Thin capitalisation rules determine how much of the interest paid on corporate debt is deductible for tax purposes.

Merging thin capitalisation rules with the transfer pricing rules.

Some tax authorities limit the applicability of thin capitalisation rules to corporate groups with foreign entities to avoid "tax leakage" to other jurisdictions.

At the risk of generalising, most traditionally common law countries do not tend to employ thin capitalisation rules generally in relation to raising and maintenance of capital.

Thin capitalisation rules limit the amount a company can claim as a tax deduction on interest when it receives loans at non-commercial rates (from connected parties, for example).

Hong Kong protects tax revenue by prohibiting payors from claiming tax deductions for interest paid to foreign entities, thus eliminating the possibility of using thin capitalisation to shift income to a lower-tax jurisdiction.

Introduction of UK to UK transfer pricing rules, coupled with the merging of the thin capitalisation rules with the transfer pricing rules (enacted by the Finance Act 2004).

The BVI Business Companies Act is based largely on New Zealand company law, but has been modified to include many of the characteristic features of offshore financial centres (such as removing restrictions on financial assistance and thin capitalisation, and permitting distribution in specie).

Regarding the specific measure of changes to thin capitalisation rules, we do not believe these will have a significant impact on investment.

In their present form, the thin capitalisation provisions only apply to related party debt.

Tighten "thin capitalisation" rules to make multinationals pay more tax.

Thin capitalisation and transfer pricing rules apply from the start of the 1997 income year.

New Zealand, like most countries, operates "thin capitalisation" rules to limit this practice.

How should the thin capitalisation provisions for onshore investment be tightened?

Apart from the impact of the actual changes, the alterations to thin capitalisation rules created uncertainty.

The associated tightening of the so-called thin capitalisation rules will proceed as planned.

Consequently, banks are much more highly geared than companies generally and this must be recognised in the thin capitalisation rules.

Thin capitalisation rules determine how much of the interest paid on corporate debt is deductible for tax purposes.

In the first year of operation, the thin capitalisation test will be applied at the end of a taxpayer's accounting period.

Domestic thin capitalisation rules would further disadvantage Australian multinationals expanding offshore.

If not, the thin capitalisation rules may impose restrictions on the gearing levels of Australian companies with only limited foreign ownership.

The only limitations to the rule itself are that it is subject to the existing thin capitalisation and conduit interest allocation rules.

Why did the introduction of thin capitalisation rules actually result in an increase in foreign investor debt funding?

The deductibility of exploration expenses and the rules surrounding thin capitalisation sent the wrong message to investors, he said.

Mr Hockey said he would keep but change so-called thin capitalisation rules that try to stop multinational companies avoiding tax.

Thin capitalisation rules - strengthened in the latest budget - limit the amount of debt that can be used to fund Australian operations.

He said that when combined with the proposed tighter rule for thin capitalisation, mining investment could suffer a double blow.

Australian branches of foreign banks should not be subject to both notional equity requirement and thin capitalisation rules.

If third party debt is brought within the thin capitalisation rules it is essential that the threshold for foreign control be increased substantially.

Merging thin capitalisation rules with the transfer pricing rules.

Thin capitalisation was one of several corporate tax changes expected to deliver a total of $4.2 billion of savings to the budget over four years.

There's also a feeling that the LNG industry is not the intended target of the thin capitalisation changes.

In summary, there is considerable uncertainty and concern amongst foreign banks about the proposed tightening of thin capitalisation conditions.

Finally, other changes to the thin capitalization rules need to be considered.

A number of factors support modifications to the thin capitalization rules, which were introduced in 1972.

• Modified the thin capitalization rules to work more effectively.

In certain circumstances, the thin capitalization rules limit a corporation’s deduction of interest expense.

Many jurisdictions have adopted "thin capitalization" rules to limit such charges.

In certain circumstances, including guaranteed debt in the scope of the thin capitalization rules has raised concerns.

Given their razor thin capitalization levels, there's a risk that credit losses continue to rise significantly as well as write downs.

Finally, consultations will be initiated on the extension of the thin capitalization rules to other arrangements and business structures, namely:

The Finance Act 2004 repealed the old rules governing thin capitalization, which allowed companies to assess their borrowing capacity on a consolidated basis.

• IT59R3 Interest on debts owing to specified non-residents (thin capitalization)

This arrangement may be used to shift income between the two non-American jurisdictions and avoid local taxes in one or the other, e.g. through thin capitalization.

THFC's thin capitalization, and resultant modest liquid financial resources, is a key weakness that constrains the rating.

MF Global collapsed in October 2011 following aggressive bets on sovereign debt, thin capitalization and questionable disclosures to investors.

The Government invites public comments with respect to both the proposed changes outlined above and the extension of the thin capitalization rules to other arrangements and business structures.

• Tightening the business tax system to limit tax-planning opportunities by amending rules with respect to thin capitalization, weak currency borrowings and non-resident owned corporations.

The thin capitalization rules ensure that a corporation's earnings are not paid out to significant non-resident shareholders in the form of tax-deductible interest rather than after-tax dividends.

A special thin capitalization rule penalizes subsidiaries of foreign shareholders if, instead of remitting after-tax dividends, they elect to pay interest on loans from shareholders.

Given their thin capitalization and what is effectively a taxpayer guarantee, Fannie and Freddie had no business dabbling in risky subprime loans in the first place.

• Thin capitalization – Under Canada’s tax conventions, Canada retains its right to limit the deductibility of interest under subsection 18(4) of the Act.

Income Tax Interpretation Bulletin Interest on debts owing to specified non-residents (Thin Capitalization) NO.:

Perhaps the transmission mechanism would be through US banks, many of which remain vulnerable, owing to thin capitalization and huge portfolios of mortgages booked far above their market value.

The main source of grief today is thin capitalization at some of the smaller companies, says Michael J. Album, a partner in the New York law firm Proskauer Rose.

In response to these concerns, the budget proposes that the thin capitalization rules in subsections 18(4) to 18(8) of the Income Tax Act be amended in the following manner:

Since there is no risk that this debt funding would lead to the corporation's earnings leaving Canada without being taxed, it need not be taken into account for the purposes of the thin capitalization rules.

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