FDI flows hit CYP 123 mln in Q1

Foreign Direct Investments (FDI) flows into Cyprus during the first quarter of 2005 reached CYP 123.6 mln, while Cypriot investments abroad during the same period amounted to CYP 44.2 mln, according to Commerce Ministry statistics.

During 2004, the total FDIs into Cyprus were estimated at CYP 537.1 mln while total investments by Cypriots abroad amounted to CYP 295.1 mln.

A year ago in November, the Finance Ministry lifted restrictions on foreign direct investment from non-EU countries to attract further investment on the island, with the new provisions aimed at putting investors from third countries on an equal footing with those of EU member states.

The new proposal basically means third countries will be levied the same tax rates as EU countries. Given the abandonment of the offshore business model in Cyprus after EU accession, this is considered another way of attracting foreign investment to the island.

In recent years, the Cyprus government has liberalised direct investment regulations, to attract more foreign direct investment and promote Cyprus as an international business centre.

In 1997, the Central Bank introduced new, liberalised regulations regarding the size of foreign investment and the extent of foreign participation in foreign direct and portfolio investment.

Investment restrictions for EU investors were abolished in January 2000. Non-EU investors still must apply to the government for permission to invest, and remain subject to a number of regulations.

After EU accession, the Finance Ministry took over responsibility for vetting investment applications by non-EU residents from the Central Bank.