European Union and SMEs in Cyprus

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Dr. Written by Ambrozio Prodromos *

In our previous conversation, we mentioned the EU SBA’s annual fax sheet, marking the performance of the year for small and medium-sized enterprises (SMEs) in the Union and marking the impact of the outbreak. The annual report also highlighted a number of issues identified in SMEs across the Union, and although there were assessments in 27 Member States, most of the issues were common, so they should be general. Policies to be developed in the Union to deal with it. Of course, in this approach, one must have an understanding of the specific circumstances that exist in each country.

There is a lot of information about SMEs in the Republic of Cyprus, but the first annual report does not focus more on the performance of each country, but tries to give a more holistic approach due to the epidemic and the black economy . Inflation in the Union and in the world. At the time of the outbreak, the Republic of Cyprus activated a series of measures, which in most cases were common in some countries, but in others the media was deemed inadequate as it did not leave businesses exposed . .

In terms of wage subsidies, the Republic of Cyprus, like other Member States (with the exception of Estonia and Finland), has been given a special place in this region, which enjoys adequate support following the recommendations of the European Central Bank (ECB). Employees. This had a positive impact on job security, otherwise it could have caused immeasurable damage to the state’s overall economy. The alignment with the policy of the European Central Bank is therefore considered to be correct. What needs to be considered is not part of the report, but the effectiveness of the measures, as many of them are clear and acceptable even to those members of government who do not meet the needs of society and are not rationally consistent and consistent.

The report focuses on another major issue for small and medium-sized businesses, namely corporate tax, and more specifically, the deferral of its payment. Unfortunately, the system of the Republic of Cyprus has not changed and our country is one of only three out of 27 countries (including Lithuania and Malta) not to do so. As a result, many small and medium-sized businesses, especially in areas such as tourism, which have been at a standstill for several months, face very large liquidity as banks refuse to provide more liquidity and / or cash. ready.

The problem with providing social security is similar, as one of the five member states of the Republic of Cyprus (along with Ireland, Latvia, Lithuania and Romania) has not implemented a minimum policy in relation to the problem. For small and medium-sized businesses that have lost the right to work. For Cyprus, and in particular for companies in the tourism sector, this is totally devastating and does not present great opportunities for companies. In view of the low turnover for two consecutive years, the collapse of many companies is unfortunately a foregone conclusion. This is especially noticeable for those who are close to the area, and the condition is causing more problems for a number of reasons than even aid.

Another problem faced by SMEs in the Republic of Cyprus was identified by analyzing the practices of other countries and their technical and digital support through various functions of the state apparatus in collaboration with the private sector. Some of the examples that can be easily cited by the Ministry of Innovation cited in the report (p. 119) are those from Austria, Italy and France. The three countries have worked with the private sector and other actors for SMEs to enable them to adapt to the growing needs of digital modernization of their operations. This is a huge gap that the Republic of Cyprus must understand, as it is directly linked to the survival of SMEs, but also to their competitiveness and productivity. At the same time, the companies themselves must pay the necessary attention and move in this direction, as this is a strategic requirement and they can ensure sustainable development.

The above are just a few of the many things that can help small and medium businesses understand, analyze, and make the right decisions. The annual report is an important tool in the hands of the state and the media and must be used properly. Although the report was prepared on a different basis due to the pandemic, the information provided is important. Unfortunately, many companies perished because the orders exceeded any financial logic and we expressed strong opposition from the start. Unfortunately, we were right.

* Academic – Education and business consultant

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