Interbank offered rates (IBORs) are interest rate benchmarks that underpin a huge number of loans and derivatives. The majority of London interbank offered rates (LIBORs) will be discontinued at the end of 2021. In assessing the overall risk and cost associated with transition away from IBORs, businesses should determine the potential tax implications, which could include taxable amounts arising from accounts carrying value changes or ‘disposal’ events caused by transition, ineffectiveness of hedging relationships for tax purposes, and transfer pricing considerations. Businesses should consider now any actions that could reduce the risk of adverse tax outcomes.
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Interbank offered rates (IBORs) are interest rate benchmarks that underpin a huge number of loans and derivatives. The majority of London interbank offered rates (LIBORs) will be discontinued at the end of 2021. In assessing the overall risk and cost associated with transition away from IBORs, businesses should determine the potential tax implications, which could include taxable amounts arising from accounts carrying value changes or ‘disposal’ events caused by transition, ineffectiveness of hedging relationships for tax purposes, and transfer pricing considerations. Businesses should consider now any actions that could reduce the risk of adverse tax outcomes.
If you are not a subscriber, subscribe now to read this content.
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