Conduit Entities: Implications of Indirect Tax-Efficient Financing Structures for Real Investment
As well known, companies shift income from high to low tax jurisdictions. Typically, profit shifting is achieved by “direct” financing structures whereby companies use debt finance in the high tax entity and equity finance in the low tax entity. However, certain tax policies can lead to “indirect” financing structures whereby a conduit entity provides an opportunity to achieve at least two deductions for interest expenses for an investment made in the host country. The effect of “direct” and “indirect” financing structures on real investment is compared.
|Date of creation:||Apr 2003|
|Date of revision:||Sep 2004|
|Publication status:||Published under same title in International Tax and Public Finance, vol. 11, no. 4, pp. 419-34.|
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