Taxation (International and Other Provisions) Act 2010 section 399

The group ratio percentage

Section 399 defines how to calculate the group ratio percentage for a worldwide group, which provides an alternative to the fixed ratio method for determining how much interest expense a group can deduct for tax purposes.

• The group ratio percentage is calculated by dividing the group's qualifying net group-interest expense by the group's EBITDA, expressed as a percentage.
• Qualifying net group-interest expense is the numerator and group-EBITDA is the denominator in the calculation.
• If the resulting percentage is negative, exceeds 100%, or the group-EBITDA is zero, the group ratio percentage is automatically set at 100%.
• The group ratio percentage is determined for each period of account of the worldwide group.