BEPS Action 4: Interest Deductions and Other Financial Payments
On 18 December 2014, the OECD, as part of its work on the Action Plan to address Base Erosion and Profit Shifting (BEPS), released a Public Discussion Draft on Action 4 in relation to the deductibility of interest expense and economically equivalent financing payments. The Discussion Draft outlines three main alternatives to address non-taxation through the use of interest deductions:
- Deduction limitations based on group attributes
- Deduction limitations based on fixed economic ratios and
- Targeted anti-avoidance measures.