BEIRUT: Tax incentive, European passports, permanent residence and a good return in profits are among the incentives offered by Cyprus to lure Lebanese and foreign investors, a Cypriot lawmaker said.
“We have a few Lebanese investors and companies who made some investments in hotels, properties, companies and restaurants in the past few years. But their number is not quite big,” Antonis I. Haji Roussos, head of the Lebanese-Cypriot businessman association, told The Daily Star in the headquarters of his company in Nicosia.
Among the Lebanese companies that made real estate investments in Limassol is PlusProperty, which is owned by George Shehwan.
Other prominent Lebanese businessmen who set up businesses on the island are Sarkis Sarkis and Gebran Tomeh.
But most of these leading businessmen use the island as a station to reach Europe and Africa.
The relatively low taxes on profits (12.5 percent maximum), as well as good infrastructure, are two reasons which encourage foreign investors to set up companies in Cyprus.
Apart from investments, many Lebanese are also buying properties in Nicosia, Limassol and Larnaca as a second house, often to spend the summer season with the family.
The short distance between Cyprus and Lebanon and familiarity with aspects of its society are among the main reasons that encourage many Lebanese to buy properties in the main cities of the island.
Thousands of Lebanese sought refuge in Cyprus during the Civil War and many of them either rented or bought houses on the island. But as war ended, the number of Lebanese residing in Cyprus fell sharply.
Roussos, whose family routes goes back to the town of Kour in Batroun, estimate the number of Lebanese living in Cyprus to be not more than 5,000.
Roussos, who is also the only Maronite MP in Cyprus, has played a vital role in communicating with the Lebanese community, especially the businessmen and investors. But the MP admitted that the economic crisis which hit Cyprus recently has to some extent affected the number of foreign direct investments.
“The only incentive which suits the Lebanese people is the EU passport. Any people who invest 5 million euros [$5.3 million] or more will obtain the Cypriot passport and this is considered an EU passport. You can get the passport in three months once the 5 million euros has been invested in Cyprus,” Roussos revealed.
He added those who do not have this amount of money have the choice to buy a property for 300,000 euros or more and in return the buyer will receive a permanent residence in Cyprus.
However, this residence permit does not entitle the holder to travel to Europe without a visa.
Roussos noticed that some foreign investors prefer to set up their main offices in Cyprus and branch out to other countries because the maximum tax on profit does not exceed 12.5 percent, and this figure is considered very low compared to the rest of the EU countries.
He added that some investors buy a building and rent it to companies and tenants and in return they will get 4.5 percent return on their investments.
The biggest number of foreign investors in Cyprus is Russians, who acquired prime properties along the coast and set up foreign exchange and export firms in the cities.
“Some of these investors have left Cyprus following the economic crisis, but there are still a big number of them,” Roussos said. He didn’t have the exact size of Russian investments in Cyprus but estimated it to be in the billions of euros.
“We hope in a very short period of time we can restore confidence in Cyprus so foreign investors can come back again,” Roussos said.
He acknowledged that Cyprus is not going to offer new incentives anytime soon because the banks in the country are not working properly following the economic crisis.
Cyprus’ central bank closed a few local banks and ordered the remaining ones in the country to put a maximum ceiling for the withdrawal of deposits, which caused a serious crisis. But the central bank allowed all local and foreign banks to operate normally and conduct all types of transactions.
However, many depositors withdrew most of their deposits from Cyprus after the central bank relaxed the restrictions.
Patrick Abboud
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