Cyprus an ideal logistics base for Chinese companies

…Free-trade zone should be revitalized

 

Cyprus could act as a central and regional hub for Chinese companies exporting to the EU and east Mediterranean, not only because of its excellent geographical location but also because of its numerous other advantages including a more favourable tax regime and the lowest VAT rate in the EU.

George Papachristodoulou, CEO of Eurofreight Logistics told the Financial Mirror that his company is spearheading a campaign to attract Chinese companies to use its facilities and Cyprus in general as their regional distribution centre.

This is in line with a suggestion made by China business advisor Marcus Lee who during an exclusive interview with the Financial Mirror on the sidelines of a dedicated CIIM seminar last week had suggested for Cypriots to come up with innovative means to prove the country’s advantage to Chinese firms.

But Cyprus may also expand its client base to neighbouring countries such as Israel wishing to trade with the Arab world or Indian firms wishing to penetrate the EU markets by taking advantage of Cyprus’ very low taxation and VAT rate.

 

Low taxes

The geographical location of Cyprus and its extensive air links with many countries are certainly a major plus, but an even better advantage is the relatively low taxation rate of 16-19% compared to 30% plus for many other EU countries and the lowest VAT rate of 15% compared to 20-25% for many other EU member states.

The low VAT rate is seen as a crucial reason why foreign companies doing business in the EU should relocate to Cyprus since according to EU rules, once the VAT is paid in any member country, then trans-shipment within EU borders does not involve further VAT adjustments.

Papachristodoulou of Eurofreight says his company is attempting to come into contact with Chinese firms but says the government should do more in this direction.

 

Free trade zone

Having his facilities next to the Larnaca Free-Trade zone, which may be linked directly with Larnaca Airport now undergoing a major face-lift and investment is another idea keenly backed by Papachristodoulou who says the Free-Trade zone facilities should be boosted and the government take immediate steps to encourage companies to use its facilities.

“We can never catch up with Dubai, but at least we may try and close the gap,” says Papachristodoulou.

If the Free-Trade zone facilities are improved and a new modern infrastructure placed, then this may attract other foreign multinationals from Israel to India to use Cyprus as a storage and regional hub for servicing other countries or for their e-commerce.

The only major disadvantage faced by Cyprus in promoting itself as a regional transportation centre is the air & sea embargo imposed by Turkey, a key and major market that discourages many multinationals to base their operations or use logistics and forwarding facilities from Cyprus.