WORLD TRADE
ORGANIZATIONG/SCM/N/38/CYP
16 August 1999
(99-3439)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994
and Article 25 of the Agreement on Subsidies and
Countervailing Measures
CYPRUS
The following communication, dated 4 August 1999, has been received from the Permanent
Mission of Cyprus.
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TABLE OF CONTENTS
Page
INTRODUCTION ............................................................................................................................... 2
(i) General remarks concerning th e duration of the aid schemes..................................... 2
A. AGRICULTURE  ................................................................................................................... 2
(i)Ηalloumi ch eese ......................................................................................................... 2
(ii) Wine alcohol and ot her grape pr oducts ...................................................................... 3
(iii) Fru it .................................................................................................................... ........ 3
(iv) Pig m eat .................................................................................................................. .... 4
B. INDUSTRY  ............................................................................................................................ 5
(v) Resource centre for th e clothing industry ................................................................... 5
(vi) Encouragement of establishment or expansion of manufacturing industries
in rural areas ............................................................................................................... 6
(vii) Establishment of Industrial Es tates ............................................................................ 6
(viii) Industrial Free Zone ................................................................................................... 7
(ix) Assistance to manufacturing industries to establish pollution
control sy stems ........................................................................................................... 8
(x) Duty relief for sele cted indust ries .............................................................................. 8
(xi) Promotion of Handicrafts ........................................................................................... 9
(xii) Industrial Restructuring and Technical Upgrading .................................................. 10
(xiii) Promotion of locally manufactured products ........................................................... 11
(xiv) Grant for technological upgrading  of the manufactu ring sector .............................. 11G/SCM/N/38/CYP
Page 2
Page
(xv) Subsidization of loan interest for technological upgrading of the
manufacturing in dustries .......................................................................................... 12
C. GENERAL  ........................................................................................................................... 13
(xvi) Drawback on exported goods ................................................................................... 13
(xvii) Exemption from taxation of profits derived from the exportation of
locally manufactured/ produced goods ..................................................................... 14
(xviii) Export Credit In surance Scheme .............................................................................. 15
(xix) Incentives provided to exporters taking part in international trade
fairs/trade missi ons abroad ....................................................................................... 16
(xx) Financial assistance for market research in fore ign mark ets .................................... 17
INTRODUCTION
This report covers state aid programmes and schemes that were in operation in 1997; the
amount of subsidies reported were paid out in the fiscal year 1997,  (1 January 1997-
31 December 1997).  Aid programmes and schemes that have been terminated since the last full report
of Cyprus covering the years 1993-1995, are reported with an indication of the latest year that
payments have been effected.  Τhe amounts stated in this report are in Cyprus Pounds (£C).  Τhe
average exchange rate between the Cyprus pound and the US dollar was £C1= US$1.94 in 1997.
A. AGRICULTURE
(i) Halloumi cheese
1. Title of Subsidy
Halloumi export subsidy
2. Period covered by the notification
Year 1997
3. Policy objectives
To enable the halloumi cheese to penetrate the foreign markets.
4. Authority of subsidy
The subsidy is decided by the board of the Cyprus Milk Industry Organization
(CMIO).
5. Form of subsidy
Export subsidy in the form of a grant to halloumi cheese.
6. To whom and how the subsidy is paid
It is paid by the Cyprus Milk Industry Organization directly to the halloumi cheese
exporters.G/SCM/N/38/CYP
Page 3
7. Export subsidy per unit
In 1997 an amount of £C84,000 was paid for 949 tonnes of halloumi cheese exported,
i.e. £C88.5 per tonne.
8. Duration of subsidy
One year renewable by decision of the Board of CMIO.
(ii)  Wine alcohol and other grape products
1. Title of the subsidy
Bulk wine subsidy covering brennwein and grape must.
2. Period covered by the notification
Year 1997
3. Policy objective
To enable wineries to compete effectively in the foreign markets.
4. Authority of subsidy
The subsidy is decided by the Vine Products Commission and it is approved by
decision of the Council of Ministers.
