THE IMPACT OF A TAX ON DIVIDENDS AND ITS INCIDENCE ON CAPITAL GAINS REALISATION IN RELATION TO TAXING CAPITAL GAINS FROM SHARES IN CAMEROON IN LIGHT WITH THE DOUBLE TAXATION LAWS

Abstract

Dividend payments to shareholders are crucial in accordance with the conventional wisdom on dividend taxation in order to draw in investors. This is justified by the fact that regular dividend distributions, which are an expression of realised earnings, may serve as a signal of profitability to both present and potential shareholders. A similar goal is to impose certain managerial restraints through the regular distribution of dividends by limiting the amount of cash flow available to managers to fund their own self-serving endeavours. Since profits are ultimately paid as dividends according to this theory, investment initiatives will primarily rely on the issuance of new shares as a source of funding. Given the emphasis on distribution and the tax rate that applies to dividends, it is assumed under the traditional view that any reduction in the tax rate on dividends could contribute to a higher dividend payout. The traditional view's justification has, however, come under fire for its underlying premises.