Special Report on
Thin Capitalisation in the Netherlands
Thin Capitalisation in the Netherlands - Trends
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16 December 2009 marked the start of thin capitalisation rules in Brazil (Provisional Measure n. 472/09). The thin capitalisation rule is the first step towards future requirements of minimum proportions between debt and equity. Limitations apply on deduction of interest between Brazilian and foreign related legal entities. The new rule will increase the taxable bases of Income Tax (IRPJ) and Social Contribution on Profit (CSLL). Taxand Brazil investigates the key features of the new rules and how they impact multinationals. The limitation for deduction of interest applies to loans obtained from: 1) related parties that are ...
Companies may soon find it unviable to take large loans for claiming tax deduction on the interest paid on debt. The government is planning to introduce ‘thin capitalisation’ rules to check such tax avoidance, by capping the debt proportion that will qualify for tax deduction. Thin capitalisation is where a higher proportion of funds are infused into a company in the form of debt rather than equity, because interest paid on loans is deductible for calculating taxable profits, whereas dividends are paid post-tax. With thin capitalisation rules, tax authorities will be able to ... Read More
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