background image
13.2. Thin-capitalization and other Restrictions to Interest Deduction

Interest paid is deductible only up to a maximum of 125% of the Central Bank’s auction rate.

Effective 1 January 2019, interest paid on foreign debts exceeding 2 times the equity, is not allowed as a deductible expense for corporate tax purposes. The limitation is not applicable to loans received from foreign banks and credit institutions, and loans on bonds traded in foreign stock exchanges. Further, intragroup loans from abroad are subject to transfer pricing rules.