Interest Income - tax treatment

Interest received by collective investment scheme is only taxed at 10% corporate income tax. Interest received from individuals and companies in the ordinary course of their business including interest closely connected to the ordinary course of business is taxed at 10% after deducting expenses. Interest received from individuals and compa­nies which does not satisfy the conditions prescribed immediately above is subject to Special Defense Contribution (SDC) without expense deduction at the rate of 10%.
Important Tax Laws have been amended by the Cyprus Parliament the 22nd of October 2009, which are effective as of the 1st of January 2009.

These amendments provide further tax incen­tives, improve Cyprus position as an attractive tax jurisdiction and focus on the tax treatment of interest income, foreign dividend income exemption and the Collective Investment Schemes (CIS).

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