About North Cyprus – Invest in Green, Blue and Sun

Turkish Republic of Northern Cyprus has a typical Mediterranean climate with about 300 days

of sunshine per year.  It enjoys dry, warm summers and mild winters. The bulk of the rain falls

during the period from November to March. The coldest month is January having minimum

and maximum mean temperatures of 6 oC and 16 oC respectively. In the hottest month August

the corresponding minimum and maximum mean temperatures are 21oC and 35 oC.

No visa is required for British or EU (European Union) citizens wishing to visit North Cyprus. The only requirement is a valid passport at the time of travel to North Cyprus. If you prefer not to have your passport stamped on arrival, you can ask at passport control for a separate piece of paper, which will be stamped instead.

Ambulance 112, Fire 199, Police 155, Forest Fire 177.

There are no longer any restrictions on border crossings for EU citizens in Cyprus, as of 2003. EU citizens are free to cross and spend as much time as they wish on either side of the border any time of the day (24 hrs). At present, there are seven crossing points where pedestrians can cross at the Ledra Palace and Lokmaci border gates are in Lefkoşa (Nicosia), whilst those who intend to cross by vehicle can use the Metehan (Kermia) border gate in Lefkoşa, Beyarmudu (Pile) near the British Sovereign bases at Dhekelia and the Akyar border gates near Gazimağusa (Famagusta) on the Larnaca-Famagusta road, Bostanci near Guzelyurt and Yesilirmak west of Lefke.

The international dialing code 00 90 392 should precede the seven digit local telephone numbers when calling landlines from abroad. Mobile numbers are simply preceded by 00 90 and then the mobile number with the code, taking off the first zero. Mobile numbers usually start 542, 533 or 548. Public telephone booths are available and telephone cards can be purchased from the Telecommunications Office.

There is a multi-party of democracy in TRNC where human rights, political pluralism and

private property are safeguarded. The head of the state is the President of the Republic who is

elected by universal suffrage for a period of five years. Legislative power is exercised by the

Assembly of the Republic which consists of fifty deputies. The country is managed by a Council

of Ministers led by the Prime Minister who is appointed by the President. Elections are held

freely every five years, based on universal suffrage.

The official currency in TRNC is Turkish Lira (¨TL). Real persons and corporate bodies are

free to keep and save foreign currency, to use foreign currency as a means of foreign exchange

and to express in foreign currency figures appearing on payment orders and contracts.

The official rates of exchange are fixed daily by the Central Bank and announced. Banks,

foreign exchange bureaus and the Central Bank are free to fix different rates of exchange for

the purchase and sale of foreign currency.

There is a developed banking system in TRNC. In addition to the Central Bank and the

Development Bank there are 21 onshore commercial banks and 7 International Banking Unit

(IBU) exist. Banks are free to keep foreign currency, act as intermediary in import and export

transactions,  accept  foreign  currency  savings,  engage  in  purchase  and  sale  of  foreign

currency, deal in bonds required to be paid in foreign currency, give foreign currency loans,

engage actively in money and foreign currency markets and in compliance with international

banking usage, to deal in every kind of foreign currency transactions.

Encouragement of foreign investment is among the primary objectives of the Turkish Republic

of Northern Cyprus’ development policy. Consequently, those wishing to invest in Turkish

Republic of Northern Cyprus can be sure of a positive Government attitude.

In accordance with its development policy, Northern Cyprus is giving preferential treatment to

export-oriented industries. Due to its small domestic market, the TRNC authorities focus on

export of goods and services. Priority is given to those projects that facilitate transfer of modern technology, know-how, new management techniques into the TRNC and that provide highest value added.   However, it should be mentioned that every project proposed by an investor will be considered on its own merits.

Co-operation between local and foreign firms in the form of joint ventures is actively promoted, and Northern Cyprus offers numerous advantages and incentives to the foreign investor including full protection of his property rights. Nationalization has never been part of

government policy nor is it contemplated in the future. The Constitution of TRNC guarantees

the right on private property while it does not discriminate between citizens and aliens.

