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Thin capitalisation rules determine how much of the interest paid on corporate debt is deductible for tax purposes. Such rules are of interest to private-equity firms , which use significant amounts of debt to finance leveraged buyouts , and in the context of strategic acquisitions, where the purchaser wishes to push debt into higher taxed ...
Many jurisdictions have adopted "thin capitalization" rules to limit such charges. Various approaches include limiting deductibility of interest expense to a portion of cash flow , [ 197 ] disallowing interest expense on debt in excess of a certain ratio, [ citation needed ] and other mechanisms.
In high tax countries the deductibility of interest expenses is perceived to be most valuable. To contain the abusive use of debt financing, especially governments in high tax countries have implemented thin capitalization rules. These rules are disadvantageous for companies because they aim at limiting the deductibility of interest expenses ...
Supreme Court allows small business registration rule to take effect, aimed at money laundering Updated January 23, 2025 at 1:23 PM FILE - The Supreme Court at sunset in Washington, Feb. 13, 2016.
A special thin capitalization rule penalizes subsidiaries of foreign shareholders if, instead of remitting after-tax dividends, they elect to pay interest on loans from shareholders. The Code effectively forces these companies to reclassify excessive interest into non-deductible dividends. [ 65 ]
Merging thin capitalisation rules with the transfer pricing rules. Thin capitalisation rules limit the amount a company can claim as a tax deduction on interest when it receives loans at non-commercial rates (from connected parties, for example). [citation needed]
Image credits: Michael Buckner / Getty #3 Scott Disick. Boxes of Mounjaro, which is known for its weight loss effects, were found stacked in Scott Disick’s fridge on a past episode of The ...
President Donald Trump, over the weekend, stoked criticism and alarm when he posted a blunt and cryptic statement seemingly suggesting the nation's laws don't apply to him. "He who saves his ...