Mar 062016
Debt planning and restructuring is a common mechanism to minimize taxable income by increasing deductions among different entities in a multinational group of companies. As interest on debt is generally a deductible expense of the payor and taxed in the hands of the payee, groups may create intercompany loans to place high levels of debt in high-tax countries, generate interest deductions in excess of actual third party interest rates, or fund the generation of tax-exempt income.