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. Law Society Says FTT Must Respect EU Laws

Law Society Says FTT Must Respect EU Laws

by Robert Lee, Tax-News.com, London

25 February 2014


Any legislation providing for the introduction of a financial transaction tax (FTT) must respect European Union treaties and the decision of a majority of member countries not to participate, according to the Law Society.

Law Society chief executive Desmond Hudson has written to EU finance ministers to raise the Society's concerns that current Tobin tax proposals do not sufficiently respect the rights and competences of the countries that have chosen not to be involved. The European Commission is accused of failing to "provide the necessary clarity on a number of practical, yet important issues," leading to uncertainty as to "how the tax will be collected and enforced, and what the legal position would be for non-participating member states and third countries."

Hudson's letter further states that the cumulative effect of the levy's "wide scope, the broad definition of establishment, the issuance principle as well as the FTT's joint and several liability is an extra-territorial reach that would make entities in non-participating member states subject to the FTT to an extent far beyond transactions with a genuine link to one of the territories of a participating member state." It could therefore be "fundamentally incompatible" with EU treaties.

Hudson also warns of a potential "'cascade effect' where the structure of the FTT leads to the possibility of multiple charges on one transaction as there is no exemption from the FTT for intermediaries." In turn, this "increases the risk that the tax will ultimately be passed on to end users," while the intended "joint and several liability would have the effect that non-financial institutions may nevertheless be liable for the FTT."

The Society is calling for "an exclusion to put beyond doubt that transactions involving collateral or other amounts provided by way of security are not subject to the FTT," and for the "scope of the primary market exemption" to be made clearer. The Commission should also clarify when the FTT would be charged on derivatives transactions, and make it explicit that the proposed anti-abuse rule is limited to FTT avoidance.

TAGS: tax | European Commission | revenue guidance | law | tobin tax | United Kingdom | legislation | tax planning | tax rates | revenue statistics | standards | trade association | trade | 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.

 






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 »