The fixed capital investments have been 1,814.13 million TL at current prices in 2016. The

public sector financed 12.6% of total fixed investments and the remaining 87.4% was financed

by private sector. Public services with %35.2 and transportation-communication sector with

%30.7 constituted the biggest shares of the public sector investments. On the other hand private

sector  investments  have  been  concentrated  mostly  on  dwelling  with  45.7%  and, business

and private services 17.1%.

Under the Incentive Law, 601 incentive certificates have been granted until the end of the year 

2017.   The   total   of   fixed   investments   with   incentive   certificate   amounted

9,620.28 million TL. Tourism sector has the highest share in fixed investments and this sector

occupies 79.06%. Industry and education dorm investments follow it with 8.84% and 7.60%

respectively.

Investment Incentives Applied Under The Incentive Law

The following incentives are applied to investments with Incentive Certificates, regardless of

whether an investor is local or foreign. Incentive Certificates are granted from the State

Planning Organization.

• Investment Allowance

Investment allowance is 200% on the initial fixed capital investment expenditure for

the investments to be made in the Development Priority regions determined by the

State Planning Organization in the development plans and / or annual programs.

Investment allowance is 100% on the initial fixed capital investment expenditure for

the investments in other sectors and regions.

Güzelyurt, Lefke, İskele and Geçitkale were determined as Priority Development

Regions by the Council of Ministers.

•  Exemption from Custom Duties and Funds

Import of machinery and equipment concerning the project are exempt from every

kind of custom duties and funds in accordance with Incentive Certificate. 

• The Rate VAT for the imported and locally purchased machinery and

equipment

Zero rate VAT is applied for both the imported and locally purchased machinery and

equipment in accordance with the Incentive Certificate.

• State Owned Land and Building Lease

State owned land and building lease is possible for the investments that are granted

Incentive Certificate in accordance with the regulations in force.

• Exemption from Construction Licence Fee

Investments that are granted Incentive Certificates are exempt from all kinds of taxes

and fees related with construction licence.

• Reduction of Stamp Duty for Capital Increase

Reduction of stamp duty concerning capital increase is provided for the investments

that are granted Incentive Certificate.

• Reduction of Fee on Mortgage Procedures

Reduction  of  stamp  and  registration  fees  is  applied  on  mortgage  procedures

necessary when using bank credit for the investments that are granted Incentive

Certificate.

1. Registration of a Company

The legal form widely used for business undertakings in the TRNC both by foreign investors and by the local businessmen, is the private limited company. The provisions concerning the limited companies are set out in the Companies Law, Cap.113.

For the registration of a local company with foreign capital participation the following documents have to be presented to the Official Receiver and Registrar:

• A letter of intent, explaining the objectives of establishment, the area of activity of the company to be established and the registered projected paid-in capital.

• Articles of Association

•  M.S. 1, 2, 3 Forms

• Revenue stamp

• Good character certificate obtained from the Investor’s local “Security Office” for directors and/or the shareholders who have no TRNC representative in their country.

• However, good character certificate is not required for directors whom are the citizens of EU, United States, Member States of the Islamic Conference, or the 5 Permanent Members of the United Nations.

• Approved photocopy of passport or identity card.

• Tax-Payment guarantee certificate for directors, obtained from the TRNC local Revenue and Tax Office.

• Certificate of the deposit of the foreign capital share at a local bank.

In case the company is a foreign company or a branch of a foreign company, it is registered under the status of “Foreign (Overseas) Company” and is subject to approval of the Ministry responsible for economic matters and authorization of the Council of Ministers.

For the registration of a branch or a place of business as “Foreign (Overseas) Company”, thefollowing additional documents have to be presented to the Official Receiver and Registrar

• Update list of shareholders.

• Update list of Board of Directors and good character certificate obtained from their local “Security Office” for the board members who have no TRNC representative in their country.

• Update certificate obtained from the foreign company’s local “Chamber of Commerce” indicating whether the company is active.

• Decision of Board of Directors regarding the appointment of one or more real or legal person with the names and addresses who is/are declared as authorized and on duty to accept official notification issued by the TRNC authorities and court notifications in the name of the company and represent in the TRNC. The appointed real or legal person/persons has/have to be resident in the TRNC.

