Dividends are the most tax-efficient way to repatriate funds because they are distributed on an after-tax basis.

Question

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Dividends are distributed on a pre-tax basis, meaning that the company has already paid taxes on the profits before distributing dividends to shareholders. When a shareholder receives a dividend, they must pay taxes on it, which could result in double taxation. Other methods of repatriating funds, such as a stock buyback or selling assets, may be more tax-efficient in certain circumstances.

Dividends Are the Most Tax-Efficient Way to Repatriate Funds Because