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February 4, 2022
2022-5139

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

Executive summary

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.

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 of 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 of 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

Chile

5.652

Nigeria (€)

N/A*

Chile (US$)

2.560

Norway

1.699

Chile (€)

0.834

Poland

3.646

China

2.775

Portugal

0.462

Costa Rica

6.363

Romania

5.146

Croatia

0.560

Russia

8.390

Cyprus

0.629

Russia (US$)

1.994

Czech Republic

2.797

Saudi Arabia

2.932

Denmark

0.061

Serbia

4.126

Dubai (€)

N/A*

Singapore

1.638

Dubai (US$)

2.533

Slovakia

-0.083

Egypt

14.913

Slovenia

0.349

Egypt (US$)

7.570

South Africa

9.799

Estonia

0.122

Spain

0.563

Finland

0.082

Sweden

0.220

France

0.195

Switzerland

-0.153

Germany

-0.206

Taiwan

0.700

Guernsey

N/A*

United States

1.512

Greece

1.315

Ukraine (€)

N/A*

Hong Kong

1.524

Ukraine (US$)

8.902

Hungary

4.484

United Arab Emirates

N/A*

India

6.509

United Kingdom

1.020

Ireland

0.237

Isle of Man

1.502

Israel

1.290

Israel (US$)

1.919

* 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, Nicosia

 
 

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