Thin capitalisation - Revision history

imported>Doug Williamson: Add link.

2020-11-27T00:35:35Z

Add link.

← Older revision		Revision as of 00:35, 27 November 2020
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	== See also ==		== See also ==
			* [[Distribution]]
	* [[Equity]]		* [[Equity]]
	* [[Transfer pricing]]		* [[Transfer pricing]]

imported>Doug Williamson: Layout.

2018-12-01T15:25:51Z

Layout.

← Older revision		Revision as of 15:25, 1 December 2018
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	Thinly capitalised businesses would thereby enable transfer of taxable profits from the subsidiary to the parent by interest payments.		Thinly capitalised businesses would thereby enable transfer of taxable profits from the subsidiary to the parent by interest payments.


	The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting and set a limit on the debt:equity ratio beyond which interest is considered a capital distribution not available for deduction against taxable profits.		The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting and set a limit on the debt:equity ratio beyond which interest is considered a capital distribution not available for deduction against taxable profits.
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	== See also ==		== See also ==
			* [[Equity]]
	* [[Transfer pricing]]		* [[Transfer pricing]]
	* [[Equity]]

	[[Category:Accounting,_tax_and_regulation]]		[[Category:Accounting,_tax_and_regulation]]
	[[Category:Corporate_finance]]		[[Category:Corporate_finance]]

imported>Doug Williamson: Typo correction, placement of ':' symbol in editing pane.

2018-11-07T16:20:06Z

Typo correction, placement of ':' symbol in editing pane.

← Older revision		Revision as of 16:20, 7 November 2018
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	Thinly capitalised businesses would thereby enable transfer of taxable profits from the subsidiary to the parent by interest payments.		Thinly capitalised businesses would thereby enable transfer of taxable profits from the subsidiary to the parent by interest payments.

	The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting and set a limit on the debt		The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting and set a limit on the debt:equity ratio beyond which interest is considered a capital distribution not available for deduction against taxable profits.
	:equity ratio beyond which interest is considered a capital distribution not available for deduction against taxable profits.

	The test for tax purposes of a minimum acceptable proportion of equity is usually one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary. Similarly the rate of interest is often tested by reference to real borrowing rates of other similar businesses.		The test for tax purposes of a minimum acceptable proportion of equity is usually one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary. Similarly the rate of interest is often tested by reference to real borrowing rates of other similar businesses.

imported>Baseby2@msn.com at 16:56, 6 November 2018

2018-11-06T16:56:16Z

← Older revision		Revision as of 16:56, 6 November 2018
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	''Tax''.		''Tax''.

	The ~~loading up~~ of ~~a foreign subsidiary’s capital structure with interest bearing~~ debt.		The 'thin' part of the term 'thin capitalisation' refers to the amount of the equity injected into the subsidiary by the parent relative to the amount of debt. Thinly capitalised structures are apt to be challenged by the local tax authorities whose tax base is being eroded in this way.

	~~This has the effect - among other consequences -~~ of ~~transferring~~ taxable profits from the ~~foreign~~ subsidiary to the parent.		Thinly capitalised businesses would thereby enable transfer of taxable profits from the subsidiary to the parent by interest payments.
	~~(Because the subsidiary is paying a lot of debt~~ interest ~~to the parent, thus lowering the taxable profits of the subsidiary and increasing the profits of the parent~~.)

	~~Thinly capitalised structures are apt to be challenged by~~ the ~~local tax authorities whose tax base~~ is ~~being eroded in~~ this ~~way~~.		The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting and set a limit on the debt
			:equity ratio beyond which interest is considered a capital distribution not available for deduction against taxable profits.

	~~The 'thin' part of the term 'thin capitalisation' refers to the amount of the equity injected into the subsidiary by the parent.~~		The test for tax purposes of a minimum acceptable proportion of equity is usually one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary. Similarly the rate of interest is often tested by reference to real borrowing rates of other similar businesses.

