Analysis of Interest Deduction Rules Under Ethiopian Corporate Tax System
Issue:
Volume 8, Issue 6, November 2020
Pages:
122-137
Received:
31 August 2020
Accepted:
19 September 2020
Published:
23 November 2020
Abstract: The use of third party and related party interest is one of the profit-shifting techniques available in international tax planning. The fluidity and fungibility of money make it a relatively simple exercise to adjust the mix of debt and equity in a controlled company. When the level of debt capital is much greater than the equity capital of the company thin capitalization occurs. Nowadays, thin capitalization is one of the major challenges to the corporate tax system of Ethiopia. Thin capitalization reduces government income from tax by increasing deductible interest paid or payable on the debt. To address this problem, Ethiopia has implemented tax rules restricting the deductibility of interest payments. This article aims to qualitatively examine the interest deduction rules under the Ethiopian income tax regimes through a qualitative analysis of existing literatures and laws. To this end, the analysis start unfolding the conceptual framework of interest deduction and its rules followed by an examination of interest deduction rules of Ethiopia. As the finding has revealed, the newly enacted federal income law has taken a big step in tightening the interest deduction rules through the adoption of debt-to-equity ratio and arm’s length approach to determine the maximum debt on which interest deductible. In doing so, the income tax rules of Ethiopia incorporated the indirect interest deduction rule which indirectly limits the amount interest on which is deduction is allowable. In addition to this, the withholding tax imposed on interest paid to non-resident and limit on maximum deductible interest rates are adopted as an interest deduction approach to supplement arm’s length and debt-to-equity ratio to protect tax base erosion. Despite these positive developments, the Ethiopian tax law has failed to recognize direct interest deduction rules which directly limit the maximum interest on which deduction is allowed. Nowadays, interest stripping rule is widely appreciated as the modern and most effective approach that directly restricts interest deduction. So, the failure to introduce a direct interest deduction rule is one of the major defect interest deduction rules in Ethiopia. Besides, the income tax law has failed to limit the special debt-equity ratio that applies to financial institutions. Furthermore, the tax law has failed to set a maximum deductible rate that applies to financial institutions licensed to lend in Ethiopia. To fill these gaps and ensure efficient protection of the tax base against erosion by deduction of interest payment, the researcher called for a direct interest deduction rule. Besides, the researcher called for the introduction of the debt-equity ratio that applies to a financial institution and the maximum deductible interest rate concerning the interest payment to legitimate financial institutions.
Abstract: The use of third party and related party interest is one of the profit-shifting techniques available in international tax planning. The fluidity and fungibility of money make it a relatively simple exercise to adjust the mix of debt and equity in a controlled company. When the level of debt capital is much greater than the equity capital of the com...
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Reproductive Health Status of Indian Women: A Critical Appraisal
Manimekalai Kalidhasan,
Ranjithkumar Arumugam
Issue:
Volume 8, Issue 6, November 2020
Pages:
138-143
Received:
10 October 2020
Accepted:
28 October 2020
Published:
27 November 2020
Abstract: Reproductive health is fundamental to social and economic development of a family, community as well as nation, and a key component of an equitable society. Reproductive health is important for gender equality and women empowerment. Women’s reproductive health status is poor, and their sexual and reproductive rights are not fully raised in many countries, maternal mortality rates are higher, and women’s, chances of dying of pregnancy-related complications are almost 50 times higher in developing countries than in developed countries. Women are particularly vulnerable and also have a lack of knowledge regarding reproductive health in India. Reproductive health is a concept of human rights. Important areas of concern for reproductive health programmes in India are poor quality of reproductive health services especially in an urgent situation; lack of focus of adolescent’s knowledge on reproductive health and lack of education. Women in India and particularly the economically disadvantaged women suffer the highest rates of complications due to pregnancy such as sexually transmitted diseases, and reproductive cancers. Lack of access to comprehensive reproductive care is the main reason, and many women suffer and die. Women are deprived of access to reproductive health care services and are influenced by the socio-economic cultural factors. Which include low social status in family and community, lack of access to economic resource and education, inability to make a decision about their health, nutrition and so on? Reproductive health facilities at the community level are poorly equipped to deal with gynecological and obstetric. Reproductive health is defined as a ‘state of complete physical, mental and social well-being and not merely the absences of disease or infirmity, in all matters relating to the reproductive systems and to its functions and processes’ (United States: 1994). Reproductive health addresses the human sexuality and reproductive processes, functions and system at all stages of life and implies that people are able to have a satisfying and safe sex life and that they have the capacity to reproduce and the freedom to decide, when and how often to do so. The main objectives of this study are; to study the reproductive health situation in an Indian context, to know the problems of women in respective of their reproductive system, the study aims at assessing the reproductive health status of Indian women, and to understand the relationship between reproductive health and gender rights.
Abstract: Reproductive health is fundamental to social and economic development of a family, community as well as nation, and a key component of an equitable society. Reproductive health is important for gender equality and women empowerment. Women’s reproductive health status is poor, and their sexual and reproductive rights are not fully raised in many cou...
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