DEBRA
From ACT Wiki
Tax - tax avoidance - European Union (EU).
Abbreviation for the Debt-equity bias reduction allowance tax initiative of the EU.
The EU's DEBRA tax initiative aims to encourage companies to finance themselves with equity rather than with debt financing.
- Reducing the risk of bankruptcies
- "Over-indebtedness could threaten the stability of the financial system and increase the risk of bankruptcies, which would in turn increase unemployment.
- "The [DEBRA] initiative will introduce an allowance for equity-financed new investment, to mitigate debt bias.
- "The whole scheme will incorporate a number of robust anti-tax avoidance rules to ensure tax fairness."
- DEBRA - proposal for a Directive - European Commission.
- DEBRA - what we're consulting on
- "The objective of the consultation is to collect views and opinions... on the perception of the tax induced debt-equity bias and the possible solutions to tackle it.
- To this aim, the consultation will gather information and knowledge on the existence and magnitude of indebtedness due to the tax debt bias and potential impacts of the policy options...
- The information gathered through the consultation will comprise the definition of equity, the reasons for indebtedness of EU companies, possible solutions to address the tax induced debt-equity bias, the appropriate level of the notional interest rate for an allowance on equity, or the need for a higher rate for SMEs.
- Concerning the anti-abuse framework, the input gathered through the consultation should provide us with information on stakeholders’ views on an effective, proportionate and dissuasive framework of anti-abuse rules linked to the measure."
- DEBRA - consultation - European Commission.
- DEBRA will contribute to re-equitisation
- "The green and digital transitions arising from the EU decision to move towards a climate neutral and digital economy will require large investments in new technologies and innovation that imply a need for capital.
- In such a context, equity financing facilitates risky investments in breakthrough technologies. An allowance for equity financing would
also contribute to the re-equitisation of companies.
- Companies with a solid capital structure are less vulnerable to shocks, and more prone to make investments and take risks.
- This can positively affect competitiveness, growth and ultimately employment."
- DEBRA - consultation - European Commission - Commission expert group Platform for Tax Good Governance - October 2021.
See also
- Allowance
- Bankruptcy
- Business in Europe: Framework for Income Taxation
- Capital structure
- Debt
- Debt equity ratio
- Debt for equity swap
- Digital economy
- Directive
- Equity
- European Commission
- European Union
- Notional
- Re-equitisation
- SME
- Tax
- Tax arbitrage
- Tax avoidance
- Tax harmonisation
- Transition
