thin capitalization

thin capitalization An arrangement in which a company is incorporated (typically in another jurisdiction) with a small share capital and financed with a large loan from its parent company. The arrangement is often designed to give tax relief on the interest payment on the loan, whereas no relief would be available on dividends paid on shares. In the UK a special tax regime is applied in certain instances of thin capitalization, so that excessive interest paid on the loan is treated as if it were a dividend, thus denying the right to a tax deduction.

• bar code
• bareboat charter
• bargain
• barratry
• barrel
• barriers to entry
• barriers to exit
• BARS
• barter
• base currency
• base date
• base metals
• base rate
• base-weighted index
• base year
• BASIC
• basing-point pricing
• basis of assessment
• basis point
• basis swap
• basket of currencies
• Basle Accords
• batch costing
• batch-level activities
• batch processing