Through the Use of Notional Interest Deduction?

[sumaiyakhatun26]

NID was introduced by Cyprus in 2015, to reduce discrepancies in the tax treatment of equity financing compared to debt financing, and to promote an incentive for capital investment in Cyprus. NID is deductible, in the same manner as interest expenses, but it does not trigger any accounting entries as it is a ‘notional’ deduction.

What Tax Advantages are Available
NID is deducted from taxable income.

It cannot exceed 80% of the taxable income, as calculated prior to Notional Interest lebanon mobile database Deduction, arising from the new equity.

A company could therefore achieve an effective tax rate as low as 2.50% (income tax rate 12.50% x 20%).
Initially, the NID rate was defined as; the 10 year government bond yield, as at 31 December of the year preceding the tax year the NID is claimed, of the country in which the new equity was employed, plus a 3% premium. This was subject to a minimum rate equal to the yie