Thin Capitalization Rules
Thin Capitalization Provisions
Thin capitalization provisions were inserted in July 2009 and apply to financial statements prepared on 31 December 2010 and onwards. Under these provisions, the accrued interest of loans or credits including bond loans and loan guarantees which are paid or credited to related enterprises are deducted, on the condition that the relation of these loans or credits to the net assets of the enterprise does not exceed the ratio of 3:1 on average per fiscal year. Accrued interest on loans and credits exceeding this ratio are not deductible.
These rules do not apply to leasing, factoring companies, banks and companies providing investment services.
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