Estimating deferred taxation on dividends in business groups

Francesco Brioschi, Giancarlo Giudici and Stefano Paleari
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Francesco Brioschi: Dipartimento di Economia e Produzione, Politecnico di Milano, Milano, Italy, Postal: Dipartimento di Economia e Produzione, Politecnico di Milano, Milano, Italy
Giancarlo Giudici: Dipartimento di Ingegneria, Università degli Studi di Bergamo, Via Marconi, 5-24044 Dalmine BG, Italy, Postal: Dipartimento di Ingegneria, Università degli Studi di Bergamo, Via Marconi, 5-24044 Dalmine BG, Italy
Stefano Paleari: Dipartimento di Economia e Produzione, Politecnico di Milano, Milano, Italy, Postal: Dipartimento di Economia e Produzione, Politecnico di Milano, Milano, Italy

Managerial and Decision Economics, 2000, vol. 21, issue 8, 329-338

Abstract: In a group of companies corporate income taxation is levied on basic earnings and then on dividends paid to holding companies. The entity of this taxation depends on the tax regime, so that income may be taxed twice, first in the hands of the subsidiaries, then in the next years in the hands of holding companies. Therefore, consolidated profits may not be wholly paid to shareholders (who are the ultimate owners) and deferred taxes have to be computed in order to determine the true profitability of a group of companies. Using input-output theory, we developed a framework to estimate deferred taxation on dividends in business groups. Such relationships can be particularly useful when cross-shareholdings exist to determine deferred liabilities under several accounting standards. Copyright © 2000 John Wiley & Sons, Ltd.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:21:y:2000:i:8:p:329-338

DOI: 10.1002/mde.993

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