OECD: “Group ratio rule” under BEPS Action 4 | KPMG | GLOBAL

OECD: Discussion draft, “group ratio rule” under BEPS Action 4

OECD: “Group ratio rule” under BEPS Action 4

The Organisation for Economic Cooperation and Development (OECD) today released a discussion draft which addresses the design and operation of the “group ratio rule” under Action 4, Interest deductions and other financial payments, of the base erosion and profit shifting (BEPS) project.


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The 52-page discussion draft [PDF 1.1 MB] deals with elements of the design and operation of the group ratio rule under Action 4 (Interest deductions and other financial payments). Comments are due by 16 August 2016.


The final version of the report on BEPS Action 4, Limiting base erosion involving interest deductions and other financial payments, indicated that the OECD will continue to conduct detailed work on the design and operation of the group ratio rule, to be completed in 2016. Today’s discussion draft has been produced as part of the follow-up work on this issue, and focuses on:

  • Approaches to calculate a group’s net third-party interest expense
  • A definition of “group-EBITDA” (earnings before interest, taxes, depreciation and amortisation)
  • Approaches to deal with the impact of losses on the operation of the group ratio rule.

The discussion draft includes a number of specific questions related to particular aspects of these topics. 

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