Tag Archive for deductibility of intercompany interest expense

China Relaxes Procedures To Send Cash Out Of Country

iStock_000015914943XSmallAccording to a recent Deloitte webcast China is simplifying its procedures for outbound payments.

Bulletin [2013] No. 40 and Huifu [2013] No. 30 removes the requirements of tax clearance certificates for outbound payments.

Also, SAFE is allowing cross-border cash pooling for pilot multinational companies and state-owned enterprises. This allows for cross-border intercompany borrowing, lending and netting or cash pooling (within limits). Tax considerations include deductibility of intercompany interest expense, withholding tax on interest payments, and transfer pricing issues concerning intercompany charges.

Further, excess cash from the China operations of an MNC could be used to finance overseas cash needs of sister companies via equity or debt. Read more