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Estimating deferred taxation on dividends in business groups

Author

Listed:
  • Francesco Brioschi

    (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)

  • Stefano Paleari

    (Dipartimento di Economia e Produzione, Politecnico di Milano, Milano, Italy)

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.

Suggested Citation

  • Francesco Brioschi & Giancarlo Giudici & Stefano Paleari, 2000. "Estimating deferred taxation on dividends in business groups," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(8), pages 329-338.
    • Handle: RePEc:wly:mgtdec:v:21:y:2000:i:8:p:329-338
    DOI: 10.1002/mde.993
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    References listed on IDEAS

    as
    1. French, Kenneth R. & Poterba, James M., 1991. "Were Japanese stock prices too high?," Journal of Financial Economics, Elsevier, vol. 29(2), pages 337-363, October.
    2. Kornbluth, J. S. H. & Salkin, G. R., 1994. "Mathematical programming models for ownership and control of European and American groups of companies," European Journal of Operational Research, Elsevier, vol. 74(3), pages 479-494, May.
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