Reference Rates For Notional Interest Deduction For Greece, Italy And Kazakhstan

Article 9(B) of the Income Tax Law of 2002 as amended provides for a notional interest deduction for tax purposes on new equity capital (paid-up share capital and share premium) injected into companies and permanent establishments of foreign companies on or after 1 January 2015 to finance business assets, calculated by applying a reference rate to the new equity.

The reference rate is the higher of the 10-year government bond yield of Cyprus or the country in which the assets funded by the new equity are utilized, in each case plus three percentage points. The bond yield rates to be used are as at 31 December of the year preceding the year of assessment.

The Tax Department has already published the bond yields and reference rates for most of the major investment destinations, including Cyprus, Germany, United Arab Emirates, United Kingdom, India, Latvia, Ukraine, Poland, Romania and Russia.