摘要：Five countries—Australia, Denmark, Germany, Italy, and New Zealand—have recently
adopted comprehensive restrictions on the deductibility of interest expense applicable in
the context of foreign direct investment. The introduction of section 18.2 of Canada’s
Income Tax Act, which denies the deduction of interest expense that can be traced to the
earning of certain forms of exempt income in the context of outbound direct investment,
is consistent with these legislative developments only in the broad sense that it attempts
to impose some form of deductibility restriction. The approach chosen by the Department
of Finance differs in two important respects from that adopted in those other countries.
First, it appears to be based on an assumption that different types of deductibility
restrictions are required in the context of outbound and inbound direct investment, with
the thin capitalization rules in subsections 18(4) to (6) applying in the latter context to
limit the deduction of interest expense on debt held by significant shareholders. Second,
tracing is used to link interest expense and foreign-source income in the context of
outbound direct investment. The comprehensive thin capitalization regimes in Australia
and New Zealand apply equally in the context of outbound and inbound direct investment,
as well as equally to intragroup debt and the external debt of a multinational group.
Interest expense in excess of a specified leverage ratio is denied deductibility unless a
resident corporation’s ratio is consistent with a multiple of the consolidated ratio of the
multinational group to which it belongs. The deductibility restrictions adopted in
Denmark, Germany, and Italy follow this same broad pattern, but an interest-coverage
ratio, characteristic of earnings-stripping legislation, is used to specify the permissible
level of interest expense.
This article argues that the legislative models adopted in these particular countries
are a preferable form of interest deductibility restriction in a second-best world in which
tax policy makers pursue the maximization of national welfare. Although the legislative
outcome is a largely symmetrical application of a comprehensive thin capitalization or
earnings-stripping restriction in the context of outbound and inbound direct investment,
the policy case for deductibility restrictions is somewhat different in these two contexts.
The competing legislative alternatives to an unrestricted interest expense deduction are
also different.
As a modified form of asset apportionment, a comprehensive thin capitalization
regime allows tax policy makers to realize a necessary balance between the need for
revenue maintenance and the encouragement of desirable outbound and inbound direct
investment. As a form of gross-revenue apportionment, a comprehensive earningsstripping
approach can realize the same balance, but there are some differences in
design features that may suggest a slight preference for a comprehensive thin
capitalization regime. The authors conclude with the presentation of some empirical
evidence of leverage ratios of Canadian corporations that tentatively suggest a baseline
in specifying a safe-harbour ratio. They believe that the Department of Finance should
take the opportunity provided by the report of the Advisory Panel on Canada’s System of
International Taxation to reconsider section 18.2, as well as the thin capitalization rules in
subsections 18(4) to (6).
关键词：Economic impact n foreign investment n interest deductibility n
international taxation n thin capitalization
