The Cyprus Parliament passed into Law the amendments relating to the Special Defence Contribution (SDC) Law, that extent the application of the reduced SDC rate of 3%.

More specifically, with the amending SDC Law that went into effect on 8 June 2022, the reduced rate of 3% will apply to both Cyprus tax resident companies and Cyprus tax resident domiciled individuals, on passive interest received from savings certificates and development bonds issued by the Cyprus Government or any other State and corporate bonds listed on a recognized Stock Exchange. The 3% rate will also apply to interest that is received or credited by Pension Funds,  Local Authorities, Public entities or  Semi-Government Organizations, Provident Fund or the Social Insurance Fund.

Note that interest income arising as a result of the carrying on of a business trading activities, including interest closely connected to the ordinary activities of the business, is not considered interest for SDC purposes. Instead, is taxed with the normal corporation/income tax rates.

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**Globalserve Consultants Ltd a licensed corporate and accounting provider, provides company formation and management, accounting and tax solutions in Cyprus and abroad as well as assist with bank account opening.