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.



Summary of country rules in relation to taxation of bank losses

This chapter summarises relevant country tax rules relating to bank losses. These include rules for how losses are recognised for tax purposes as well as rules for how tax relief may be given in respect of such losses. The rules are complex, and differ from country to country, and the chapter aims to summarise the key elements under a number of themes, including the tax treatment of the write-down of loans and securities, rules for offsetting tax losses against other income of the same company, rules for offsetting tax losses within a group of related companies, rules for the carry-over of unrelieved tax losses, rules for the treatment of foreign losses and restrictions on tax relief for a loss being given more than once.


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