Notional Interest Deduction Guidelines updated

On 11 July 2019, the Office of the CfR published updated guidelines on the Notional Interest Deduction rule.

The updated guidelines include a new paragraph ‘xi’ which is applicable from YA2020:

“(xi) Accounting Periods other than 12 Months

To further approximate the neutrality between debt and equity financing, an adjustment shall be applied to the NID to remove distortive and disproportionate deductions in respect of accounting periods that are longer or shorter than 12 months. The NID in respect of the years of assessment to which such accounting periods refer shall be inflated or reduced by multiplying the deduction contemplated by Rule 4(1) of the Rules by the number of days in the accounting period and dividing the result by 365. This paragraph (xi) shall be applicable to the year of assessment 2020 and subsequent years of assessment.”

Download a copy of the updated guidelines here