LIBOR Transition Tax Issues

By June 2023, the remaining U.S. dollar LIBOR tenors will be phased out and replaced by a variety of alternative reference rates. What are the potential tax consequences for capital market participants?

In December 2021, the IRS published final regulations providing guidance when changing from LIBOR to a new reference rate; however, certain complexities and pitfalls in the application of the rules remain. Practical challenges, such as restrictions imposed by current systems and processes used to price and monitor transactions, also remain. In addition, transfer pricing methodologies and documentation requirements will need to be robust for related-party transactions.

Read this KPMG summary that outlines steps to take to prepare for the end of LIBOR and provides answers to the top 10 frequently asked questions we hear from our clients about the tax issues surrounding LIBOR transition.

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