THE government has approved a package of tax incentives to boost the start-up sector and innovation in Cyprus, undersecretary to the president Constantinos Petrides announced on Wednesday.
The package includes an up to 50 per cent tax exemption on investment in innovative and start-up companies.
“The cabinet has approved an important package of tax incentives for innovative and start-up firms which we believe greatly assist entrepreneurship and innovation in Cyprus,” Petrides said.
He added that the incentives were put together following consultations with the business world and the start-up society. The government adopted practices which are applied in other countries, he said.
The exemption will be afforded to individuals who invest in an innovative enterprise, either directly or through an investment fund.
Petrides added the maximum annual amount to be exempted is €150,000.
The investment could be in the form of acquiring shares, a loan, or providing guarantees to innovative enterprises.
To be considered innovative, a company must have spent 10 per cent of its operating expenses on research and development in at least one of the last three years. This will be determined by an external auditor, Petrides said.
Start-ups will be assessed based on their business plan.
Petrides said the definition of innovative enterprise has also changed.
To date, the definition was limited, only including specific sectors of research and development.
“Now it covers a wide spectrum that is not restrictive and can be effectively used by businesspeople, young people with innovative ideas that can be turned into entrepreneurship and commercial products,” Petrides said.
The measure will come into force after it is approved by parliament.