• Decision of Board of Directors indicating the intention of the company concerning the kinds of activities which will be engaged in the TRNC.

• Tax-Payment guarantee certificate for corporate body, obtained from the TRNC local Revenue and Tax Office.

• Y.Ş. 1, 2 and 3 Forms.

Having satisfied the required registration conditions the businessman or company is awarded a certificate of incorporation by the Official Receiver and Registrar and henceforth as a legal person may engage in investment activities in TRNC.

2. Investment Development Agency (YAGA)

Cyprus Turkish Investment Development Agency (YAGA) is established with the aim of to promote investments necessary for economic development of TRNC, contribute in improving the investment climate and determining promotion strategies.

The Agent, provides necessary information and consultancy services to investors, before, during and after the investment in cooperation with the relevant institutions.

YAGA supports the investors in all their dministrative process dealing with bureaucracy such as obtaining licenses and starting a business.

1. Personal Income Tax and Corporation Tax

All companies and other corporate bodies, except cooperative societies, are chargeable with

Corporation Tax.

Corporations which are registered in the state as  “Local Companies” are chargeable with 10%

tax on chargeable income.

Corporations which are “Foreign Companies” whether registered in the state or not, are also

chargeable at the rate of 10% on chargeable income only derived from trade or other income in

TRNC.

A corporation is “Locally Registered Company” in the case where the central management and

control of its business is in TRNC. For tax purposes, all profits of such companies, including

profits from other countries are liable to Corporation Tax, but for the avoidance of double

taxation a set off for similar tax paid abroad is allowed. Corporation Tax is paid in two

instalments; May and October of each year.

In addition to the Corporation Tax liability the corporations which are specified under the

Corporations Tax Law have to withhold income tax at source at a standard rate of 15% on the

net chargeable income after corporation tax is deduced. Companies (registered in the state)

engaged in education and health facilities and engaged in industrial activities in the regions

approved by the council of Ministers, withhold income tax according to the Undistributed

Profit/Paid Up Capital ratio (This ratio must not exceed the standard rate).

Foreigners operating in the field of transportation, including corporations, shall not be subject

to withholding tax on taxable income to be ascertained under the provisions of the Corporation

Tax Law and the Income Tax Law.

The net amount of earnings and revenues obtained from all sources within the borders of the

Turkish Republic of Northern Cyprus in a calendar year depends on the Income Tax.

For permanent residents income arising within or outside the TRNC is subject to income tax,

but for the avoidance of double taxation a set off for income tax paid abroad is allowed.

Before income tax is charged, allowances granted to individuals under Income Tax Law are as

follows;

• Contributions to Social Security Funds

• Personal Allowance

• Private Allowance

• Wife Allowance

• Child Allowance

• Having more than 3 Children Allowance

• Disability Allowance

Individuals are liable to income tax under a progressive tax system. The personal income tax is

levied at the statutory rates ranging from 10% to 37%.

2 Value Added Tax

Value Added Tax was introduced in 1996 as a Consumption Tax. Five VAT rates are applied

in accordance with VAT rates regulation.  Applied VAT rates are: 0%, 5%, 10%, 16% and 20%

The Government of TRNC is keen to encourage foreign capital investment, either in the form

of joint-venture or independently, through capital commitment or introduction of improved

technology in all sectors. The Gazimağusa Free Port and Zone covering an area of 115 acres

offers foreign investors excellent opportunities for transit trade as well as manufacturing

opportunities for middle-east and near-east countries.

The Free Port and Zone Law states that only ‘Approved Enterprises are entitled to operate and

erect concerns in the Free Port and Free Zone Areas’. An “Approved Enterprise” is defined as

one which has received approval from Free Port and Zone Council to function in the Free Port

and Zone Areas.   Applications for “Approved Enterprise” status are to be submitted to the Free

Port and Zone Council on forms supplied by this body.

Operations and activities permitted in the Free Port and Zone Areas are as follows:

•  Engaging in all kinds of industry, manufacturing and production.

