On 12 February 2021, the Cyprus Tax Department (CTD) announced the 10-year government bond yield rates as of 31 December 2020 with respect to the Notional Interest Deduction (NID) on equity related to the 2021 tax year.

The interest yields of the 10-year government bonds (as at 31st December of the previous tax year) increased by 5%, represents their “reference rate” for the purposes of granting tax allowance on new capital as per article 9B of the Income Tax Law N.118(I)/2002, as amended. A NID is provided on new equity introduced into a Cyprus tax resident company that is used for the operations of the company. The new equity should be in the form of share capital (share premium is also allowed).

NID = New equity x Reference rate (capped at 80% of the taxable profit)

The NID reference rates for 2021 are as follows:

  31/12/2020 NID Reference Rate 2021
Abu Dhabi 1,681 6,681
Albania N/A N/A
Argentina 3,269 8,269
Armenia 7,485 12,485
Australia 1,005 6,005
Austria -0,433 4,567
Azerbaijan N/A N/A
Belarus(US$) 6,075 11,075
Belgium -0,388 4,612
Bermuda(US$) 1,783 6,783
British Virgin Islands N/A N/A
Bulgaria 0,19 5,190
Canada 0,675 5,674
Cayman Islands N/A N/A
China 3,18 8,180
Costa Rica 9,627 14,627
Croatia 0,548 5,548
Cyprus 0,136 5,136
Czech Republic 1,252 6,252
Denmark -0,459 4,541
Dubai(€) N/A N/A
Dubai (US$) 2,594 7,594
Egypt 14,006 19,006
Egypt(US$) 6,678 11,678
Estonia -0,211 4,789
Finland -0,425 4,575
France -0,343 4,567
Germany -0,388 4,612
Guernsey N/A N/A
Greece 0,19 5,190
Hong Kong 0,541 5,541
Hungary 2,135 7,135
India 5,865 10,865
Ireland -0,318 4,682
Isle of Man 0,985 5,985
Israel 0,77 5,770
Israel(US$) 1,551 6,551
Italy 0,541 5,541
Ivory Coast N/A N/A
Jordan(US$) 4,48 9,480
Kazakhstan (€) 0,653 5,653
Kazakhstan (US$) 4,03 9,030
Kenya 11,977 16,977
Latvia -0,18 4,820
Lebanon N/A N/A
Lithuania -0,197 4,803
Luxembourg -0,415 4,585
Morocco 2,403 7,403
Mauritius 1,58 6,580
Netherlands -0,49 4,510
Nigeria 7,261 12,261
Nigeria(€) N/A N/A
Norway 0,944 5,944
Poland 1,229 6,229
Portugal 0,026 5,026
Romania 2,959 7,959
Russia 5,91 10,910
Russia (US$) 1,546 6,546
Saudi Arabia 2,399 7,399
Serbia 3,48 8,480
Singapore 0,834 5,834
Slovakia -0,52 4,480
Slovenia -0,187 4,813
South Africa 8,736 13,736
Spain 0,043 5,043
Sweden 0,022 5,022
Switzerland -0,523 4,477
Taiwan 0,3 5,300
U.S.A 0,916 5,916
Ukraine (€) N/A N/A
Ukraine (US$) 6,052 11,052
United Arab Emirates N/A N/A
United Kingdom 0,192 5,192
Vietnam 2,202 7,202

 

In case of countries not mentioned, taxpayers may apply to the CTD for the determination of the appropriate NID Reference rate enclosing the interest yields of the 10-year government bonds for the countries concerned as identified on the basis of their estimation of the applicable rate.

 

We are at your disposal should you require any further information, clarifications or assistance.