Dividends taxation is important for both, corporate finance managers as well as for external investors who take care about their net investment return. Dividends taxation represents cost of capital and on the other hand, it influences investors' decisions to invest and provide financial resources to public limited company. Dividend taxation causes double economic taxation, which rise cost of capital and has adverse effect on foreign direct investment inflow. There are several possible systems how to tax dividends, overall they can be classified to classical, extreme and hybrid systems. To attract foreign investors, improve business environment and enhance fairness of taxation, Slovak government adopted rule under which since 2004 dividends have not been taxed anymore. However, in times of financial crisis potential tax revenues coming from taxation of dividends could improve total government tax revenues and assist in cutting government budget deficit. The purpose of this study is to find out whether dividend taxation is statistically significant determinant of foreign direct investment inflow to Slovak republic. We analyze potential impact of imposition of tax on dividends on foreign direct investment inflow to Slovakia. To fulfil our research task, we employ system of linear equations. Our research suggests that if Slovak government adopts other than extreme system of taxing dividends making them subject to tax, it will have statistically significant adverse effect on foreign direct investment inflow to country. Based on our research results we do not recommend any change to dividend taxation in Slovakia