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Government Sponsored “Digital Upgrade” Plan

 

G.K Progress I.T.C Services Ltd with more than 15  years of experience in corporate digital transformation and consulting, undertakes the application, proposal and providers study for the Ministry of Energy, Commerce and Industry “Digital Transformation” Plan, sponsoring up to 25.000€ (50% of approved investment).

The “Digital Upgrade” sponsorship Plan was announced in May 2019 by the Ministry of Energy, Commerce and Industry, expected to officially open in September 2019. The draft Plan design can be found in the Ministry’s webpage (click here). It is important to note that the applications will be evaluated / approved at a first come – first served basis. After the application submission no additional information / documentation will be accepted.

G.K Progress I.T.C Services Ltd associated consultants can guide you through your digital transformation path and support you in applying for the Ministry of Energy, Commerce and Industry “Digital Upgrade” Plan sponsorship. We can prepare on time, the Plan’s application and proposal that will include a well organised, complete, clear and realistic Business plan, to be submitted online to the Ministry’s Approval Committee.  Our highly qualified consultants will meet with you and:

  • Document your digital transformation needs, how the project is expected to address the needs and opportunities of your business and set what will be the beneficial results.
  • Develop a realistic time-plan and a specific action plan, which presents how the plan will be organised, implemented and operated in future.
  • Document the viability of the expected results in relation to the set objectives.
  • Provide proper project management.
  • Handle supporting documents, etc.

Below you will find more information about the Plan design.

Digital Upgrade Plan summary:

Purpose of the Plan:

The Plan aims to enhance the degree of integration of digital technology in businesses located or will be located, in areas controlled by the Republic of Cyprus.

Businesses located or to be located, in areas controlled by the British Army Forces are not covered by the Plan under Protocol No. 3 of the Accession Treaty.

The financial support consists of the grant of specified eligible costs for the implementation and utilization of digital Upgrade of existing or new SMEs.

Its specific objectives are:

  • Enhancing the digital identity of businesses.
  • Increasing the number of small and medium-sized enterprises using information and communication technologies, including the e-commerce sector.
  • Promoting digital entrepreneurship.

Implementation and Financing Phases of the Plan:

PHASE A – Signing of a Public Financing Agreement. In this stage the Public Financing amounts to an advance covering up to 40% of the approved eligible costs.

PHASE B – After completing and certifying the physical and financial purpose of the project. Sponsorship of eligible costs implemented and certified.

Financing of the Plan

The Plan is co-financed by the Republic of Cyprus and the European Regional Development Fund of the E.U., in the context of the O.P. “Competitiveness and Sustainable Development 2014-2020”.

The total amount dedicated for the needs of the first Call for Proposals amounts to € 4.5m. This budget may be amended.

Beneficiaries – Conditions for participation:

-New or Existing SMEs that will invest in implementing digital Upgrade technologies (including e-commerce).

-The eligible categories of businesses that can apply for and receive funding under this Plan are those not listed in Appendix I of the EU Treaty. (Appendix I).

The following economic activities are therefore excluded:

  • Business activities related to the primary production or processing or trading of agricultural products as listed in Paragraph I of the Treaty on European Union (Appendix I).
  • Activities related to fisheries and aquaculture.

Businesses must be established or will be established in areas that are effectively controlled by the Republic of Cyprus.

According to the Recommendation of the Commission of the European Communities of 06/05/2003 and no. 2003/361 / EC, the definition of “Small and Medium-sized Enterprises” is defined based on:

  • the number of employees and
  • the Turnover or balance sheet total and they are:

(a) Employing <250 persons; and

(b) They have ≤ € 50 million annual turnover or ≤ € 43 million Annual Balance Sheet.

These limits apply only to independent businesses.

Businesses that are part of Group of Companies, must include employee / turnover data or balance sheet of the Group they belong to.

 

For the Beneficiaries of the Plan the below must be valid:

 

  • A minimum amount of the proposed investment (eligible costs) is set at € 5,000.
  • An enterprise approved for a grant from another Plan / Program for the same eligible costs is not eligible for sponsorship under this Plan.

De Minimis Regulation: The total amount of sponsorships that can be awarded to a single company every three (3) financial years is € 200,000. Sponsoring digital business upgrades is estimated

  • Aid to problematic businesses within the meaning of the E.U guidelines on government aid for rescuing and restructuring non-Finance problematic businesses (2014 / C 249/01) is not allowed.
  • Businesses that has:

(a) a final court conviction for deception, fraud and / or other offenses, committed in connection with any Sponsorship Scheme of the Ministry of Energy, Commerce and Industry or other authorities.

(b) a decision of the Ministry of Energy, Commerce and Industry to exclude them, for three (3) years from all Sponsorship Plans of the Ministry and / or to take further legal action shall not be eligible for sponsorship under this Plan unless three (3) years have elapsed since of those decisions.

Funding terms

 

(a) The table below shows the budgetary limits of the proposals (excluding VAT), as well as the percentage of government funding.

* Processing / Manufacturing Industry activities are those listed in Section C of the Statistical Codes of Economic Activities, 2008 (based on the NACE Rev. 2 Economic Classification System of the EU).

(b) The remaining amount beyond the government sponsorship needed to cover the overall budget is considered as own (the applicant’s company) contribution for the implementation of the Plan. The own contribution may be covered either by loan from a financial institution or by own resources.

The own contribution must be proved by official data provided by electronic submission of the application eg bank accounts, letter / bank confirmation etc. in the name of the company or the main shareholders. If the contribution arrives from the company’s shareholders, a separate Statement / Commitment should be submitted stating their intention to allocate the amount to the company to finance the investment.

