It has long been recognised that multinational enterprises have opportunities to avoid income tax. While the primary technique available to multinationals to avoid tax is the use of manipulated transfer prices, taxes can also be avoided by olher means. One such alternative is the way that multinationals finance their foreign subsidiaries. By choosing to flnance foreign subsidiaries primarily with debt from the parent company instead of equity capital, further tax savings can be achieved - hence the term 'thin capitalisation'. This book examines the issues pertaining to thin capialisation, including:

• the features of income tax systems that give rise to incentives for multinational companies to avoid tax using thin capitalisation arrangements;
  
• how much arrangements would allow non-resident investors to avoid New Zealand tax;
  
• the effects of Double Taxation Agreements and OECD recommendations;
• how other countries have attempted lo deal with thin capitalisation; and
  
• options as to how the problem can be solved.