2. Cyprus Telecommunications Authority, CytaGlobal INVESTMENT OPPORTUNITIES IN CYPRUS

3. Cyprus Telecommunications Authority, CytaGlobal 2 CYPRUS TELECOMMUNICATIONS AUTHORITY by Yiannis Koulias, Assistant Manager, CytaGlobal Acknowledgement: presentation prepared in co-operation with the Foreign Investors Service Centre, Ministry of Commerce, Industry & Tourism March, 2006

4. Cyprus Telecommunications Authority, CytaGlobal 3 Republic of Cyprus  Positioned at a strategic location in the Eastern Mediterranean at the crossroads of Europe, Asia and Africa, Cyprus serves as a bridge between the European Union and the Middle East... ASIA AFRICA EUROPE

5. Cyprus Telecommunications Authority, CytaGlobal 4 4

6. 5 Republic of Cyprus (contd…) Established on 16/8/1960, full member of European Union on 1/5/2004 Bilingual (Greek/English), highly qualified and skilled work force Regional telecommunications, air-transport and services centre

7. Cyprus Telecommunications Authority, CytaGlobal 6 Republic of Cyprus (contd…) Modern and efficient legal, accounting and banking services International Financial and Business Centre –1,200 International Business Corporations (IBCs) –6 th leading maritime nation in the world –30 foreign Banks

8. Cyprus Telecommunications Authority, CytaGlobal 7 Cyprus Economy Main Social Economic Indicators  Total area: 9,250 sq. km  Population 2004 (est.): 837,300  Rate of growth 2004: 3.8%  Unemployment 2004: 3.6%  Inflation 2004: 2.3%  Per Capita GDP 2004: EUR 17,239 Source: UNCTAD World Investment Report 2005 Sources: Statistical Service of Cyprus, Central Bank of Cyprus

9. Cyprus Telecommunications Authority, CytaGlobal 8 Foreign Direct Investments Sample Top Foreign Investors, 2003–2005  Bank of Beirut, Lebanon (Financials)  Starbucks, USA (Restaurant)  GFI, UK (IT & Software)  Regus, UK (Consulting & Services)  DAT, United Arab Emirates (Energy)  Boutaris, Greece (Agri-food)  Lidl, Germany ( Retailer)  Scancom, Lebanon (Telecoms) Source: Central Bank of Cyprus

10. Cyprus Telecommunications Authority, CytaGlobal 9 FDI Policy Since 1/10/2004, FDI Policy is fully liberalized for both EU and non EU nationals, in most sectors of the economy –no limitations on foreigners’ participation percentage –no limitation on minimum level of investment Simplification of administrative procedures –Companies can be established by direct application to the Registrar of Companies

11. Cyprus Telecommunications Authority, CytaGlobal 10 Telecommunications in Cyprus Telecommunications Market in Cyprus is fully liberalised as from 1/1/2003 Cyprus Telecommunications Authority (CYTA): –the main telecommunications provider in Cyprus –provides the whole spectrum of electronic communication products, ranging from fixed and mobile telephony to internet service provision and broadband applications –offers probably the best telecommunications network in the Eastern Mediterranean region and the cheapest telecommunications in Europe

12. Cyprus Telecommunications Authority, CytaGlobal 11 Telecommunications in Cyprus (contd…) –provides an impressive global submarine cable and satellite infrastructure –is committed to meeting the area's ever expanding needs and business goals via a portfolio of competitively priced and flexible products –CYTA’s key statistics (Dec., 2005)  Direct exchange lines (density): 53.71 %  Postpaid mobile telephone service (density): 45.29%  Prepaid mobile telephone service (density): 53.02%  Internet access customers: 47,189  Broadband access customers: 35,433  ISDN customers: 27,252

13. Cyprus Telecommunications Authority, CytaGlobal 12 Tax reform (in effect as from 1/1/2003): –conforms with European Union regulations and OECD requirements –maintains Cyprus’ competitiveness as an International Business Centre –enhances Cyprus’ attractiveness as a suitable jurisdiction for holding companies Fiscal Incentives

14. Cyprus Telecommunications Authority, CytaGlobal 13 Fiscal Incentives (contd…) Favourable tax regime: no tax on dividends no tax on profits from permanent establishment outside Cyprus no tax on profits from reorganizations no tax on capital gains from disposal of securities tax free repatriation of profits and capital favourable tax treatment of losses

