Impact of Estonian distributed profits tax on corporate finances: a literature review
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Abstract
This paper examines tax aspects related to distributed profits tax (DPT) in Estonia, which was the first country to introduce a corporate income tax on distributed profits (the so-called Estonian CIT). The main area of research centres on Estonian tax reform, with a particular emphasis on understanding their effects on corporate finances. Since its introduction in 2000, Estonia has consistently applied DPT, which has greatly benefited rapidly growing businesses. The DPT system is considered capable of promoting investment; it also fosters economic growth and capital accumulation. Additionally, the Estonian CIT could serve as a model for other countries to consider adopting a distributed profits tax system. It is vital to evaluate the influence of the Estonian tax reform on corporate finances to inform policymaking in this field, in particular in a context where the opaque corporate tax system in Poland urgently requires rational changes. The main area of the research centres on Estonian tax reforms, with a particular emphasis on understanding their implications and effects. This paper makes use of an analysis of legal sources and scholarly literature, complemented, to some extent, by empirical data, in accordance with the nature of the research problem.
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