TaxCorporate TaxNo value in bank VAT charge

No value in bank VAT charge

Research points to little tax to be gleaned from making banks liable to VAT

CHARGING BANKS VAT would not significantly increase the tax take from the sector – instead it could lower receipts, according to new research.

The study by professor Ben Lockwood of the University of Warwick, undertaken with PwC, showed that subjecting banks to VAT would potentially create a minor net increase in tax collected.

If EU banks were subject to VAT, they could recover the VAT on their costs. Banks’ business customers would be charged back which could be reclaimed, so the only potential increase would be through charging VAT on consumers.

It is unlikely that governments would make much more tax, the report finds, with some of its analysis pointing to a net loss for EU tax revenues.

“The conclusions are based on national income data from 26 (out of 27) EU member states and, while the study makes a number of assumptions, it does not support a view that imposing VAT on banking services would significantly increase VAT revenues,” said professor Lockwood. “In fact, it could even decrease them.”

Related Articles

Markets expected to respond positively to US policy changes

Corporate Tax Markets expected to respond positively to US policy changes

7m Alia Shoaib, Reporter
'Innocent' companies will be hit by tough HMRC anti-fraud powers

Corporate Tax 'Innocent' companies will be hit by tough HMRC anti-fraud powers

1y Stephanie Wix, Writer
Building company director banned for 7 years for VAT under-declaration

Corporate Tax Building company director banned for 7 years for VAT under-declaration

1y Richard Crump, Writer
Berkshire motor business VAT fraudsters sentenced

Corporate Tax Berkshire motor business VAT fraudsters sentenced

1y Richard Crump, Writer
The growth and challenges of digital sales taxes globally

Corporate Tax The growth and challenges of digital sales taxes globally

1y Editorial comment
CIoT urges government to rethink VAT approach to online traders

Corporate Tax CIoT urges government to rethink VAT approach to online traders

1y Richard Crump, Writer
UK votes to leave EU – accountancy profession reacts

Accounting Firms UK votes to leave EU – accountancy profession reacts

1y Fraser Simpson, Reporter
HMRC calls for extra time in Spot the Ball legal battle

Corporate Tax HMRC calls for extra time in Spot the Ball legal battle

2y Fraser Simpson, Reporter