DEBT FINANCING COSTS FROM THE TAX LAW PERSPECTIVE: LEGACY TREATMENT VS. RECENT DEVELOPMENTS
Keywords:
debt financing costs, thin capitalisation, excessive financing costs, debt-equity bias reduction allowanceAbstract
The paper explores the development of tax rules governing debt financing cost and analyses factors that have led to a rapid shift away from legacy treatments based on very general and somewhat soft limitations on tax deductions of excessive debt in recent years. The new concepts of excessive financing costs, hybrid instrument mismatches, minimum effective tax, misuse of shell entities, and debt-equity bias reduction are examined on the background of legacy concepts like thin capitalisation and transfer pricing.
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