Question

What is the meaning of Tax Clienteles? (if possible, could you explain it with some examples?).And why is it hard to find Tax Clienteles in real business practices?

Answer 1

Clienteles

when any investor invest in market then in return it demand dividend, capital appreciation or interest if invested in bond or debentures, so clientele explain the movement in company stock price according to the demand and goal of the customer. Now coming to the point of clienteles tax when demand come in reaction with tax or other policy then it affect the stock price of the company

Categories of investors who have specific preferences for debt or equity because of differences in their personal tax rates. As mainly stock price is affected by dividend policy of the company

as the different age of investors have different expectation from the company if an matured age person invest in company then it demand a consistent rate of interest or dividend or if a younger age person invest then it demand capital appreciation I stock price so that capital gain occured when he get matured.

Example

In some year maruti suzuki does not declare dividend as the majority of stockholder are the age group of 20-40 so they want capital appreciation in their investment as when company declare dividend then it has to pay dividend distribution tax and also it taxed in the personal hand of stockholder it also affect affect the working capital requirement of the company as when company does not pay dividend then the earning help in growing of business also company does not take external commercial borrowing so their is no exp and no tax saving in form of exp and on the other hand of bank income there is no tax in govt portfolio so it is true that clienteles affect the tax which is mainly depend upon the demand and goal of the customer.

why is it hard to find Tax Clienteles in real business practices

1- Company does not have the precise data of age group of the share holder

2- some times company taken external borrowing which mandate them to follow their policy rules and regulation

3- it is not easy to company to maintain the balance between both customer demand and market expectation .