CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. EU FTT Under Fire From International Trade Associations

EU FTT Under Fire From International Trade Associations

by Ulrika Lomas, Tax-News.com, Brussels

19 April 2013


The European Commission's proposed financial transaction tax (FTT) would have "unprecedented extraterritorial impacts," a number of trade associations have warned in a letter to the G20 finance ministers.

Representatives of the Australian Financial Markets Association (AFMA), the Global Financial Markets Association (GFMA), the Investment Industry Association of Canada (IIAC), the Japan Securities Dealers Association (JSDA), and the Korea Financial Investment Association (KOFIA) composed the letter to "express strong opposition" to the measure. A request is made that the ministers also resist the proposals.

Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia are progressing with plans for an FTT along the lines of "enhanced cooperation." This procedure, which enables those states wishing to work more closely together to do so, was authorized by the European Council of Economic and Financial Affairs (Ecofin) in January. Under the European Commission's plans, all share and bond transactions will be taxed at a rate of 0.1%, and derivatives transactions at 0.01%. The tax is intended to apply from January, 2014.

The letter claims that the FTT would apply to transactions well beyond this EU11. Transactions where either the buyer or seller is resident in an EU11 country, the security was issued in an EU11 country, or an EU11 financial institution, or any of its foreign branches, is involved in the transaction, will be affected. According to the letter, this means that "the FTT would apply to the sale of corporate bonds of a French company by a Japanese bank to a Canadian bank through a US dealer-broker." The FTT therefore "conflicts with repeated calls by the G20 to avoid measures exhibiting extraterritorial effects."

The cost of equity and debt financing for both governments and businesses will increase, as will the cost of hedging transactions undertaken in the real economy to manage risk, the letter also warns. Because the FTT is intended to apply to a broad range of transactions, it is feared that the adverse effects on the global economy will be multiplied.

With global markets remaining fragile, "now is not the time to experiment with policies that will fragment markets, increase market volatility, harm savings, and impede growth," the letter stresses.

TAGS: tax | investment | business | European Commission | Belgium | Portugal | Slovenia | tobin tax | Australia | Estonia | Slovakia | tax rates | Austria | Canada | France | Germany | Greece | Italy | Spain | G20 | tax reform | trade association | trade | European Union (EU) | Japan | Europe

To see today's news, click here.

Leave a comment

Read our Posting Guidelines

 






Close

Password Reminder

Please enter your email address to receive a password reminder.

 

Log into Tax-News+
Not registered yet? Find out about our daily news alert service »

 Email: 
 Password: 

Login »

Forgotten your password?







Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Tax-News+ Updates

Receive FREE daily updates from Tax-News.com, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...

 

Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »