International Taxation 94B

difference between implicit and explicit Guarantee
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Quick Summary
This discussion explores the distinction between explicit and implicit guarantees within the context of International Taxation 94B. An explicit guarantee is akin to a formal contract, while an implicit guarantee is broader, often applying to holding companies with subsidiaries. It's noted that these terms lack formal definitions in section 94B, which could potentially lead to future legal disputes.

Explicit Guarantee - It could be understood as an express agreement between two parties or a contract of guarantee.

Implicit Guarantee - It would have a wide coverage and narrow interpretation should be avoided. For eg of there is a wholly owned subsidiary or a partial subsidiary of company, then there would be implicit guarantee on holding company.

However, one may note that these are terms are not defined in section 94B and can lead to unnecessary litigation going forward.

Thanks and Regards,
Nihit Somani
Thanx

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