Question

Suppose a company is domiciled in a country with no corporate income tax (no withholding tax). Income tax is deferred until the moment of profit distribution. When dividend is paid, company withholds dividend income tax of 21% on gross amount. How about a tax shield component in cost of capital (cost of debt post taxes), is there a tax shield or not? In the presence of a long-term dividend payout policy and your FCFF including dividend income taxes, would you consider cost of debt after tax? At investor level, both dividends and loan interests are taxed similarly.