In 2015, Cyprus introduced the Notional Interest Deduction
('NID') in its tax law. The NID is notional interest
deduction on new equity which can be set against taxable income
generated by the company as a result of the funds from the new
equity.
NID is equal to the interest yield of the 10-year government
bond yield of the country in which the new equity is invested,
increased by 3% (the minimum rate being the yield of the Cyprus
10-year government bond increased by 3 percentage points). The bond
yield rates to be used are those valid on December 31 of the year
preceding the assessment year.
On 17 February 2017, the Cyprus Tax Department issued an
announcement informing on the bond yield rates as at 31 December
2016 for the below jurisdictions, which should be increased by 3
percentage points to determine the reference rates to be used for
the NID of 2017.
