On 20 December 2018, the Income Tax Act 2010 (Amendment No. 3) Regulations 2018 were published. The Regulations implemented the EU Anti-Tax Avoidance Directive as following:
Interest limitation rules
The deduction of net interest expenses is limited to the higher of 30% of the taxpayer's EBITDA or EUR 3,000,000. The excess interest expense may be carried forward indefinitely and the unused interest capacity may be carried forward for a maximum of 5 years.
To qualify as a CFC the following conditions should be met: (i) the resident itself or together with its associated enterprises should hold a direct or indirect participation of more than 50% of the voting rights, capital, or rights to the profits of the entity, and (ii) the actual tax paid on the profits by the entity or PE is lower than the difference between the tax that would have been charged on the entity or PE according to the Income Tax Act and the actual tax paid by the entity or PE on its profits.
The CFC's accounting profits not exceeding EUR 750,000 and non-trading income not exceeding EUR 75,000 or the CFC's accounting profits not exceeding the 10% of its operating costs for that tax year are excluded from the scope of these rules.
The Regulations are effective to accounting periods beginning on or after 1 January 2019.
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