The Presidential Office announced the amended Income Tax Act, which included thin capitalization rules, on 26 January 2011. The Ministry of Finance issued on 22 June 2011 the Thin Capitalization Assessment Rules (TCAR). The TCAR applies retroactively from 1 January 2011. The salient points of the TCAR highlighted below. Prescribed inter-company debt-to-equity ratio (Arts. 2 and 5 of the TCAR) Tax deductible interest expense on inter-company debt is capped at a prescribed inter-company debt-to-equity ratio of 3:1. The non-deductible portion of interest expense on inter-company debt which exceeds the said stipulated threshold is calculated based on the following formula: a...