On the taxation of stock repurchases on the taxation of stock repurchases

Stock repurchases are viewed by scholars, market participants and policymakers as a key transaction for companies seeking to optimize stockholder value. However, the net benefits of this practice are not consensual, which has motivated significant debate, especially the potential taxation of these operations. In this regard, the paper discusses the benefits and downsides of stock repurchases and the potential role of their taxation, and provides some international evidence and suggestions for policymakers. The main conclusion is that the only strong argument to implement the taxation of stock repurchases is to raise additional government revenue to finance public spending, and even that is not guaranteed in light of other alternatives to distribute cash.