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On 3 February 2022, the Cypriot Tax Department issued an announcement which lists the 10-year government bond yield rates as at 31 December 2021 for a number of countries (listed on the table below) with respect to the Notional Interest Deduction (NID) on equity. These yield rates are to be used to determine the reference interest rate for claiming NID for the 2022 tax year.

The key NID provisions and the applicability of the 10-year government bond yield rates are summarized below.

Notional Interest Deduction

As of 1 January 2015, Cyprus tax resident companies (as well as foreign companies with permanent establishments in Cyprus), which carry on a business, are entitled to claim a NID on their equity capital introduced on or after 1 January 2015.

The NID is deducted from the taxable income of the company for the relevant tax year (subject to any restrictions) for the period of time during which the equity is used by the company for the carrying on of its activities. The NID is subject to a number of conditions, including a taxable income limitation.

The NID equals the multiple of the “reference interest rate” (as defined below) and ‘’new equity.’’

Reference interest rate” means the 10-year government bond yield as at 31 December of the year preceding the tax year of the country in which the new equity is invested increased by 5%.

 10-year government bond yield rates as at 31 December 2021 (applicable for 2022 tax year)

Country Yield rate Country Yield rate
Abu Dhabi N/A* Italy 1,170
Albania N/A* Ivory Coast N/A*
Argentina 3,508 Jordan ($ US) 5,631
Armenia 9,722 Kazakhstan (€) 1,444
Australia 1,670 Kazakhstan (US$) 2,107
Austria 0,072 Kenya 12,660
Azerbaijan N/A* Latvia 0,323
Belarus ($ US) 9,785 Lebanon N/A*
Belgium 0,180 Lithuania 0,259
Bermuda ($ US) 2,376 Luxembourg 0,129
British Virgin Islands N/A* Morocco 2,239
Bulgaria 0,690 Mauritius 4,200
Canada 1,479 Netherlands -0,035
Cayman Islands N/A* Nigeria 12,607
China 2,775 Nigeria (€) N/A*
Costa Rica 6,363 Norway 1,699
Croatia 0,560 Poland 3,646
Cyprus 0,629 Portugal 0,462
Czech Republic 2,797 Romania 5,146
Denmark 0,061 Russia 8,390
Dubai (€) N/A* Russia ($ US) 1,994
Dubai ($ US) 2,533 Saudi Arabia 2,932
Egypt 14,913 Serbia 4,126
Egypt ($ US) 7,570 Singapore 1,638
Estonia 0,122 Slovakia -0,083
Finland 0,082 Slovenia 0,349
France 0,195 South Africa 9,799
Germany -0,206 Spain 0,563
Guernsey N/A* Sweden 0,220
Greece 1,315 Switzerland -0,153
Hong Kong 1,524 Taiwan 0,700
Hungary 4,484 United States 1,512
India 6,509 Ukraine (€) N/A*
Ireland 0,237 Ukraine ($ US) 8,902
Isle of Man 1,502 United Arab Emirates N/A*
Israel 1,290 United Kingdom 1,020
Israel ($ US) 1,919 Vietnam 2,066

* There are currently no government bond yield rates for the above indicated countries.

 

For any queries you have with regards to the announcement Kyriakides, Savvides & Associates Ltd is always at your disposal.

KSA

KSA