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ARTICLE · 05 SEPTEMBER 2016

Practical Guidance On Calculating The Notional Interest Deduction For New Capital

Elias Neocleous & Co LLC
Elias Neocleous & Co LLC
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Elias Neocleous & Co LLC

Elias Neocleous & Co LLC

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The Cyprus tax authorities have issued a circular on the practical application of the provisions introduced in 2015 for a notional interest deduction (NID).

CyprusWealth Management
Elias Neocleous & Co LLC
Elias Neocleous & Co LLC
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The Cyprus tax authorities have issued a circular on the practical application of the provisions introduced in 2015 for a notional interest deduction (NID).   As explained in a previous news item, NID is available in respect of new equity capital introduced into companies and permanent in Cyprus from the beginning of 2015 for the purpose of financing business assets. NID is calculated by reference to government bond rates and is limited to 20% of the profit before NID. 

The circular sets out the legal basis for the NID, and explains the underlying concepts, definitions and basic principles of calculating NID and their application in practice, including several worked examples.  It clarifies a number of issues which had not previously been considered in detail.

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