In the case of bank loan to cover the own contribution or a part of it, it is necessary to submit a letter and / or a certificate from a financial institution which approves the financing of the business plan.

It is a given that at the stage of implementation of the proposed investment Plan, the payments for eligible expenditure will necessarily have to be made through a bank account in the name of the Beneficiary.

(c) Government sponsorship will be paid directly to the Beneficiary and may not be transferred to third parties.

 

Eligible costs

Categories of Eligible costs:

When formulating the overall business budget, costs can be classified into the following categories of eligible costs:

  1. Equipment
  2. Off the shelf software produced for the mass market
  3. Specialized Operating Software, CLOUD PLATFORMS, Systems, Software and IT Services
  4. Purchase of Services for other Digital Upgrade expenses, not directly related to IT Systems

Description of Eligible Costs:

  1. Equipment:

This category includes costs for purchasing new equipment required for digital Upgrade, such as network equipment (Routers, Firewalls, WAFs, Load Balancers), Servers, Bladeservers, Storage Networks (SAN), Gateways, UPS etc.

Other specialized equipment such as bar code readers, are approved depending on the needs and activity of the business.

Other costs not described above and approved with a decision of the Approval al Committee are eligible for the digital Upgrade of the company.

  1. Off the shelf software produced for the mass market:

An off-the-shelf software produced for the mass market. The Plan covers the purchase of the license and installation on the user’s computer and / or cloud computing license.

Other costs not described above and approved with a decision of the Approval al Committee are eligible for the digital Upgrade of the company.

  1. Specialised software designed and developed to meet all business requirements and related services from IT providers

This category includes the following:

Accounting Software

ERP – Enterprise Resource Planning

HRMS – Human Resources Management System

CRM – Customer Relationship Management

Warehouse Management System – Logistics

Payroll System

BI – Business Intelligence

ECM – Enterprise Content Management

EAM – Enterprise Asset Management

DMS – Document Management System

BPM – Business Process Management

RPA – Robotics Process Automation

Security Services, Custom Application

Be-spoke-Software Development.

Online Shop

Industrial Digitization

e-Invoicing – Online Invoicing

Data Analytics

Secure Payments etc.

Cloud Platforms

Mobile Applications (Design & Development)

Services related to IT Systems such as Software Configuration, Data Transfer (system initialization), Installation, Personnel Training etc.

It is noted that software purchases can be implemented by purchasing services or by renting an application in cloud computing (cost coverage up to 36 months).

Other costs not described above and by Commission decision are eligible for digital upgrade of the business.

Other costs not described above and approved with a decision of the Approval al Committee are eligible for the digital Upgrade of the company.

  1. Other Digital Upgrade Expenses not directly related to IT.

This category includes, inter alia, the Purchase of Services for other Digital Upgrade aspects, such as digital marketing, social media presence, video production for company product presentation, content creation and more.

Consultant costs for preparation, submission and overall management of the application with a maximum eligible cost of € 500.

Other costs not described above and approved with a decision of the Approval al Committee are eligible for the digital Upgrade of the company.

 

Clarifications

  1. Implementation of the business plan can begin after the proposal has been submitted electronically to the Ministry. For the purposes of the Plan, the implementation date will be recognised as the date of the equipment / software / services is purchased, ie:
  • the date of import for the equipment the company sourced from abroad,
  • the date stated in the purchase invoice for equipment, software and / or services purchased from the home market.

Invoices and payment receipts must be in the name of the business.

  1. Spending that will incurred prior to the positive grant approval by the Approval Committee shall be made at the sole responsibility of the applicant and shall not bind the decision of the Approval Committee regarding the approval or not of the proposal.
  2. The equipment provided by the business under the Plan must be new.
  3. Value Added Tax (VAT) is not an eligible expense.
  4. The cost of the equipment on which the sponsorship is calculated, refers to the CIF (Cost, Insurance & Freight) value when it is imported from another country by the applicant or the purchasing price (as invoiced) when it is purchased from the domestic market.
  5. Costs incurred (date of invoice or receipt of payment) before the date of submission of the proposal are not eligible.
  6. All invoices with costs over € 500 (excluding VAT) must be paid by check of the applicant or their business or credit card or bank transfer, provided that the payment is documented by all relevant documents (bank account statement, etc.).
  7. Invoices to be issued by Cypriot companies – suppliers of equipment, systems / software / services who are not registered with the VAT will not be accepted.
  8. For all cost the requested documents are the original invoices or a duplicate signed by the supplier and proof of payment. In cases where partially paid invoices are submitted for the purpose of receiving the approved grant under Phase B of the Plan, these may be taken into account for the calculation and payment of the grant, but only up to the amount for which the relevant proof of payment is presented.
  9. All assets that will be subsidized will be used exclusively in the receiving business, will be considered depreciable assets and should be purchased by third parties on market terms. Therefore, in cases where equipment is purchased from second-degree relatives or affiliates, only the initial purchase cost will be taken into account. Likewise, in the case of purchasing costs in the other categories.
  10. A business (legal or individual) approved for a grant from another Plan / Program for the same eligible costs is not eligible for sponsorship under this Plan.
  11. In order to be eligible for sponsorship, the Beneficiary should have settled his obligations with the Social Security Services, the Value Added Tax Service (VAT) and the Internal Revenue Department (Income Tax). It is noted that, pursuant to the Republic’s Accounting and Financial Management and Financial Control Law of 2014, (Law 38 (I) / 2014), Article 13 “Offsetting of Expenses and Expenses”, the Accountant General may at his discretion , when making any payment to a legal entity or individual to deduct amounts due to any economic operator or other specialist.”



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