5. Form of subsidy
Export subsidy in the form of a grant to bulk wine and grape must.
6. To whom and how the subsidy is paid
It is paid by the Vine Products Commission directly to the four major wineries.
7. Export subsidy per unit
ln 1997 4,340,161 litres anhydrous of bulk wines, were subsidized.Total subsidy paid in 1997:  £C680,119
8. Duration of subsidy
One year, renewable by decision of the Council of Ministers with no quantity limits
attached.
(iii) Fruits
1.  Title of subsidy
Dried Grapes (Raisins)G/SCM/N/38/CYP
Page 4
2. Period covered by the notification
Year 1997
3. Policy objective
To enable Vine Products Commission to compete effectively in the foreign markets.
4. Authority of subsidy
The subsidy is decided and approved by decision of the Council of Ministers.
5. Form of subsidy
Export subsidy on Sultana raisins.
6. To whom and how the subsidy is paid
The subsidy is paid to the fruit exporters and it represents the difference between
export receipts and costs of purchase, processing and packing.
7. Export subsidy
£C56,465
8. Duration of subsidy
One year, renewable by decision of the Council of Ministers, with no quantity or
monetary values attached.
(iv) Pig meat
1. Title of subsidy
Pig meat export subsidy.
2. Period covered by the notification
Year 1997
3. Policy objectives
To facilitate the export of pig meat surpluses.
4. Authority for the subsidy
The subsidy was proposed by the Ministry of Commerce, Industry and Tourism and
was approved by the Council of Ministers.
5. Form of subsidy
It took the form of a grant.G/SCM/N/38/CYP
Page 5
6. To whom and how the subsidy was paid
It was paid by the Ministry of Commerce, Industry and Tourism directly to the Pig
Farmers Association.
7. Export subsidy per unit
£C145,000 for 16,311 pigs exported.
8. Duration of subsidy
The subsidy was granted to the exporters of 16,311 pigs exported in 1997.
B. INDUSTRY
(v) Resource centre for the clothing industry
1. Title of subsidy
Resource Centre for the Clothing Industry
2. Period
A five-year period starting from 1996.
3. Policy objective
To improve the competitiveness of the clothing industry.
4. Authority of subsidy
Granted by the Ministry of Commerce, Industry and Tourism and approved by a
Decision of the Council of Ministers.
5. Form of subsidy
A grant of £C694,000 to be distributed over a five-year period.
6. To whom and how the subsidy is paid
It is paid to the Fashion Resource Centre.
7. Amount of subsidy
Total payment in 1997: £C55,036
Τhe rest will be distributed over the remaining three years.
8. Duration of subsidy
Five years as from 1996.G/SCM/N/38/CYP
Page 6
(vi) Encouragement of establishment or expansion of manufacturing industries in
rural areas
1. Title of subsidy
A scheme to encourage the establishment or expansion of manufacturing industries in
rural areas.
2. Period
Yearly.
3. Policy objectives
To encourage the establishment or expansion of manufacturing industries in rural
areas.
4. Authority of subsidy
Ministry of Commerce, Industry and Tourism.  Approved by the Council of
Ministers Decisions (Nos. 35.265 dated 21 May 1991 and 38.776 dated 28 January 1993).
5. Form of subsidy
Grant.
6. To whom and how the subsidy is paid
To existing and newly established manufacturing industries in certain specified rural
areas.
7. Amount of subsidy
Total payment in 1997: £C210,000.
8. Duration of subsidy
The scheme commenced in 1991 and is still in existence.
(vii)   Establishment of Industrial Estates
1. Title of subsidy
Establishment of Industrial Estates.
2. Period
On a yearly basis.
3. Policy objectives
To assist industrial growth by providing the necessary infrastructure.G/SCM/N/38/CYP
Page 7
4.Αuthority of subsidy
Ministry of Commerce, Industry and Tourism by Decision of the  Council of
Ministers.
