A multinational enterprise may adopt a tax avoidance mechanism under the contribution of paid-in capital to its subsidiary in Taiwan is decreased, while increasing its loans to the subsidiary as much as possible. This may result in the minimization of the taxable income of the subsidiary through the increase in interest expense deduction of the subsidiary. Under such an arrangement, non-deductible dividend payments are replaced with deductible interest payments.
Anti-thin capitalization that was originated from the arm's length principle is adopted from Article 9(1) of the OECD Model Tax Convention. Many countries set a fixed debt-equity ratio as a safe harbor to anti-tax avoidance. In this paper, we use factor analysis to find the optimal debt-equity ratio under the optimal capital structure model. The purpose of this study is to find an optimal debt-equity ratio and propose suggestions in order to revise the law and advance tax system.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0213108-150744 |
| Date | 13 February 2008 |
| Creators | Wu, Gu-ling |
| Contributors | Cho, Hai-Tao, Diana H. Tsai, Fahn, Jiin-ming |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0213108-150744 |
| Rights | not_available, Copyright information available at source archive |
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