	~~The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting.~~

	The test for tax purposes of a minimum acceptable proportion of equity (usually ~~expressed as a debt:equity ratio) is~~ one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary.


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	* [[Equity]]		* [[Equity]]

			[[Category:Accounting,_tax_and_regulation]]
	[[Category:Corporate_finance]]		[[Category:Corporate_finance]]
	~~[[Category:Accounting,_tax_and_regulation]]~~

imported>Doug Williamson: Add 'minimum' for clarity; link with Equity page; add Capital Structure to categorisation.

2014-08-06T13:45:53Z

Add 'minimum' for clarity; link with Equity page; add Capital Structure to categorisation.

← Older revision		Revision as of 13:45, 6 August 2014
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	The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting.		The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting.

	The test for tax purposes of an acceptable proportion of equity (usually expressed as a debt:equity ratio) is one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary.		The test for tax purposes of a minimum acceptable proportion of equity (usually expressed as a debt:equity ratio) is one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary.


	== See also ==		== See also ==
	* [[Transfer pricing]]		* [[Transfer pricing]]
			* [[Equity]]

	[[Category:~~Taxation~~]]		[[Category:Corporate_finance]]
			[[Category:Accounting,_tax_and_regulation]]

imported>Doug Williamson: Spacing and category addition 14/8/13

2013-08-14T15:26:12Z

Spacing and category addition 14/8/13

← Older revision		Revision as of 15:26, 14 August 2013
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	''Tax''.		''Tax''.

	The loading up of a foreign subsidiary’s capital structure with interest bearing debt.		The loading up of a foreign subsidiary’s capital structure with interest bearing debt.

	This has the effect - among other consequences - of transferring taxable profits from the foreign subsidiary to the parent.		This has the effect - among other consequences - of transferring taxable profits from the foreign subsidiary to the parent.
	(Because the subsidiary is paying a lot of debt interest to the parent, thus lowering the taxable profits of the subsidiary and increasing the profits of the parent.)		(Because the subsidiary is paying a lot of debt interest to the parent, thus lowering the taxable profits of the subsidiary and increasing the profits of the parent.)
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	Thinly capitalised structures are apt to be challenged by the local tax authorities whose tax base is being eroded in this way.		Thinly capitalised structures are apt to be challenged by the local tax authorities whose tax base is being eroded in this way.

	The 'thin' part of the term 'thin capitalisation' refers to the amount of the equity injected into the subsidiary by the parent. The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting.		The 'thin' part of the term 'thin capitalisation' refers to the amount of the equity injected into the subsidiary by the parent.

			The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting.

	The test for tax purposes of an acceptable proportion of equity (usually expressed as a debt:equity ratio) is one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary.		The test for tax purposes of an acceptable proportion of equity (usually expressed as a debt:equity ratio) is one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary.


	== See also ==		== See also ==
	* [[Transfer pricing]]		* [[Transfer pricing]]


			[[Category:Taxation]]

imported>Administrator: CSV import

2012-10-23T14:20:52Z

CSV import

New page

''Tax''.
The loading up of a foreign subsidiary’s capital structure with interest bearing debt.
This has the effect - among other consequences - of transferring taxable profits from the foreign subsidiary to the parent.
(Because the subsidiary is paying a lot of debt interest to the parent, thus lowering the taxable profits of the subsidiary and increasing the profits of the parent.)

Thinly capitalised structures are apt to be challenged by the local tax authorities whose tax base is being eroded in this way.

The 'thin' part of the term 'thin capitalisation' refers to the amount of the equity injected into the subsidiary by the parent. The thin capitalisation tax rules may deem that the equity capital is too 'thin' compared with the related amount of debt which this equity is supporting.

The test for tax purposes of an acceptable proportion of equity (usually expressed as a debt:equity ratio) is one which would be acceptable to an external lender such as an independent bank, lending directly to the subsidiary.

== See also ==
* [[Transfer pricing]]