It doesn't only relate to internal loans, there are avoidance techniques that use external debt too.
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Replying to @georgenturner
George i feel like we are going round in circles. Article says "MNCs can set up Fincos in tax havens to loan money to their Opcos"...
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Replying to @MForstater
Are you deliberately not reading the next sentence?
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Replying to @georgenturner
No. i read it, but i don't get it - how you come to conclusion BEPs A4 will have no impact, by only looking at an external debt example?
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Replying to @MForstater
Intra-company loans + bank debt is not > intra company loans.
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Replying to @georgenturner @MForstater
Sorry. I must be misreading as I don't follow this. If ICL are say 100 and BD 100 then surely 100+100 is greater than 100?
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Replying to @iaincampbell07 @MForstater
My bad - hit the wrong arrow key. Indeed. Intracompany loans, plus bank debt is not smaller than ICD alone.
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Replying to @georgenturner @iaincampbell07
right I thought .BEPS4 designed to allow groups external debt but clamp down on thin capitalisation of subsids? (i.e not yr examples)
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Replying to @MForstater @iaincampbell07
As I said. Both here and on the blog, BEPS recommended cap includes both intra-company loans and bank debt.
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Replying to @georgenturner @iaincampbell07
Yes. But BEPS not against 3rd party debt per se - it’s against a loading a subsid w excessive proportion of groups debt…pic.twitter.com/OFwsmm3rnO
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Whereas yr example “dodgyco” seems to be a standalone co borrowing from third party.
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Replying to @MForstater @iaincampbell07
Its a made up company Maya. It was an example created purely to demonstrate in real terms how much debt a 30% EBITA ratio implies - a lot.
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