Historically, the cost of financing business through debt has reduced income tax paid.Financing via new equity has not.This Ansell Lighting Twistlock 50W Gimbal GU10 Chrome Die-Cast Downlight asymmetry has not been without consequences.
The high indebtedness and relative undercapitalisation of corporates creates a risk of reduced resilience to economic shocks.Some countries have introduced tax incentivisation of equity, reduced tax incentivisation of debt, or both.In June 2022, the European Commission proposed a harmonised solution: Debt Equity Bias Reduction Allowance (DEBRA).
All EU Member States, including the Collections Czech Republic, should provide corporate income tax deduction for equity, whilst further limiting interest deduction, starting 2024.