5. Form of subsidy
Leasing of land in the industrial estates and provision of the necessary infrastructure
(electricity, water, telecommunication network) at reasonable rates.
6. To whom and how the subsidy is paid
Manufacturing industries.
7. Amount of subsidy
Total payment in 1997: £C1,148,312
8. Duration of subsidy
The scheme was introduced in 1965 and it is still in existence.
(viii) Industrial Free Zone
1. Title of subsidy
Industrial Free Zone
2. Period
Yearly.
3. Policy objective
To provide incentives for the establishment of exporting  manufacturing companies in
Cyprus.
4. Authority of subsidy
Ministry of Commerce, Industry and Tourism (according to the Free Zones Law
69/75).
5. Form of subsidy
Leasing of land at reasonable rates, tax incentives.
6. To whom and how the subsidy is paid
To approved manufacturing companies.G/SCM/N/38/CYP
Page 8
7. Amount of subsidy
Total payment in 1997: £C9,098.
8. Duration of subsidy
Yearly.
(ix) Assistance to manufacturing industries to establish pollution control systems
1. Title of subsidy
A grant scheme to assist manufacturing industries to establish pollution control
systems.
2. Period
Yearly.
3. Policy objectives
To assist manufacturing industries to install systems for the minimization of pollution
in the environment.
4. Authority of subsidy
Ministry of Commerce, Industry and Tourism by Decision of the Council of
Ministers.
5. Form of subsidy
Grant (30 per cent on the value of the pollution control systems installed).
6. To whom and how the subsidy is paid
To manufacturing firms which were in operation prior to 1 January 1993.
7. Amount of subsidy
Total payment in 1997: £C129,000.
8. Duration of subsidy
The scheme came into effect in 1994 and its duration is five years.
(x) Duty relief for selected industries
1. Title of subsidy
Duty relief for certain industries:
-   Food industryG/SCM/N/38/CYP
Page 9
-   Clothing industry
-   Chemical industry
-   Spirits industry
2. Period
Yearly
3. Policy objective
Support of the manufacturing industries.
4. Authority of subsidy
Ministry of Finance.
5. Form of subsidy
Exemption from the payment of import and excise duty on certain imports-mainly
raw materials.
6. To whom and how the subsidy is paid
To existing and newly established manufacturing industries - Relief from payment of
import duty on raw materials.
7. Amount of subsidy
£C5,133,434
(xi) Promotion of Handicrafts
1. Title of subsidy
Promotion of Handicrafts.
2. Period
Yearly.
3. Policy objective
Promotion of Cypriot cultural inheritance through popular art.
4. Authority of subsidy
Ministry of Commerce, Industry and Tourism.
5. Form of subsidy
Training of local craftsmen and promotion of items made by them.G/SCM/N/38/CYP
Page 10
6. To whom and how the subsidy is paid
Local craftsmen.
7. Amount of subsidy
Total payment in 1997: £C200,000.
(xii) Industrial Restructuring and Technical Upgrading
1. Title of subsidy
A project for Industrial Restructuring and Technological Upgrading administered by
the Institute of Technology.  The Project comprises:
(i) A scheme for Competitiveness Enhancement studies to be carried out by
industrial enterprises.
(ii) A scheme for the Development - Accreditation of Consultants involved in the
studies mentioned in (I) above.
2. Period
Yearly.
3. Policy objectives
(i) To assist and encourage local enterprises to upgrade their units by subsidizing
the cost of specialized studies carried out by accredited consultants.
(ii) To promote the upgrading of consultancy services for the manufacturing
industry.
4. Authority of subsidy
Institute of Technology.
5. Form of subsidy
(a) Grant of up to 40 per cent of the cost of competitiveness enhancement study.(b) Grant of up to 50 per cent of the cost of training programmes.
6. To whom and how the subsidy is paid
To existing and newly established manufacturing industries.
7. Amount of subsidy
Total payment in 1997: £C220,224G/SCM/N/38/CYP
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8. Duration of subsidy
The schemes were introduced in 1992 and are still in progress.
