2. Int'l Tax Update Significant Developments in the Global Tax System - Andrew Seidler
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Interest deduction limitations<br />
<strong>Tax</strong> Change<br />
New Interest<br />
Deduction<br />
Limitation<br />
Post Reform Law<br />
• Limits <strong>the</strong> net <strong>in</strong>terest expense<br />
deduction to 30 percent of adjusted<br />
taxable <strong>in</strong>come (ATI)<br />
• For 2018 through 2021, ATI will<br />
approximate earn<strong>in</strong>gs before<br />
<strong>in</strong>terest, taxes, depreciation and<br />
amortization (EBITDA)<br />
• After 2021, ATI will approximate<br />
earn<strong>in</strong>gs before <strong>in</strong>terest and taxes<br />
(EBIT)<br />
• Disallowed <strong>in</strong>terest generally may<br />
be carried forward <strong>in</strong>def<strong>in</strong>itely<br />
• Limitation does not apply to<br />
bus<strong>in</strong>esses with an average<br />
gross receipts of ≤$25 million<br />
USD and certa<strong>in</strong> agricultural,<br />
farm<strong>in</strong>g and real estate<br />
bus<strong>in</strong>esses<br />
• “Net <strong>in</strong>terest expense” so back<br />
to back loans rema<strong>in</strong> viable for<br />
<strong>in</strong>tercompany f<strong>in</strong>anc<strong>in</strong>g<br />
activities<br />
• Real property trade or<br />
bus<strong>in</strong>esses that use ADS and<br />
farm<strong>in</strong>g bus<strong>in</strong>esses may elect<br />
not to be subject to <strong>the</strong> bus<strong>in</strong>ess<br />
<strong>in</strong>terest deduction limitation<br />
28
Change language