The
Cyprus Tax Department published on 5 July 2024 the bond yield rates as at 31
December 2022 and 2023 for Montenegro and Cameroon, to be considered for the
Notional Interest Deduction (NID) to which equity injected in to Cyprus
companies is entitled. The rates can be found on the website of the Cyprus Tax
Department by clicking here.
It is reminded that
equity introduced to a company as from 1 January 2015 (new equity) in the form
of paid-up share capital or share premium is eligible for an annual NID for tax
purposes. The deduction is calculated as a percentage (reference rate) on the
new equity. The relevant reference rate is the yield of
the 10 year government bond (as at December 31 of the previous tax year) of the
country where the funds (the new equity) are invested in the business of the
company, plus a 5% premium.
The NID is deducted from the taxable income of a company for as long as the new equity financing is used in its operations. The deduction is subject to a number of conditions, including a taxable-income limitation.
