The monetary and financial hindrance had a devastating influence on financial institution gains, with loss-making banks reporting worldwide advertisement losses of round USD four hundred billion in 2008. This accomplished document units the marketplace context for financial institution losses and gives an outline of the tax remedy of such losses in 17 OECD nations; describes the tax dangers that come up when it comes to financial institution losses from the viewpoint of either banks and profit our bodies; outlines the incentives that provide upward thrust to these hazards; and describes the instruments profit our bodies need to deal with those strength compliance dangers. It concludes with options for profit our bodies and for banks on how dangers regarding financial institution losses can most sensible be controlled and diminished. desk of content material :ForewordExecutive SummaryChapter 1. atmosphere the context for present degrees of financial institution tax lossesChapter 2. capability scale/fiscal rate of banks tax lossesChapter three. precis of nation principles when it comes to taxation of financial institution lossesChapter four. major matters for banks with regards to tax lossesChapter five. Compliance/tax probability concerns for profit our bodies on the subject of financial institution tax lossesChapter 6. instruments to be had to profit our bodies to handle compliance hazards in terms of financial institution tax lossesChapter 7. Conclusions and recommendationsAnnex A. state principles on the subject of taxation of financial institution lossesGlossary of acronyms and technical phrases
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E. it will contribute to its overall Return On Equity), and that value is accounted for on a cash, rather than Net Present Value (NPV) basis, providing an accounting (even if not a cash-flow) incentive for the bank to retain tax losses within the group as long as there is a likelihood of relief being given at some point in the future. On the other hand: • There are incentives for banks to seek to increase loss relief due in order to reduce costs and improve cash-flow, particularly as they rebuild profitability following the crisis, though to an extent this is no different from any tax planning in good or bad times.
5. com). 3tr write-down figure, and grossing up the implied losses of USD 489 billion by that fraction, thus USD 489 billion x USD 1300 billion/USD 876 billion = USD 726 billion, and this is rounded down to USD 700 billion. 6. com/markets, consulted on 26 or 29 March 2010. 7. EPS figures imply 2010 profits for these banks of USD 61 billion compared with publicly reported pre-tax profits for the same banks, and those they have subsequently acquired, of USD 273 billion. 8. Average weighted by current market capitalisation.
More fundamentally, some banks are concerned that tax policy in relation to the recognition of loan write-offs is in many cases more restrictive than accounting rules. They also expect revenue bodies to apply domestic and international tax rules consistently to both profits and losses. Some banks are concerned that countries may take an aggressive stance on losses allocated to their jurisdiction with the result that a significant part of a genuine commercial loss could not be allocated anywhere and hence could not be claimed by the taxpayer.