Addressing Tax Risks Involving Bank Losses

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The financial and economic crisis had a devastating impact on bank profits, with loss-making banks reporting global commercial losses of around USD 400 billion in 2008.  This comprehensive report sets the market context for bank losses and provides an overview of the tax treatment of such losses in 17 OECD countries; describes the tax risks that arise in relation to bank losses from the perspective of both banks and revenue bodies; outlines the incentives that give rise to those risks; and describes the tools revenue bodies have to manage these potential compliance risks. It concludes with recommendations for revenue bodies and for banks on how risks involving bank losses can best be managed and reduced.



Annex A. Country rules in relation to taxation of bank losses

This section of the report summarises the main features of the relevant rules in the countries which contributed to the drafting of the report. It is not intended to be exhaustive but simply to give an overview of relevant rules in relation to the tax treatment of losses for the purpose of assessing where tax risks may arise both for business and for revenue bodies. The relevant rules can be categorised as, first, those relating to the recognition, for tax purposes, of losses on loans or securities and, second, those relating to the relief of overall losses incurred in a taxable period.


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