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How to handle the new corporate interest restriction

Daniel Head and Kashif Javed (KPMG) assess some of the practical challenges facing corporate groups.
 

Following the endorsement of the BEPS package of measures by G20 leaders and the OECD in 2015 the final updated Action 4 report (limiting base erosion involving interest deductions and other financial payments) was finalised in December 2016.

After a period of consultation the government announced on 13 July 2017 that it intends to enact the new corporate interest restriction (CIR) regime in a Finance Bill after Parliament’s summer recess with a commencement date of 1 April 2017. This article is based on the draft Finance Bill legislation published on 8 September 2017 and the draft HMRC guidance published on 4 August 2017.

The CIR regime which will also replace and extend the existing worldwide debt cap rules introduces a complex overlay to the UK corporate tax code applicable to financing transactions....

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