Law Commons^™

Taxing State-Owned Enterprises: Understanding A Basic Institution Of State Capitalism, Wei Cui

Osgoode Hall Law Journal

State-owned enterprises (“SOEs”) have become active investors in global markets in the last decade, challenging policymakers in Canada and other Organisation for Economic Co-operation and Development countries to confront the logic of “state capitalism.” This article develops a novel theory of the income taxation of SOEs. Many countries subject their SOEs to the income tax, but economists tend to dismiss SOE taxation as superfluous. A contrary, popular belief holds that SOE taxation is necessary to ensure fair competition. This article shows that both views are mistaken and explains SOE taxation in terms of the agency problem for dividend policy. Because …