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Cyprus recently adopted a new framework of rules governing taxation of IP rights, which introduces a favourable IP regime in Cyprus.  This development is expected to enhance the competitiveness of Cyprus in the area of Intellectual Property. The key feature of the new framework provides for an 80% exemption on the net profit from the exploitation of IP rights. 80% of the net profits generated from exploitation of IP Rights as well as 80% of profits generated from their disposal are now tax deductible. Supplemental changes involve: The amendment of the definition of the term “patent rights and intellectual property (IP) rights” in the fiscal framework, so as to cover all types of IP rights, as these are regulated under the Patent Rights Law of 1998, the Intellectual Property Law of 1976 and the Trademark Law. The ability to deduct all direct expenses associated with the production of this income, prior to the assessment of the net profit. The rate of capital allowances on IP rights has been set at 20% of the cost of acquisition. The new framework is expected to have a positive impact on Foreign Direct Investment in Cyprus.

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