Corporate interest restriction
Corporate interest restriction

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Corporate interest restriction
  • Background
  • High-level summary of the rules
  • What is the corporate interest restriction (CIR)?
  • How does it work?
  • What is its impact?
  • Key concepts and principles
  • 'Interest' includes certain other payments
  • The rules operate on a worldwide group basis
  • The rules operate by reference to periods of account
  • More...

Corporate interest restriction

The rules comprising the corporate interest restriction are lengthy and complex. To assist the reader, this Practice Note starts with a background section and a short, high level summary of the rules. This is followed by a guide to some of the key concepts and principles that underpin the rules and a glossary of key definitions. The main operative provisions of the rules are then considered in more detail in the remaining sections of this Practice Note.

The order of contents is as follows:

  1. Background

  2. High-level summary of the rules

  3. Key concepts and principles

  4. Glossary of key definitions

  5. How the interest restriction is calculated and applied

  6. The fixed ratio method of calculating the interest restriction

  7. The group ratio method of calculating the interest restriction

  8. Elections

  9. Carry forward of disallowed interest

  10. Carry forward of unused interest allowance

  11. Provisions dealing with particular types of companies, businesses and transactions

  12. Banking groups

  13. Public infrastructure exemption

  14. Regime anti-avoidance rule

  15. Interest restriction returns

  16. Transitional rules


As part of the G20/OECD project to tackle Base Erosion and Profit Shifting (BEPS), the OECD published best practice recommendations for preventing erosion of the tax base by multinational businesses through the use of deductions for interest and other financial payments (Action 4).

The OECD report identified three basic scenarios in which BEPS involving interest and similar payments can arise:

  1. groups placing higher levels

Popular documents