•  Storage and export of goods imported to the Free Port and Zone Areas.

•  Assembly and repair of goods imported to the Free Port and Zone Areas.

•  Building, repair and assembly of all kinds of ships.

•  Banking and Insurance services.

•  Any other kind of activity approved by the Council of Ministers.

Investors applying to the above activities are charged a fee up to 1000 $, this fee being

changeable according to the activity undertaken.

Incentives provided to businesses established in the Free Port and Zone are as follows:

• All income derived from activities and operations undertaken by investors in the

Free Port and Zone are exempt from Corporate and Income Tax. This exemption

does not apply to the exports of goods and services not manufactured and undertaken

in the Free Port and Zone and that are directed to the TRNC.

• No limit on repatriation of profit and capital

• Exemption from custom duties and indirect taxes.

• Permission to employ foreign expert, engineer and technical personnel.

 In addition to the above incentives there is ample supply of skilled and unskilled labour and

wages are reasonable.  The Port’s handling charges are much lower than the other neighbouring

ports. The port, which is geographically well located, offers sufficient covered storage area,

experienced stevedoring and good security. A sound and receptive civil service, coupled with

minimum of formalities, provides investors and dealers with a favourable working climate. All

types of port machineries (fork-lifts, cranes etc) are available.

BUSINESS COMPANY AND MAIN INCENTIVES

The establishment of an International Business Company in TRNC is subject to the approval of Ministry responsible for economic matters.

Foreign real person, foreign corporate bodies and non-residents may apply to the Ministry responsible for economic matters for the purpose of carrying on International Business Company operations.

• The minimum paid-up capital required of International Business Company is €20.000.

• Charge payable on application is €500. This application fee is never returned to the

applicant under any circumstances. This amount can be increased or decreased 50% by the Council of Ministers.

• The Ministry evaluates applications and if deemed suitable gives a provisional licence within 15 days at the latest.

• Having received the provisional licence, the applicant has to complete the registration procedure at the Official Receiver and Registrar within a period of two months. Otherwise the provisional licence shall be deemed invalid.

• An International Business Company, within one month at the latest after completion of the registration procedure, has to submit a main contract, regulation, opening balance sheet and one set approval document to the Ministry responsible for economic matters in order to receive an operation licence. That application is concluded within 15 days at the latest.

• An International Business Company, within two months at the latest after receipt of the operation licence from the Ministry, has to specify its place of business, must commence business according to its main contract, otherwise the operation licence shall be deemed invalid.

• International Business Companies shall perform all activities aimed at overseas (Off-Shore) and derive income from activities abroad.

• International Business Companies cannot provide financial resources from banks, credit companies and real person or corporate bodies in TRNC.

• This kind of companies run their activities without being dependent to Income Tax Law, Money and Foreign Exchange Law and Corporation Tax.

• The year after the registration of the company was first founded, the companies applied for operation to the ministry, must paid annually with pro-rata method 5000 Euros to the tax office cash desk for Activity Permit Fee.

• International Business Companies shall be subject to tax at a rate of 1% on taxable income to be ascertained under the provisions of the Corporation Tax Law and

Income Tax Law. This Tax should be paid within five months at latest to the Income and Tax Office after each accounting period.

• International Business Companies must carry on their activities and accounting enrolments according to Turkish Lira and/or convertible exchange units.

• International Business Companies may transfer abroad, earnings and resources they have gained and transferred from abroad freely.

New Year`s Day (1 January), Children`s & Sovereignty Day (23 April), Labour Day (1 May), Youth and Sports Day (19 May), Peace and Freedom Day (20 July), Victory Day (30 August), Turkish Republic Day (29 October), North Cyprus Republic Day (15 November). The dates of religious festivals vary from year to year.

The official language is Turkish, but English is also widely spoken as a second language.

GMT + 3

Driving is on the left and traffic and road signs are international. Maximum speed is 100 km/hr. Vehicles entering North Cyprus must be insured upon arrival. Seat-belts must be worn at all times. Drinking and driving is illegal, as is using a mobile phone whilst driving.