Template-Type: ReDIF-Article 1.0
Author-Name: Lyudmila V. Polezharova
Author-Email: mila-minfin@mail.ru
Author-Workplace-Name: Ministry of Finance of the Russian Federation, Moscow, Russia
Title: Thin capitalization: the Mechanism of Resistance
Abstract: The article author examines the international thin capitalization practices. She examines the principles used when the business organization’s expenses are recognized in the books when the interest on debt obligations is paid to the affiliated entities as the income tax base is formed. The author examines what impact the use of the recognition principle makes on the economic entities’ behavior, and the role the expenditure plays as a tax instrument. She looks into how the provisions in the international taxation agreements influence the way the thin capitalization is made on the national levels providing her own suggestions for the way the Russian capitalization rules should be formed.
Classification-JEL: F23, F38
Keywords: thin capitalization, national deficient capitalization rules, affiliated entities’ transactions, international taxation agreements, use of thin capitalization for getting a tax benefit
Journal: Finansovyj žhurnal — Financial Journal
Pages: 23-36
Issue: 1
Year: 2011
Month: January
File-URL: http://www.nifi.ru/images/FILES/Journal/Archive/2011/1/statii/2011_01_02.pdf
File-Format: Application/pdf 
Handle: RePEc:fru:finjrn:110102:p:23-36