The five key developments in 2010 affecting international corporate taxes are as follows:
1. The debt cap
One of the biggest – at least most complex – changes of the year affecting larger groups was the introduction of the debt cap rules with effect from 1 January 2010. Much has been written on the technical details of these rules in this publication and so I will just recap briefly. The purpose of the rules is broadly to ensure that the corporation tax deduction for financing costs of UK companies which are members of a group does not exceed the group’s external financing costs on a worldwide basis. The rules are primarily aimed at ‘cash-rich’ foreign multinationals which finance their UK operations with intra-group debt and UK multinationals with upstream loans to the UK from overseas subsidiaries. There were many problems with the legislation originally...
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The five key developments in 2010 affecting international corporate taxes are as follows:
1. The debt cap
One of the biggest – at least most complex – changes of the year affecting larger groups was the introduction of the debt cap rules with effect from 1 January 2010. Much has been written on the technical details of these rules in this publication and so I will just recap briefly. The purpose of the rules is broadly to ensure that the corporation tax deduction for financing costs of UK companies which are members of a group does not exceed the group’s external financing costs on a worldwide basis. The rules are primarily aimed at ‘cash-rich’ foreign multinationals which finance their UK operations with intra-group debt and UK multinationals with upstream loans to the UK from overseas subsidiaries. There were many problems with the legislation originally...
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