A few days ago the Council of Ministers approved a draft Law in relation to the Facilitation of Investments (Act of 2017).
The aforementioned draft Law is designed to be approved by the House of Representatives in January 2018. Under this draft Law, the licensing process is radically changing by creating in substance a single service for potential investors that will ensure the issuance of the necessary licenses and/or permits within a time period not exceeding 1 year totally from the submission of the necessary applications (rapid licensing procedure). The goal is the modernization of the licensing process and the reduction of bureaucracy, so that a potential investor does not need to get involved in time-consuming and complicated bureaucratic processes that are currently required for obtaining the necessary licenses for investments. If it is established - based on specific criteria- that the investment is major, the single investors’ service center (Division Investment Service Office) will be able to obtain planning permit in a couple of months, whilst the issuance of all licenses will be completed within one year. Today the competent authorities do not apply time schedules. In the meantime, the number of the roles involved and the actions required for obtaining all the necessary licenses is decreased. However, it is highlighted that in order for the provisions of the draft Law to be applicable, an Under-secretariat for Development must first be established.
Which investments fall within the scope “major”
Under the draft Law, in order for an investment to be qualified as a strategy and to be integrated in the rapid licensing mechanism, at least one of the following criteria must be met:
- Capital investments: capital investment of €5 millions, of which at least 75% must derive from core capital (namely, new, cash, available funds directly related to the project from the undistributed profits of the company, from loan capital or from the issuance of the project’s shares) and/or external capital (funds that come from abroad as inflows in the capital account).
- Creation of new job positions: at least 80 permanent jobs of any type must be generated or 50 new permanent jobs with an annual payroll over €1 million
- Anchor Company: the company must be known, multinational with an international reputation that will develop business activity in Cyprus. It must also be registered to the relevant international lists of FORBES 2000, NASDAQ 500, FTSE 350.
- An investment focusing on research, development and innovation: there must be a minimum investment of €1 million. The costs for research, development and innovation must be at least 10% of the total operating costs in one of the three previous years or as it will be shown in the business plan.
Under the draft law, this is the step by step process:
- Submission of the application to the Division Investment Service Office for classification purposes (major investment etc.).
- The Investment Manager shall appoint with regards to the specific project an Assessor(s) and a Project Manager(s).
- Subsequently, the Project Assessor in cooperation with the Project Manager shall assess the application and draft a relevant report.
- The Project Manager shall examine the aforementioned report and shall prepare a licensing/consultation list.
- The report and the licensing/consultation list shall be submitted to the Deputy Minister of Development.
- Subsequently, the Deputy Minister shall submit the report and the licensing/consultation list to the Council of Ministers for approval or rejection.
- In the case where the Council of Ministers gives the green light, the Project Manager informs the investor thereof.
- The licensing processes commence and the officers proceed to consultation with the competent authorities.
- In the meantime, the assessment process in relation to the impact in the environment is carried out by the Environment Department.
- The Project Manager shall monitor the progress of all processes.
- Issuance of the planning permit – Commence of the process with regards to the building permit – consultation with the competent authorities.
- Issuance of the building permit – the investor is being informed about the issuance of the permits and/or licensing.
- The Project Manager informs the investor regarding the issuance of the permits and/or licensing.
With this process, the Government aims, inter alia, at:
- Dealing with long delays on licensing and the function of major investments
- Establishing fast processes with strict time frames for the completion of the licensing process of a major investment
- Combating corruption
- Reducing bureaucracy .
The role of the Project Manager
In this promoted process, the Project Manager plays a decisive role. In any case, the Project Manager will be appointed by the Deputy Minister of Development and subsequently, the appointment will be ratified by the Council of Ministers. The Project Manager, who is the sole point of contact between the investor and the Public Service, will have the following responsibilities:
- Coordinating and monitoring the project’s implementation progress - managing electronically and monitoring the procedure
- Drafting a list encompassing the necessary licenses on the basis of specified time schedules.
- Drafting a consultation list, in cooperation with the Director of Planning Department, in relation to the building permissions.
- Drafting a recommendation addressed to the Deputy Minister in relation to the re-examination and/or review of the decision of an administrative authority.