15. Cyprus Telecommunications Authority, CytaGlobal 14 Uniform corporation tax rate at 10% –lowest corporation tax rate in the EU –50% of interest income is exempt from tax Personal income tax rate up to 30% –no tax on interest and dividends Double taxation treaties with 40 countries Fiscal Incentives (contd…)

16. Cyprus Telecommunications Authority, CytaGlobal 15 Investment Incentives The Government has introduced various Grant Schemes as measures to: –enhance Cyprus’ competitiveness –achieve steady and self sustained growth –maximize GDP  special emphasis: on the manufacturing industry

17. Cyprus Telecommunications Authority, CytaGlobal 16 Investment Incentives (contd…) Basic objectives of the Industrial Development Policy: –to attract and develop new high-tech industries –to improve productivity –to restructure the Cypriot traditional manufacturing industry –to attract foreign investment

18. Cyprus Telecommunications Authority, CytaGlobal 17 Examples of Grant Schemes: –Technology-Incubating Program up to CYP120,000 for two-year period –Technological Upgrading Program covers 30% of investments –Protection against industrial pollution grant may reach up to CYP150,000 Investment Incentives (contd…)

19. Cyprus Telecommunications Authority, CytaGlobal 18 –National Framework Program for financing research and development projects  total Government’s contribution for 2003-2005, approximately CYP11.65 million –Strengthening laboratory infrastructure  maximum subsidy amount is CYP60,000 –Encouragement of Women & Youth Entrepreneurship  50% of approved budget, up to CYP35,000 for manufacturing, up to CYP25,000 for other sectors Investment Incentives (contd…)

20. Cyprus Telecommunications Authority, CytaGlobal 19 The Larnaca Free Zone Established in 1980, to encourage external trade and international commerce –abolishment of custom duties and taxes All kinds of enterprises are allowed (trade, transit trade, manufacture, services) –currently over 25% of total area has been leased

21. Cyprus Telecommunications Authority, CytaGlobal 20 The Larnaca Free Zone (contd…) Industrial sites in the Free Zone are leased for a period of up to 99 years (for the first 5 years a nominal rent of CYP1 per year applies) Free-of-charge provision of electricity power (maximum demand) Free-of-charge provision of unlimited number of direct telephone lines

22. Cyprus Telecommunications Authority, CytaGlobal 21 Foreign Investors Service Centre Based in Nicosia Commenced operations in December 1999 Under the auspices of the Ministry of Commerce, Industry & Tourism

23. Cyprus Telecommunications Authority, CytaGlobal 22 Foreign Investors Service Centre, The Foreign Investors Service Centre was designed to provide total solutions and support… –acts as central agency for information, support and foreign investors’ relations –provides after-care development services –attracts FDIs in targeted industries and promotes Cyprus as an International Business and Investment Centre Scope

24. Cyprus Telecommunications Authority, CytaGlobal 23 Foreign Investors Service Centre, To attract foreign direct investments, thus contributing in the enhancement of the production capacity and competitiveness of Cyprus industry, and to serve the investors’ needs by providing total solutions and an after-care service program Mission

25. Cyprus Telecommunications Authority, CytaGlobal 24 Foreign Investors Service Centre, Provides information regarding financial, legal and taxation matters Provides advice regarding the various benefits on-offer (e.g. grant schemes) and after-care development services Promotes Cyprus as an international business, investment and R&D centre Services & Activities

26. Cyprus Telecommunications Authority, CytaGlobal 25 Foreign Investors Service Centre, Co-ordinates and acts as liaison with other appropriate government departments, and facilitates the acquisition of the required permits and licenses (e.g. work permits) Member Euro-Mediterranean Network of Investment Promotion Agencies (ANIMA) Member World Association of Investment Promotion Agencies (WAIPA) Services & Activities (contd...)

27. Cyprus Telecommunications Authority, CytaGlobal 26 Conclusions Strategic geographic location Availability of high-quality services and highly-skilled work force Global telecommunications connectivity Standardised and simple procedures Favourable business envirornment Low set-up and operation costs Favourable tax regime Grant Schemes

28. Cyprus Telecommunications Authority, CytaGlobal 27 Conclusions (contd…) Dynamic, liberalised FDI regime and Industrial Development Policy Availability of Free-Zone bonded factories The Foreign Investors Service Centre provides total services and support European standard of living Dynamic free-market economy

29. Cyprus Telecommunications Authority, CytaGlobal 28 …thank you …the end INVESTMENT OPPORTUNITIES IN CYPRUS