Taxation and Leverage in International Banking - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Taxation and Leverage in International Banking write by Ms.Grace Weishi Gu. This book was released on 2012-11-30. Taxation and Leverage in International Banking available in PDF, EPUB and Kindle. This paper explores how corporate taxes affect the financial structure of multinational banks. Guided by a simple theory of optimal capital structure it tests (i) whether corporate taxes induce subsidiary banks to raise their debt-asset ratio in light of the traditional debt bias; and (ii) whether international corporate tax differentials vis-a-vis foreign subsidiary banks affect the intra-bank capital structure through international debt shifting. Using a novel subsidiary-level dataset for 558 commercial bank subsidiaries of the 86 largest multinational banks in the world, we find that taxes matter significantly, through both the traditional debt bias channel and the international debt shifting that is due to the international tax differentials. The latter channel is more robust and tends to be quantitatively more important. Our results imply that taxation causes significant international debt spillovers through multinational banks, which has potentially important implications for tax policy.
Taxation, Bank Leverage, and Financial Crises
Taxation, Bank Leverage, and Financial Crises - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Taxation, Bank Leverage, and Financial Crises write by Ruud A. de Mooij. This book was released on 2013-02-25. Taxation, Bank Leverage, and Financial Crises available in PDF, EPUB and Kindle. That most corporate tax systems favor debt over equity finance is now widely recognized as, potentially, amplifying risks to financial stability. This paper makes a first attempt to explore, empirically, the link between this tax bias and the probability of financial crisis. It finds that greater tax bias is associated with significantly higher aggregate bank leverage, and that this in turn is associated with a significantly greater chance of crisis. The implication is that tax bias makes crises much more likely, and, conversely, that the welfare gains from policies to alleviate it can be substantial—far greater than previous studies, which have ignored financial stability considerations, suggest.
Debt, Taxes, and Banks
Debt, Taxes, and Banks - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Debt, Taxes, and Banks write by Mr.Michael Keen. This book was released on 2012-02-01. Debt, Taxes, and Banks available in PDF, EPUB and Kindle. Understanding the impact of the asymmetric tax treatment of debt and equity on the capital structures of financial institutions is critical to shaping and assessing responses to the problem of excessive leverage that underlay the 2009 financial crisis - but there is no empirical evidence to draw on. Guided by a simple model of banks? financing decisions in the presence of both regulatory constraints and tax asymmetries, this paper explores the impact of corporate tax bias on bank leverage, the use of hybrid instruments and regulatory capital ratios for a panel of over 14,000 commercial banks in 82 countries over nine years. On average, the sensitivity of banks? debt choices proves very similar to that of non-financial firms, consistent with rough offsetting of two opposing effects suggested by the theory. As the model predicts, somewhat counter-intuitively, the impact of tax on hybrids is generally weak or insignificant. Responsiveness to taxation varies significantly across banks, however: those holding smaller equity buffers, and larger banks, are noticeably less sensitive to tax.
International Taxation of Banking
International Taxation of Banking - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook International Taxation of Banking write by John Abrahamson. This book was released on 2020-02-20. International Taxation of Banking available in PDF, EPUB and Kindle. Banking is an increasingly global business, with a complex network of international transactions within multinational groups and with international customers. This book provides a thorough, practical analysis of international taxation issues as they affect the banking industry. Thoroughly explaining banking’s significant benefits and risks and its taxable activities, the book’s broad scope examines such issues as the following: taxation of dividends and branch profits derived from other countries; transfer pricing and branch profit attribution; taxation of global trading activities; tax risk management; provision of services and intangible property within multinational groups; taxation treatment of research and development expenses; availability of tax incentives such as patent box tax regimes; swaps and other derivatives; loan provisions and debt restructuring; financial technology (FinTech); group treasury, interest flows, and thin capitalisation; tax havens and controlled foreign companies; and taxation policy developments and trends. Case studies show how international tax analysis can be applied to specific examples. The Organisation for Economic Co-operation and Development Base Erosion and Profit Shifting (OECD BEPS) measures and how they apply to banking taxation are discussed. The related provisions of the OECD Model Tax Convention are analysed in detail. The banking industry is characterised by rapid change, including increased diversification with new banking products and services, and the increasing significance of activities such as shadow banking outside current regulatory regimes. For all these reasons and more, this book will prove to be an invaluable springboard for problem solving and mastering international taxation issues arising from banking. The book will be welcomed by corporate counsel, banking law practitioners, and all professionals, officials, and academics concerned with finance and its tax ramifications.
Tax Policy, Leverage and Macroeconomic Stability
Tax Policy, Leverage and Macroeconomic Stability - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Tax Policy, Leverage and Macroeconomic Stability write by International Monetary Fund. Fiscal Affairs Dept.. This book was released on 2016-12-10. Tax Policy, Leverage and Macroeconomic Stability available in PDF, EPUB and Kindle. Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. ‘Debt bias’ (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern. This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries’ tax reform plans in the coming years.
