Cyprus is moving ahead with plans to establish a national mechanism for screening foreign direct investment (FDI), with the revised bill gaining broad support in a meeting by the House finance committee.

The legislation aligns Cyprus with European practices by tightening controls on investments of strategic importance, while aiming to keep the country attractive to reliable investors.

A Finance Ministry representative said key changes include defining what constitutes a strategic enterprise, covering both local and foreign-registered firms operating in Cyprus, and exempting investors from EU, EEA and Switzerland.

The bill also introduces a €2 million notification threshold, obliges foreign investors to provide timely information, and allows for ex officio reviews even when no notification has been filed.

An exemption has been granted to the shipping industry, in order not to undermine its competitiveness, though floating natural gas units will remain subject to scrutiny.

The draft law also foresees the creation of an advisory committee to review cases and permits retrospective checks on completed investments within 15 months.

According to the ministry, the aim is a transparent and predictable framework that does not deter investment.

Business groups including the Chamber of Commerce and Industry (Keve), the Cyprus Employers and Industrialists Federation (Oev), the Cyprus Bar Association, and the Cyprus Banks Association have all backed the proposal.

The Institute of Certified Public Accountants of Cyprus (ICPAC), the Cyprus Investment Funds Association (CIFA) and the Cyprus Shipping Chamber (CSC) have also expressed their support.

However, TechIsland, which represents the technology sector, expressed disappointment that no exemption was granted for tech, noting that Belgium has adopted such an approach.

Finance committee chair and Diko MP Christiana Erotokritou described the bill as “very important,” saying it strengthens Cyprus with a strict and modern legal framework.

She explained that it encourages reliable investment while excluding those that fail to meet criteria in sectors such as telecommunications, energy and tourism.

Erotokritou noted that the revised text was submitted in August by the Finance Ministry and is expected to be wrapped up in committee discussions by September. She said the draft has the backing of most stakeholders, adding that it makes Cyprus “stronger and more reliable in the investment environment.”

The framework also provides for an advisory committee with ministry representatives to vet investors, and allows retrospective checks on deals completed within 15 months to ensure that critical infrastructure remains accessible only to credible parties.

Erotokritou stressed that this is not new but an alignment with the 2019 EU regulation, placing the process under Cypriot authorities.

She added that the regulation is “encouraging for bona fide, transparent and developmental investments” while deterring those of “bad faith.”

Member of the House finance committee and Akel MP Andreas Kafkalias said his party views the bill as a continuation of the EU’s investment-screening regime, in place since 2020.

He cautioned, however, that recent acquisitions in banking, healthcare and real estate underline the need to protect the public interest and the Republic’s vital sectors.

“The goal must be to protect the public and the vital interests of the Republic,” he said, while describing the text as improved compared with earlier drafts. Akel, he added, will review the provisions carefully before taking a final position in the coming weeks.

Addressing concerns about monopolies in hospitals, Kafkalias said this falls under the party’s wider effort to safeguard society and democracy through such legislation.

He also questioned why the Finance Ministry is designated as the competent authority but assured that these issues will be examined thoroughly before the party decides.