The monetary and monetary drawback had a devastating influence on financial institution gains, with loss-making banks reporting international advertisement losses of round USD four hundred billion in 2008. This entire document units the industry context for financial institution losses and gives an summary of the tax remedy of such losses in 17 OECD nations; describes the tax dangers that come up with regards to financial institution losses from the point of view of either banks and profit our bodies; outlines the incentives that supply upward thrust to these hazards; and describes the instruments profit our bodies need to deal with those strength compliance dangers. It concludes with strategies for profit our bodies and for banks on how hazards regarding financial institution losses can top be controlled and lowered. desk of content material :ForewordExecutive SummaryChapter 1. environment the context for present degrees of financial institution tax lossesChapter 2. capability scale/fiscal fee of banks tax lossesChapter three. precis of kingdom ideas with regards to taxation of financial institution lossesChapter four. major concerns for banks when it comes to tax lossesChapter five. Compliance/tax possibility matters for profit our bodies in terms of financial institution tax lossesChapter 6. instruments to be had to profit our bodies to handle compliance hazards relating to financial institution tax lossesChapter 7. Conclusions and recommendationsAnnex A. state ideas with regards to taxation of financial institution lossesGlossary of acronyms and technical phrases
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Extra info for Addressing Tax Risks Involving Bank Losses
ADDRESSING TAX RISKS INVOLVING BANK LOSSES © OECD 2010 32 – 3. SUMMARY OF COUNTRY RULES IN RELATION TO TAXATION OF BANK LOSSES Overview of relevant tax rules Although commercial accounts are generally the starting point for the recognition of bank losses, tax and accounting rules are only rarely completely aligned. This section of the report summarises the main features of participating countries’ tax rules that are relevant for understanding both the main issues for banks (see chapter 4) and the tax compliance concerns of revenue bodies (see chapter 5).
Early certainty over the revenue body’s attitude to a claim for tax losses can also make a substantial difference to a bank’s cost of capital. Certain banks have indicated that revenue body support – in real time – for tax loss claims has directly influenced regulators in accepting tax losses as available to contribute to regulatory capital. Without this, the banks would have needed to issue new capital, repay borrowings, and/or reduce their lending activity and this may have affected their recovery strategy.
SUMMARY OF COUNTRY RULES IN RELATION TO TAXATION OF BANK LOSSES – 35 backwards) is a feature of all tax systems, though there are marked differences between countries. between 5 and 20 years in some participating countries. Loss carry-back is allowed only in a few countries, and – where allowed – it is generally limited to between one and three years, although some countries have relaxed these limits, at least temporarily, in response to the financial crisis. Some countries additionally provide for quantitative limitations on the deduction of losses carried back or forward.
Addressing Tax Risks Involving Bank Losses by OECD