The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
In most instances, a company’s financing income and expenses are taxed or relieved under the loan relationships regime. There are several different sets of rules governing the amount and timing of the tax deductions which are available. However, additional restrictions have been proposed which will apply to a wide range of interest and interest-like transactions such as:
CTA 2009, ss 292–476 (Pt 5)
The legislation in this area uses the term ‘tax-interest expense’ to include all the financing costs listed above. For simplicity, the term ‘interest’ is used in this guidance note.
This guidance note describes in outline the main concepts and features of the restrictions.
The main driver for the new rules to restrict the deductibility of interest has been the Organisation for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) project which has delivered two key pieces of guidance:
The reports make recommendations for dealing with the use of excess financial gearing to generate tax deductions in high-tax jurisdictions, the use of intra-group debt to boost tax deductions and the use of debt to generate income in low tax jurisdictions such as Luxembourg.
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