Verification of Capital Structure Theory in the Light of Polish Tax Regulation in 2006
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The cost of acquired capital is the main factor determining capital structure. The models of capital structure are practically not applied in Poland because of little knowledge of their theoretical concepts and importance in business management. It has to be said that Polish regulations encourage high level of debts because percentage paid on foreign capital is tax deductible. Thus they are such as those of developed market economies. The difference is the relatively high cost of foreign capital due to the high level of rates in Poland. The necessary prerequisite of Polish enterprise prosperity is the taxing stability enabling to determine aims and effectiveness of financial and investment solutions. The article verifies the capital structure theories in the light of current and future tax regulations. The proper changes in the tax system may result in the increased interest in foreign capital use by enterprise. It may result in the lower capital cost.
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