Interest earned from financing
activities is taxed as ordinary business income at a rate of 10% (after
deducting all business expenses). A very low profit margin of as little
as 0,35% is acceptable for tax purposes which it can decreased up to
0,125%. This legislation makes Cyprus financing companies very
attractive. Also group companies can benefit from this legislation since
the low margins are acceptable for financing group companies.
If interest does not qualify as business income then it is subject to SDC at a rate of 10%