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| Author: | Kari, S. Ylä-Liedenpohja, J. |
| Title: | Cost of capital for cross-border investment: The fallacy of Estonia as a tax haven |
| Journal: | Baltic journal of economics
2005 : AUTUMN-WINTER, VOL. 5:1, p. 28-43 |
| Index terms: | Estonia Finland Investment Taxation |
| Language: | eng |
| Abstract: | This article analyses the utility of having subsidiaries in other countries, which have different taxation systems. The initial cost of equity of a foreign subsidiary and the opportunity cost of reinvesting its marginal foreign profits both depend on repatriation taxes. This article focuses on the situation between Finland and Estonia. It suggests that Estonian subsidiaries, which pay no tax on undistributed profits but a corporate dividend tax, offer tax benefits to their parents only in terms of intra-marginal profits. |
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