Deutsche Bank said that development from the new tax regime has been positive. The new tax bill takes the tax on non distributed profits to 20% in 2011 from 24% under the previous regime, according to a statement.
The dividend tax of 40% on distributed profits, now replaced with a withholding tax of 25%, is of greater importance. “We deem this positive for Greek corporates since under the new status the dividend tax will not be ΄paid΄ by the corporate ‐ it will not create a tax liability”, says the Bank’s report.
The Bank estimates that there will be an expansion of earnings and cash flows. The impact will be more profound for companies paying a larger proportion of earnings as dividends (including OPAP, PPC, Motor Oil, OTE and CocaCola Hellenic), as well as corporates with lucrative assets paying dividends to the parent company.
Despite the fact that some foreign institutional investors appear indifferent in the wake of the new tax changes and actual dividend received, “it is definitely a positive for the market”, says Deutsche Bank.
It also looks positive for the real economy in light of the recessionary environment, says the Bank.
Based on its calculations, this would imply an earnings uplift of 14%. Higher dividend payout companies (80% of earnings) would see their PE reduce by 3.0x, implying an earnings uplift of 27%.
“The market is up 10.5% ytd and should head higher on the back of such news flow”.
The names that should benefit most from the new tax bill include OPAP and Motor Oil, according to Deutsche Bank.
The dividend tax of 40% on distributed profits, now replaced with a withholding tax of 25%, is of greater importance. “We deem this positive for Greek corporates since under the new status the dividend tax will not be ΄paid΄ by the corporate ‐ it will not create a tax liability”, says the Bank’s report.
The Bank estimates that there will be an expansion of earnings and cash flows. The impact will be more profound for companies paying a larger proportion of earnings as dividends (including OPAP, PPC, Motor Oil, OTE and CocaCola Hellenic), as well as corporates with lucrative assets paying dividends to the parent company.
Despite the fact that some foreign institutional investors appear indifferent in the wake of the new tax changes and actual dividend received, “it is definitely a positive for the market”, says Deutsche Bank.
It also looks positive for the real economy in light of the recessionary environment, says the Bank.
Based on its calculations, this would imply an earnings uplift of 14%. Higher dividend payout companies (80% of earnings) would see their PE reduce by 3.0x, implying an earnings uplift of 27%.
“The market is up 10.5% ytd and should head higher on the back of such news flow”.
The names that should benefit most from the new tax bill include OPAP and Motor Oil, according to Deutsche Bank.
