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- 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%
