Cyprus, May 2022. the Cyprus Parliament approved law amendments in the Special Defence Contribution law (SDC), targeting to widen the application of the reduced SDC rate of 3%.
According to the previous provisions of the law, the reduced rate of 3% applied to interest income received by Cyprus tax resident domiciled individuals from savings certificates and development bonds of the Republic of Cyprus, corporate bonds and interest received or credited by a Provident Fund or the Social Insurance Fund.
After the changes, the 3% will also apply to both Cyprus tax resident domiciled individuals and Cyprus tax resident legal entities, and it will cover:
- interest received from savings certificates and development bonds of the Republic of Cyprus or any other State,
- corporate bonds listed on a recognised Stock Exchange,
- interest that is received or credited by a Pension fund, a Local Authority, a public entity or a Semi-Government Organisation, and
- Provident Fund or the Social Insurance Fund.
Clarification for SDC
The amending law makes clear that interest income resulting from the ordinary carrying on of a business or closely connected with the ordinary carrying on of a business is not considered as interest and therefore it does not fall within the provisions of the SDC law.
The amended SDC law was published in the Cyprus Gazette and is effective from June 8th 2022.
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