During a period of intensive efforts towards attracting foreign investors and building a healthy and developed financial and business system, the Cypriot Council of Ministers has recently approved new attractive tax incentives. The incentives target the support of new and innovative businesses with a main goal being the promotion of entrepreneurship and innovation in Cyprus.
Specifically, the incentives provide for the following:
- exemption of the investment from the investor's taxable income ( up to a maximum amount of 50% of the taxable income);
- deduction of € 150,000 per year as well as the right of allocation and distribution of the discount up to five years later. In other words, the beneficiary investor has the right to allocate the above proportionally in his/her tax returns.
The investment can be made to an investing fund or directly to a business, regardless of whether the business is managed by a legal entity or a natural person.
Additionally, the definition of an "innovative business" – previously criticized for being too limiting as it only concerned specific research and development activities - has been amended to a broader range. As a result, it now allows the more effective use by entrepreneurs and young people with innovative ideas, paving an easier way toward commercially successful products.
The implementation of these measures will be effected after the enactment of the bill in Parliament.
The introduction of the above incentives which are already being applied in many other countries is a good example of effective experience transfer between countries. In today's rapidly changing tax environment, Cyprus' future-oriented perspective will prove to be the driving force for the republic's business and innovation.
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