Sweden’s government today released a memorandum proposing corporate tax cuts and new interest deduction limitation rules.
The measures are proposed to be effective 1 July 2018. The memorandum will now be subject to consultation, with input required by 26 September 2017.
The Swedish rules for interest deductions in the corporate sector have been the subject of discussions and various changes for many years. The Ministry of Finance has now presented its proposal as to how Sweden would adapt its legislation regarding, inter alia, interest deductions in line with the EU Anti Tax Avoidance Directive of 12 July 2016. It have been observed that the government primarily advocates an EBIT rule, despite of the fact that EBITDA is generally internationally applied and also endorsed by the OECD and the EU. The government also advocates that the current interest deduction limitation rules remain in place, albeit with a somewhat more limited scope, despite certain criticism (e.g., in respect of legal certainty and difficulties in application). It remains to be seen how this will be received in the consultation. Furthermore, the Ministry of Finance proposes restrictions on the use of brought-forward losses and wants to introduce a flat-rate income on security reserves—also proposals that are expected to be subject to comments.
Read a June 2017 report prepared by the KPMG member firm in Sweden
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