CbC reporting and PIK notes: Difference between pages

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''Tax''.
Debt instruments based on non-cash payment of interest coupons.


'CbC' means 'country-by-country' reporting in relation to tax.
Interest is usually recognised by an increase in the amount of principal owed by the borrower.




Taking the UK as an example, where CbC reporting has been implemented with effect from 2016:
PIKs are generally either unsecured loans or deeply subordinated securities ranking just before equity in the capital structure.


UK CbC reporting applies to all UK-headquartered multinationals and UK subsidiaries of foreign-owned multinationals.
This means that, in the event of a bankruptcy, PIKs are the last debts to be repaid, making them a high risk instrument for lenders and investors.  


These companies are required to provide the UK tax authorities (HMRC) with information about their global activities, profits and taxes annually for each tax jurisdiction in which they do business.
In order to compensate lenders for the risk, PIKs have to offer significantly enhanced rates of return to investors.




"HMRC thinks [CbC reporting] will influence behaviour and not just disclosure."
== See also ==
 
* [[Coupon]]
''Paul Johns, director treasury and tax, ISG plc.''
* [[Equity]]
 
* [[Interest]]
 
* [[Notes]]
==See also==
* [[Payment in kind]]
* [[Base erosion and profit shifting]]
* [[Principal]]
* [[Common Consolidated Corporate Tax Base]]
* [[Secured debt]]
* [[Corporation Tax]]
* [[Subordinated debt]]
* [[Diverted profits tax]]
* [[Unsecured debt]]
* [[Double taxation]]
* [[Fixed ratio method]]
* [[HMRC]]
* [[Multinational corporation/company]]
* [[Tax avoidance]]
* [[Transfer pricing]]
* [[Worldwide interest cap]]
 
 
===Other links===
 
*[[Media:BEPS_report_2013.pdf|OECD Action Plan on Base Erosion and Profit Shifting 2013]]
*[[Media:2015_10_Oct_-_Walk_the_line.pdf| Walk the line, The Treasurer, 2015]]

Revision as of 14:21, 22 August 2017

Debt instruments based on non-cash payment of interest coupons.

Interest is usually recognised by an increase in the amount of principal owed by the borrower.


PIKs are generally either unsecured loans or deeply subordinated securities ranking just before equity in the capital structure.

This means that, in the event of a bankruptcy, PIKs are the last debts to be repaid, making them a high risk instrument for lenders and investors.

In order to compensate lenders for the risk, PIKs have to offer significantly enhanced rates of return to investors.


See also

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