The study examines the tax treatment of mutual funds relative to the claim of mutual companies that the present practice of taxing their income constitutes double taxation, ie., at the level of the mutual fund company and its shareholders. Given the significant role of mutual fund companies in the mobilization of domestic savings and the development of the capital market, the study notes that while there is legally no double taxation on the income of mutual funds, there may be justifiable reasons to provide tax incentives to shareholders of open-end investment companies in the area of income taxation depending on the policy thrust of the government.
