Interest on equity capital as an allowance for business income tax - model approaches

Anna Leszczyłowska

Abstract


It is common for the majority of income tax systems all over the world that the cost of debt financ- ing lowers the taxable income while financing with equity is not treated similarly. The question raised in the article is connected with the way the cost of equity financing can be calculated for tax purposes. The aim of the paper is to identify and to analyze some model approaches which allow to lower the taxable base with the cost of equity financing. Some practical experiences form several European countries are analyzed which enables to distinguish between classical model, incremental model and incremental model with a dual tax rate.

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DOI: http://dx.doi.org/10.17951/h.2014.48.3.197
Date of publication: 2015-05-23 19:36:29
Date of submission: 2015-04-17 20:28:20


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