Dreaded tax law on interest relaxed

The proposed amendment, published through Income Tax Amendment Bill 2019, comes after rigorous lobbying by business for the amendment of the recently introduced thin capitalisation law which was enacted on December 31, 2018.

The effect of the December 2018 law was to effectively limit interest expenses incurred by corporates as from July 1, 2019 as tax deductions. Previously, every company could claim 100% of its interest expense but the law limited it to 30% of what is known as Tax EBITDA, effectively increasing corporate tax.