1) Which (combination) of the above outlined solutions do you consider most appropriate to tackle any taxation problems that arise when dividends are paid across border to individual investors or to companies that are portfolio investors? Why do you prefer that option?
WE CONSIDER THE SIXTH OPTION – NO WITHHOLDING TAX IN THE STATE OF SOURCE AND NO TAXATION OF FOREIGN SOURCE DIVIDENDS IN THE STATE OF RESIDENCE – TO BE THE MOST APPROPRIATE SOLUTION. THIS OPTION WOULD ALLOW FREE MOVEMENT OF CAPITAL AND THUS CREATE A TRULY SINGLE MARKET, WHERE TAXPAYERS WOULD NOT BE DISCRIMINATED BASED ON THE STATES OF “SOURCE” AND “RESIDENCE”.
IT SHOULD BE NOTED THAT THIS OPTION WOULD NOT ELIMINATE TAXATION OF CORPORATE INCOME AS SUCH, SINCE BOTH CORPORATE INCOME AND DISTRIBUTED PROFITS WOULD CONTINUE TO BE TAXED.
2) Would you prefer a completely different solution and if so what solution do you suggest?
ELIMINATION OF DOUBLE TAXATION OF PROFIT BY ABOLISHING CORPORATE INCOME TAX AND TAXING ONLY THE DISTRIBUTED PROFITS (I.E. DIVIDENDS)