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The monetary and financial difficulty had a devastating impression on financial institution earnings, with loss-making banks reporting worldwide advertisement losses of round USD four hundred billion in 2008. This accomplished document units the industry context for financial institution losses and offers 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 viewpoint of either banks and profit our bodies; outlines the incentives that supply upward push to these hazards; and describes the instruments profit our bodies need to deal with those power compliance hazards. It concludes with thoughts for profit our bodies and for banks on how hazards regarding financial institution losses can most sensible be controlled and decreased. desk of content material :ForewordExecutive SummaryChapter 1. atmosphere the context for present degrees of financial institution tax lossesChapter 2. power scale/fiscal rate of banks tax lossesChapter three. precis of state ideas with regards to taxation of financial institution lossesChapter four. major matters for banks when it comes to tax lossesChapter five. Compliance/tax chance concerns for profit our bodies in terms of financial institution tax lossesChapter 6. instruments on hand to profit our bodies to handle compliance dangers in terms of financial institution tax lossesChapter 7. Conclusions and recommendationsAnnex A. kingdom ideas relating to taxation of financial institution lossesGlossary of acronyms and technical phrases
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They will also depend on the perceived “market price” for losses, which will take into account the demand for this type of planning from corporate groups with tax capacity, and the supply of tax losses available. • The availability of planning opportunities to shelter tax on future profits without the use of losses. If a low cost alternative to tax losses as a means of sheltering taxable profits is available, the value of the losses to a third party corporate group (and therefore to the bank) will be reduced.
Commercial losses are by their nature a signal of commercial distress, and early resolution of a claim for tax losses can be crucial in securing cash-flow benefits, including through repayment or offset of tax otherwise payable. 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.
Ideally, banks would wish to have certainty over the future tax treatment of past and current losses as they reassess their business plans following the recent turmoil. The degree of certainty over that is likely to affect banks’ appetite for aggressive tax planning. Some banks are concerned that revenue body audit procedures may mean that they do not have certainty about the amount of losses available to be used in the future, even though the loss- ADDRESSING TAX RISKS INVOLVING BANK LOSSES © OECD 2010 4.
Addressing Tax Risks Involving Bank Losses by OECD