OPOREZIVANJE UTANJENE KAPITALIZACIJE − UPOREDNA ANALIZA PORESKIH SISTEMA CRNE GORE, SRBIJE I BOSNE I HERCEGOVINE
TAXATION OF THIN CAPITALIZATION − A COMPARATIVE ANALYSIS OF THE TAX SYSTEMS OF MONTENEGRO, SERBIA AND BOSNIA AND HERZEGOVINA

Author(s): Mirko Andrić, Milan Lakićević, Saša Vujošević
Subject(s): Economy, National Economy, Micro-Economics, Public Finances, Accounting - Business Administration
Published by: Finrar d.o.o Banja Luka
Keywords: capital structure; thin capitalization; double taxation treaties; multilateral convention; preferential tax system;
Summary/Abstract: The paper pays special attention to the tax treatment of thin capitalization in the tax systems of Montenegro, Serbia and Bosnia and Herzegovina, as well as to the activities that are undertaken in these countries in order to prevent tax evasion and profits’ transfer to the so called “tax havens”. In this context, special attention is given to the tax treatment of dividends paid and interest paid in comparative tax systems. Having in mind the fact that reduced capitalization is a form of tax evasion in the international framework, it is necessary to point out the implementation of agreements on the prevention of double taxation, as well as of the multilateral conventions, in order to prevent tax evasion and profits’ transfer to the so called countries of preferential tax jurisdictions. Thin capitalization is associated with an inadequate capital structure and arises as a result of the unequal tax treatment of dividends,as return on equity, and interest as return on borrowed capital. The capital structure means the relationship between equity and long-term debt. In cases when the equity is disproportionately smaller in relation to the borrowed capital, such a capital structure is considered as thin capitalization and most often represents a relationship between related parties. Thin capitalization can occur as a result of financial and tax reasons. It is most often caused by tax reasons, where various manipulations are used to tax redirection from one legal entity to another related legal entity that is under the tax jurisdiction of another state. The paper aims to analyze the treatment of thin capitalization in the tax systems of Montenegro, Serbia and Bosnia and Herzegovina and to consider the possibility of tax evasion on this basis.

• Details
• Contents