See the Unseen in Intercompany Loans 31 May 2019
Get attuned on the finer details to stand up to scrutiny by tax authorities
A subsidiary borrows from a third party at 1% to 2% and on-lends to its head office at a significantly higher interest rate. This arrangement resulted in its head office claiming a large interest deduction and the subsidiary earning a profit of over $1 billion which was not taxed in any country. Sounds familiar?