The Cyprus Tax Department has announced a revision of the previously-announced reference rates used to calculate the Notional Interest Deduction (“NID”) under article 9B of the Income Tax Law for new capital used to finance assets employed in Russia.
Previously, the reference rate for Russian government 10-year bonds at 31 December 2014, which is used to calculate NID on capital introduced in 2015, had been announced as 13.73 per cent. The corresponding rate at 31 December 2015, which is to be used to calculate NID on capital introduced in 2016, had been announced as 9.57 per cent.
In an announcement on the Tax Department website issued on 9 July 2016 these rates were reduced to 6.58 per cent and 6.60 per cent respectively.
Consequently, applying the prescribed uplift of three percentage points, the NID for new capital introduced in 2015 to finance assets employed in Russia will be calculated at a rate of 9.58 per cent. For capital introduced in 2016 the NID will be calculated at a rate of 9.6 per cent.