(xiii) Promotion of locally manufactured products
1. Title of subsidy
Promotion of locally manufactured products.
2. Period
Yearly.
3. Policy objective
Promotion of locally manufactured products.
4. Authority of subsidy
Ministry of Commerce, Industry and Tourism.
5. Form of subsidy
Grant of up to 50 per cent of cost of advertising campaign organized by an industrial
association, with a ceiling of £C40.000.
6.Το whom and how the subsidy is paid
To industry associations.
7. Amount of subsidy
Total payment in 1997: £C92,220.
8. Duration of subsidy
The scheme was introduced in 1994 and is still in existence.
(xiv) Grant for technological upgrading of the manufacturing sector
1. Title of subsidy
Grant for technological upgrading of the manufacturing sector.
2. Period
Yearly.
3. Policy objective
The objective of the scheme is to encourage investments in modern technology with
the aim of improving both productivity and quality of locally produced goods.G/SCM/N/38/CYP
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4. Authority of subsidy
Ministry of Commerce, Industry and Tourism.
5. Form of subsidy
The grant as a percentage of the eligible investment is 20 per cent of the investment
in new machinery and equipment.  The amount of grant is limited to a maximum of
£C150.000 per applicant for the duration of the scheme.
6. To whom and how the subsidy is paid
To existing and newly established manufacturing units.
7. Amount of subsidy
Total payment in 1997: £C4,725,493.
8. Duration of subsidy
The scheme was introduced in 1996 and is still in existence.
(xv) Subsidization of loan interest for technological upgrading of the manufacturing
industry
1. Title of subsidy
Subsidization of loan interest for technological upgrading of the manufacturing
industry.
2. Period
Yearly.
3. Policy objective
The objective of the scheme is to encourage investments in modern technology with
the aim of improving both productivity and quality of locally produced goods.
4. Authority of subsidy
Ministry of Commerce, Industry and Tourism.
5. Form of subsidy
The subsidy as a percentage of the eligible investment is the difference between 5 per
cent and the current interest rate with the maximum subsidy being 3.5 percentage points.  Theamount of grant is limited to £C150,000 per applicant for the duration of the scheme.G/SCM/N/38/CYP
Page 13
6. To whom and how the subsidy is paid
To existing and newly established manufacturing units.
7. Amount of subsidy
Total payment in 1997: £C231,589.
8. Duration of subsidy
The scheme was introduced in 1996 and is still in existence.
C. GENERAL
(xvi) Drawback on exported goods
1. Title of subsidy
Drawback on exported goods.
The drawback procedure provides for the refund of duties and Temporary Refugees´
Levy paid on prescribed materials and goods used in the manner specified in the Law, whenexported, shipped for use as stores or delivered locally to persons, bodies, authorities or
organizations entitled to the duty free importation of such goods.
2. Period
January to December 1997.
3. Policy objective
Export promotion and support of industry.
4. Authority of subsidy
Customs and Excise Duties Law No. 109/95.Customs and Excise Law No. 14(I)/97.
Temporary Refugees´ Levy Law 14/77.
5. Form of subsidy
Refund of the import duty and Temporary Re fugees´ Levy paid on importation of the
goods.G/SCM/N/38/CYP
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6. To whom and how the subsidy is paid
It is paid (I) to any natural or legal person being the actual payer of duty and T.R.L.
or (ii) to the exporter, shipper etc., provided a disclaimer from the actual payer is produced
together with the claim.
It is paid after exportation or loading of the goods on ships or aircraft for use as stores
or after delivery of the goods to persons, bodies or organizations entitled to duty free
importations of such goods.
Drawback can be claimed on the goods specified in the Fifth Schedule of the
Customs and Excise Duties Law No. 109/95 and 14(I)/97 and to the extent shown for eachcategory of goods.
7. Amount of subsidy
  Amount refunded in 1997:  £C3,091,808
8. Duration of subsidy
Year during which it came into force: 1962.
Duration has not been specified.
