs in one basket,” says Droushiotis. “There are over 50,000 corporations in Cyprus.”
Despite an increase in the corporate tax rate from 4.25% to 10%, which was a condition of entry to the EU, Cyprus remains an attractive location for tax planning. It still has one of the lowest corporate tax rates in Europe and has tax treaties with 34 countries, with a further 31 under negotiation. According to Remko van Roekel, Cyprus analyst at Citco Corporate & Trust, the new tax regime is actually more favorable to companies in terms of exemptions. “There hasn’t been much lost, in all honesty,” he explains, “and now it’s got the seal of approval from the OECD and the EU.” Furthermore, he notes that the changes that Cyprus made before accession have cleaned up the economy. “There were concerns about some of the Russian money coming into Cyprus,” he adds. “It wasn’t great for the image of the country.” Other services hope to benefit from Cyprus’ location as a bridge between Europe and the growing economies of the Middle East and North Africa. The country has had free trade zones—where companies bring in shipments intended for neighboring markets and divide them up into country deliveries—since 1977, and use of them is increasing by such companies as IBM and Estée Lauder. Last year Cyprus generated $400 million in re-exports. Meanwhile, the government is also trying to encourage technology-based companies, especially in IT services. It has set up four $250,000 venture capital funds to develop companies and also signed agreements with EU countries and the State University of New York and Harvard University Research Institute on Public Health to bring a greater knowledge base to its economy. The geographical positioning of the country is also working in Cyprus’ favor in the technology market, says Droushiotis. He notes that US firm Amdocs recently hired 45 IT professionals from India to work on software in Cyprus because communications with the US are better in Cyprus than in India, and the working environment is more stable and developed. Despite the country’s enthusiasm for joining the EU, the benefits of membership are perhaps less immediate for Cyprus than for the other nine countries that joined in May 2004. As the local press repeatedly noted, the country was the richest of the 10 new states. Indeed, it is expected that within a few years, Cyprus will become a net contributor to the EU budget. In the short term, however, Cyprus will benefit from agricultural modernization programs in areas such as dairy and wine production, the latter presenting potentially huge growth opportunities for the sun-drenched country. In addition, being a member of the EU gives Cyprus much more clout when it comes to determining quotas and trading with the US. |
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