Policy Positions

1. Establishment of a Deputy Ministry for Development and Competitiveness.

Improving the business environment is a fundamental prerequisite for enhancing the country’s competitiveness and creating new employment opportunities, with significant benefits for the domestic economy.

2. “Integrated Tourism Development” as a New Strategic Land Use Category.

For the rational development of the tourism sector and the maximisation of its contribution to the domestic economy, the implementation of realistic and targeted proposals is essential.

3. Addressing the Housing Challenge and Infrastructure Development in the Context of Headquartering.

Cyprus is increasingly emerging as a key destination for corporate headquartering. The establishment of headquarters of major international companies in the country enhances its economic offering, creates new jobs, promotes technological innovation and strengthens the domestic economy. To fully capitalise on its potential as a global headquartering destination, it is essential to establish a favourable investment framework.

4. Strengthening Economic Diplomacy.

The Association of Large Investment Projects has actively expressed its intention to participate in the working group of the Ministry of Foreign Affairs, which has assumed a leading role in shaping a national economic diplomacy strategy.

5. Accelerating Cyprus’s Green Transition

Environmental sustainability is a necessity, aimed at improving citizens’ quality of life and ensuring a healthy and sustainable future.

6. Establishment of a Policy Framework for Golf Course Development.

With the aim of addressing the significant challenges that hinder the development of golf course projects, the Association of Large Investment Projects has repeatedly prepared and submitted updated policy proposals to the State.

7. Accession of Cyprus to the Schengen Area.

Cyprus’s accession to the Schengen Area would undoubtedly serve as a strong driver of economic growth. It constitutes a decisive step towards deeper European integration, while simultaneously strengthening the confidence of the international business community, positioning Cyprus as a secure and stable investment destination.

8. Tax Incentives to Enhance Investment Activity.

Productive foreign investment constitutes a key pillar of growth for the Cypriot economy.

With the objective of ensuring a sustained inflow of foreign capital, the Association of Large Investment Projects proposes the introduction of attractive tax and other incentives, including reductions in VAT, capital gains tax and income tax.

In parallel, in order to stimulate real estate transactions and enhance liquidity across various sectors of the economy, the Association recommends the temporary exemption from capital gains tax on future property sales, for a defined period (e.g. three years), applicable to purchasers who retain ownership of the asset for at least two years. This measure should apply across all categories of investors, including individuals, corporate entities and investment funds.

In the same direction, the Association proposes extending the carry-forward period of tax losses from five to ten years, as well as the introduction of VAT refunds or exemptions for capital expenditure in targeted sectors with strong growth potential, such as education, healthcare and research.

This measure is expected to significantly support both the development of new activities and the expansion or upgrading of existing ones, covering the construction of new buildings, the extension of existing facilities, as well as the acquisition and modernisation of equipment. Currently, the 19% VAT remains a cost burden for such organisations, given that their services are not subject to VAT, preventing offsetting and leading to increased operational costs that may act as a disincentive to investment.

Furthermore, in order to address the significant shortage of real estate, particularly residential and office space, and the high cost of rents, the Association proposes the introduction of VAT refunds for properties used for rental purposes. Specifically, purchasers should be entitled to VAT recovery, provided that VAT is imposed on rental income under an “option to tax” framework.

At the same time, it should be permitted to rent out residential units acquired for the purpose of obtaining permanent residency, provided that where a reduced VAT rate of 5% was applied, the corresponding VAT difference is paid proportionally based on the remaining period required to complete ten years from the date of delivery of the property.

In a similar context, the Association proposes reducing VAT from 19% to 5% on repairs and maintenance of common areas, recognising that these form an integral part of development projects, as is already the case for residential units.

Additionally, increasing the annual tax depreciation allowance to 10% for buildings constructed within a specified timeframe would further enable businesses to reinvest capital back into the economy.