Conduit Entities: Implications of Indirect Tax-Efficient Financing Structures for Real Investment |
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Authors: | Jack Mintz |
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Institution: | (1) J.L. Rotman School of Management, University of Toronto and the C.D. Howe Institute, Canada |
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Abstract: | 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. |
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Keywords: | business taxes multinational company finance and investment |
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