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February 16, 2021
2021-5195

Cyprus Tax Authorities publish 10-year government bond yield rates for NID purposes

Executive summary

On 12 February 2021, the Cypriot Tax Department issued an announcement which lists the 10-year government bond yield rates as at 31 December 2020 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 2021 tax year.

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

Detailed discussion

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%.

For information on the amendments to the NID rules, see EY Global Tax Alert, Cyprus amends Notional Interest Deduction rules, dated 5 June 2020.

10-year government bond yield rates as at 31 December 2020 (applicable for 2021 tax year)

Country

Yield rate

Country

Yield rate

Abu Dhabi

1,681

Italy

0,541

Albania

N/A*

Ivory Coast

N/A*

Argentina

3,269

Jordan (US$)

4,48

Armenia

7,485

Kazakhstan (€)

0,653

Australia

1,005

Kazakhstan (US$)

4,03

Austria

-0,433

Kenya

11,977

Azerbaijan

N/A*

Latvia

-0,18

Belarus (US$)

6,075

Lebanon

N/A*

Belgium

-0,388

Lithuania

-0,197

Bermuda (US$)

1,783

Luxembourg

-0,415

British Virgin Islands

N/A*

Morocco

2,403

Bulgaria

0,19

Mauritius

1,58

Canada

0,675

Netherlands

-0.49

Cayman Islands

N/A*

Nigeria

7,261

China

3,18

Nigeria (€)

N/A*

Costa Rica

9,627

Norway

0,944

Croatia

0,548

Poland

1,229

Cyprus

0,136

Portugal

0,026

Czech Republic

1,252

Romania

2,959

Denmark

-0,459

Russia

5,91

Dubai (€)

N/A*

Russia (US$)

1,546

Dubai (US$)

2,594

Saudi Arabia

2,399

Egypt

14,006

Serbia

3,48

Egypt (US$)

6,678

Singapore

0,834

Estonia

-0,211

Slovakia

-0,52

Finland

-0,425

Slovenia

-0,187

France

-0,343

South Africa

8,736

Germany

-0,388

Spain

0,043

Guernsey

N/A*

Sweden

0,022

Greece

0,19

Switzerland

-0,523

Hong Kong

0,541

Taiwan

0,300

Hungary

2,135

United States

0,916

India

5,865

Ukraine (€)

N/A*

Ireland

-0,318

Ukraine (US$)

6,052

Isle of Man

0,985

United Arab Emirates

N/A*

Israel

0,77

United Kingdom

0,192

Israel (US$)

1,551

Vietnam

2,202

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

____________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young Cyprus Limited, International Tax and Transaction Services (ITTS), Nicosia

 
 

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