AMENDMENTS TO THE SPECIAL DEFENCE CONTRIBUTION LAW WITH THE RATE REDUCTION OF SPECIAL DEFENCE CONTRIBUTION FROM 30% to 17%
On the 6th of December 2023, the Cyprus Parliament approved an amendment to the Special Defence Contribution (‘SDC’) Law, through which the SDC rate on passive interest income earned by Cyprus tax residents, both individuals and companies, is reduced from 30% to 17%.
The amendment was published in the official Cyprus Gazette on 20 December 2023 and comes into force on 1 January 2024.
It is being reminded that the SDC rate was increased from 15% to 30% during the year 2013, as part of several temporary economic measures at the time.
The purpose of this amendment is to address the inconsistency in the taxation of passive interest in comparison to dividends, which are subject to a 17% SDC rate.
This is viewed as a positive development, expected to contribute to easing the tax burden on taxpayers in Cyprus.
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