As is the case with most jurisdictions, a typical thin-capitalisation regulation places a cap on the gearing ratio in the capital structure of a company and any debt more than that is treated as equity whereby the corresponding interest expense is not allowed as a tax deductible expense. Though the capital gearing ratio may be differently prescribed for different sets of industries, stage of project cycle, type of investment and so on, a range of 2:1 to 3:1 is often observed.