It also outlines three versions of a financial activities tax (FAT): an addition method FAT compensating for the VAT exemption which would be designed to compensate for the VAT exemption of the financial sector and tax the sum of wages and profits; a rent-taxing FAT that can also be designed, using accrual basis, specifically to tax economic rents only. In this case, the tax base would be remuneration (wages) and the profit as defined for corporate income tax purposes, but in contrast to the addition method FAT, only profits above a defined level would be taxed; and a risk-taxing FAT that would tax excess return due to unduly risky activities.
Notably, the consultation weighs in on options for a bank levy, stating, “The proposals of how the financial sector might contribute to costs of future crisis via a tax cannot be separated from the potential changes to be made to the regulatory framework, especially the possible introduction of a bank levy for the financing of a bank resolution fund.”
The deadline for comment is on 19 April 2011.
© European Commission
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