Implications of Us Multinationals’ New Interest Expense Rules
Saturday, July 28th, 2007Internal Revenue Code ( “Code”), section 864 (e), implemented by and dry. Treas. Reg Sec. 1861-11t, requires that all members of a “national group of partners” to be treated as a corporation for the purposes of the apportionment rates between domestic and foreign interest income. That is why, by application of this rule, income from foreign sources to a foreign company, its own interest expense can be reduced twice: once by foreign companies of their own staff payment of interest and the second by interest calculated by local groups, divided the assets of the earned income from foreign sources.