Article 52 - Compensating Adjustment for Guarantor
(1) This Article applies in any case where—
Person ("the borrowing person") has liabilities under the terms of a loan received by the Person;
(b) those liabilities are to any extent the subject of a guarantee provided by a
Person ("the guarantor person"); and
(c) in computing the
Chargeable Profits or tax losses of the borrowing person for the purposes of these Regulations, the amounts to be deducted in respect of interest or other amounts payable under the terms of the loan fall to be reduced (whether or not to nil) under Article 48(3) by virtue of Article 49.
(2) On the making of a claim in writing to the
Tax Department by the guarantor person in any such case, the guarantor person shall, to the extent of that reduction, be treated for all purposes of these Regulations as if it (and not the borrowing person)—
(a) had received the loan;
(b) owed the liabilities under the terms of the loan; and
(c) had paid any interest or other amounts paid under the terms of the loan by the borrowing person.
(3) Where the borrowing person's liabilities under the terms of the loan are the subject of two or more guarantees (whether or not provided by the same Person) the total of the amounts brought into account by the guarantor persons by virtue of Article 52(2) must not exceed the total amount of the reductions that fall within Article 52(1)(c).
(4) Articles 51(4) and (5) shall apply in relation to a claim under Article 52(2) as they apply in relation to a claim under Article 51(1) by the second taxpayer but taking references in Article 48—
(a) to the first taxpayer, as references to the borrowing person; and
(b) to the second taxpayer, as references to the guarantor person.
(5) Article 49(5) also applies for the purposes of this Article.
|Amended (as from 18th June 2014)|