(xvii) Exemption from taxation of profits derived from the exportation of locally
manufactured/produced goods
1. Title of subsidy
Taxation of profits from the exportation of locally manufactured/produced goods at
50 per cent of the normal rates (Petroleum products are not covered)
2. Period
For each tax year.
3. Policy objective
Encourage the exports of locally manufactured products.
4. Authority of subsidy
Granted by the Ministry of Finance, In land Revenue Department.  Income Tax Law
Article 28E.
5. Form of subsidy
Special method of taxation.G/SCM/N/38/CYP
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6. To whom and how the subsidy is paid
It is provided to the exporters provided that profits from the exportation of locally
manufactured/produced goods are transferred back to the Republic of Cyprus.
7. Amount budgeted
Total tax benefits provided for 24 cases and amounted in 1997 to £C53,316.
8. Duration of subsidy
The scheme commenced in 1990 and is still in existence.
(xviii)   Export Credit Insurance Scheme
1. Title of subsidy
Export Credit Insurance Scheme
2. Period
Yearly.
3. Policy objective
To provide insurance cover for Cyprus manufacturers/exporters aiming at
encouraging, facilitating and developing trade with other countries.
4. Authority of subsidy
Ministry of Commerce, Industry and TourismLaw No. 41 of 1974
5. Form of subsidy
Commercial and political risks covered for non-payment in case of insolvency/or
failure of buyer to pay for goods delivered and accepted.
6. To whom it is provided:
To all Cypriot interested manufacturers/exporters.
7. Amount budgeted
Varies according to the cover.  Approximately 80 members were covered by the
scheme.
8. Duration of subsidy
The scheme commenced in 1975 and is still in existence.G/SCM/N/38/CYP
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(xix) Incentives provided to exporters taking  part in international trade fairs/trade
missions abroad
1. Title of subsidy
Export promotion of industrial products by providing financial incentives to the
Cyprus manufacturers/exporters who participate in Trade Fairs/Missions abroad.
2. Period
Yearly.
3. Policy objective
To promote exports of Cyprus industrial products exhibited in foreign Trade Fairs
and Trade Missions abroad.
4. Authority of subsidy
Ministry of Commerce, Industry and Tourism.
5. Form of subsidy
When a manufacturer/exporter participates in a Trade Fair organized by the Ministry,
the rent for space and construction expenses of the stand are covered by the Ministry.
For manufacturers/exporters participating in international exhibitions on their own,
the Ministry covers 50 per cent of the rental and construction costs of the stand up to
£C1,500.
For Trade Missions abroad the Ministry covers the rent of the stand and construction
costs of the stand.
6. To whom the subsidy is paid
This incentive is provided to Cypriots exporters/manufacturers interested in export
promotion purposes.
7. Duration of subsidy
The scheme is provided every year and is still in existence.
8. Amount budgeted
Varies according to the number of international exhibitions the Ministry or the
manufacturers/exporters decide to participate in and the number of Trade Missions organized
by the Ministry of Commerce, Industry and Tourism.G/SCM/N/38/CYP
Page 17
(xx) Financial assistance for market research in foreign markets
1. Title of subsidy
Scheme for granting financial assistance to manufacturers/exporters for market
research in foreign markets.
2. Period
Yearly.
3. Policy objectives
The objective of the scheme is to encourage Cypriot manufacturers/exporters to
undertake on their own market research in foreign markets for the purpose of identifying
export potentials for Cyprus products.
4. Background authority
Ministry´s decision.  Not bound by any legislation.
5. Form of subsidy
Grant of a sum up to £C500 for each applicant for covering the cost of a return air
fare (economy).
6. To whom and how the subsidy is provided
The grant is provided by the Ministry to Cypriot manufacturers/exporters on
presentation of valid evidence (air ticket, receipt of payment of cost of ticket) and a
completed questionnaire.
7. Subsidy
The total amount budgeted each year for the subsidy (grant) is £C20,000.
8. Duration
The scheme was introduced in 1994 and continues ever since.
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