Interest Deduction
the Debt Bias, Thin Capitalization Rules, and the BEPS Action Plan
DOI:
https://doi.org/10.46801/2595-7155.12.1.2023.2447Keywords:
interest deduction, thin capitalization rules, debt bias, EBITDAAbstract
We explore throughout this paper the national rules and the OECD recommendations for interest deduction for companies that are trading in more than one country. The article identifies the problem of the debt bias, strongly oriented by the tax system that discriminates the financing according to its origin, whether by debt or equity, resulting in the change of behaviour of the subjects of the discriminatory rule in favour of debt financing. In this sense, we use the OECD recommendations as a paradigm, EBITDA-base, to face the erosion of the tax base in an international context. Finally, we identify a normative concurrence in the Brazilian legislation that establishes two different criteria for the deduction of interest, one of those, has a purely anti-avoidance nature and the other threshold the benefit for domestic firms, in the first, the norm is objective, and later, the norm is subjective.
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