Article 9(B) of the Income Tax Law 2002 (as amended) provides for a notional interest deduction for tax purposes on new equity capital (ie, paid-up share capital and share premium) injected into companies and permanent establishments of foreign companies on or after January 1 2015 to finance business assets, calculated by applying a reference rate to the new equity.

The reference rate is the higher of the 10-year government bond yield of Cyprus or the country in which the assets funded by the new equity are used, in each case plus three percentage points. The bond yield rates to be used are those of December 31 of the year preceding the assessment year.

The Tax Department recently announced the 10-year government bond yields for December 31 2016, which will be used as the basis for the notional interest deduction for the 2017 tax year, for the following countries:

 

Bond yield rate

Reference rate for 2017

Cyprus

3.489%

6.489%

Germany

0.204%

3.204%

United Arab Emirates

3.326%

6.326%

United Kingdom

1.326%

4.326%

India

6.878%

9.878%

Latvia

0.894%

3.894%

Ukraine

8.705%

11.705%

Poland

3.627%

6.627%

Romania

3.748%

6.748%

Russia

(Expressed in US dollars)

8.380%

4.409%

11.380%

7.409%

Czech Republic

0.414%

3.414%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For further information on this topic please contact Philippos Aristotelous at Andreas Neocleous & Co LLC by telephone (+357 25 110 000) or email (aristotelous@neocleous.com). The Andreas Neocleous & Co LLC website can be accessed at www.neocleous.com.

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