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Low Digital Intensity in Most Cypriot Businesses Signals Urgent Need for Transformation

by THEFUTURE.TEAM

September 9, 2024

Cyprus’ business landscape is facing a critical challenge as the majority of companies continue to operate with low levels of digital integration. According to a recent study, a large proportion of Cypriot businesses have not embraced the digital technologies necessary to thrive in an increasingly competitive global economy. This lack of digital intensity is raising concerns about the future competitiveness of Cyprus’ economy, especially in sectors where digital transformation is key to growth and sustainability.

Digital Intensity Lagging Behind

The findings of the report reveal that most Cypriot businesses are not fully utilising digital tools such as cloud computing, big data analytics, and e-commerce platforms. The term “digital intensity” refers to the extent to which businesses integrate digital technologies into their core operations, from marketing and sales to supply chain management and customer service. While many businesses in Europe are making strides in this area, Cyprus lags behind, with a significant gap in adoption rates compared to the EU average.

This lack of digital integration poses a considerable risk, as digital transformation is widely recognised as a major driver of economic growth and competitiveness. Businesses that fail to adopt these technologies risk falling behind their international counterparts, limiting their ability to innovate, scale, and reach new markets.

Challenges to Digital Adoption

Several factors contribute to the low digital intensity observed in Cyprus. A primary issue is the high cost associated with implementing advanced digital systems, which many small and medium-sized enterprises (SMEs) find prohibitive. For smaller businesses, which make up a large proportion of the Cypriot economy, the upfront investment in digital infrastructure, combined with a lack of digital skills within the workforce, creates significant barriers to adoption.

In addition, there appears to be a lack of awareness or understanding among some business leaders about the potential benefits of digital transformation. Many companies are still relying on traditional business models, viewing digitalisation as an optional or secondary concern rather than a necessity for survival in the modern marketplace.

Sectors Feeling the Pressure

Certain sectors are particularly vulnerable due to low digital intensity. The retail and hospitality industries, which are vital to Cyprus’ economy, are increasingly reliant on digital channels for customer engagement and sales. However, the adoption of e-commerce and digital marketing strategies remains relatively low. Similarly, the financial services and real estate sectors, though more advanced in some respects, still show gaps in utilising data analytics and automation to improve efficiency and decision-making.

Cyprus Showcases Its Business Advantages At 2024 London Event

by THEFUTURE.TEAM

December 5, 2024

Cyprus seized the opportunity to present itself as a premier destination for high-net-worth individuals (HNWIs) at the ‘Non-Doms: The Cyprus Private Client Offering Gathering 2024,’ held at the iconic London Stock Exchange. The event attracted over 150 participants, including professionals from the UK and experts from Cyprus, all gathering to explore Cyprus’ business advantages.

The gathering aimed to strengthen ties between the international investment community and Cyprus, highlighting the island’s competitive tax regime and wealth management opportunities. The central focus was Cyprus’ strategic appeal for non-domiciled residents, particularly as changes to the UK’s tax framework prompted many HNWIs to reconsider their tax and residency options.

A Shift in Global Tax Dynamics

With the UK government’s decision to abolish its long-standing non-dom tax regime, Cyprus stands poised to become an attractive alternative. The UK’s new residence-based system, set to take effect in April 2025, could direct more wealthy individuals and businesses toward jurisdictions like Cyprus, known for its fiscal benefits and strategic location in the Eastern Mediterranean.

Marios Tannousis, CEO of Invest Cyprus, and George Pantelis, former Director General of the Finance Ministry, addressed how Cyprus is uniquely positioned to capitalize on this shift. Their presentations underscored the island’s stability, tax benefits, and favorable environment for both personal wealth and corporate operations.

Key Highlights from the Conference

One of the highlights of the event was the panel discussion titled “Cyprus: A Destination of Choice for HNWIs, Their Families, Companies, and Employees.” Experts like Christos Neokleous, Consultant at Tsirides Law, outlined the simplicity of doing business in Cyprus, emphasizing the ease of setting up companies and understanding the regulatory environment.

Andreas Andronicou, Partner at PwC Cyprus, discussed the significant tax advantages for both individuals and corporations looking to operate from Cyprus, especially within the European and global markets. The country’s legal framework, based on the English Common Law system, was another focus, with Melina Dionysiou, Director/Head of Corporate at Totalserve, explaining its business-friendly aspects.

A Strategic Business Environment

Cyprus’ status as an international business hub is further reinforced by its competitive tax rates, skilled workforce, and advantageous legal system. These factors, combined with its prime location, make it an ideal choice for companies seeking to expand into new markets. Moreover, the conference highlighted the island’s growing appeal to foreign investors and companies, with opportunities ranging from tax-efficient corporate structures to residency-by-investment programs.

As the world moves toward greater tax competitiveness, Cyprus is keen to attract international clients seeking efficiency and flexibility. This year’s event comes at a crucial moment, as the UK’s changes to its non-dom tax regime create new openings for Cyprus to solidify its position as a leading destination for wealthy individuals and businesses.

Global Appeal for High Net-Worth Individuals

Cyprus’ tax benefits, wealth protection solutions, and modern legal structures were the focal points of the final panel, which also explored investment opportunities on the island. Experts such as Sara Eojourian, Head of Wealth Management at Athlos Capital, discussed the array of investment solutions that Cyprus offers, particularly for HNWIs. These services not only provide personalized wealth management but also come at competitive costs, making them an attractive option for international investors.

Conclusion: Cyprus, an Attractive Option for International Clients

In conclusion, Cyprus is increasingly recognized as a top destination for both high-net-worth individuals and international businesses. Thanks to its competitive tax system, business-friendly legal environment, and strategic location, Cyprus is solidifying its status as a prime hub for foreign investment. As global tax policies continue to evolve, Cyprus remains well-positioned to provide attractive opportunities for clients and businesses seeking stability, efficiency, and significant fiscal benefits.