1 / 15

Ecosocial Forum Europe Conference A New Basis to Finance International Duties VIENNA JUNE 2006

Ecosocial Forum Europe Conference A New Basis to Finance International Duties VIENNA JUNE 2006. Currency Transactions Tax. Implementation technical and legal aspects prof. Mr. L.A. Denys. Context: THE GLOBAL FOREIGN EXCHANGE MARKET.

mitch
Download Presentation

Ecosocial Forum Europe Conference A New Basis to Finance International Duties VIENNA JUNE 2006

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Ecosocial Forum Europe Conference A New Basis to Finance International Duties VIENNA JUNE 2006

  2. CurrencyTransactions Tax Implementationtechnical and legal aspectsprof. Mr. L.A. Denys

  3. Context: THE GLOBAL FOREIGN EXCHANGE MARKET equals forex trading : • annual forex turnover : 400.000 à 500.000 billion $ = one year • daily forex turnover : +2.000 billion $ = one day • world financial assets : 120.000 billion $ • world gdp : 40.000 billion $ = one month • world trade (goods & services) : 10.000 billion $ = one week • official development assistance (2004) : 70 billion $ = 15 minutes • Mill. Development Goals needs (2006) : 135 billion $ = 30 minutes • Mill. Development Goods needs in 2015 : 195 billion $ = 45 minutes ! Austria 2000 billion €

  4. Context: THE GLOBAL FOREX MARKET (cont’d) • annual turnover : 400 à 500.000.000.000.000 $ • daily forex turnover : 2.000.000.000.000 $ • average value per transaction (payment instruction) : 10.000.000 $ (200 to 500 million $ per transaction is not abnormal) • price setting : 20 times per minute exchange rate can alter several thousand times a day • 40 % transactions concluded in 3 days • 80 % transactions concluded within a week

  5. Context : THE GLOBAL FOREX MARKET (cont’d) • market share : 80 % in 11 financial centers • London City : 33 % • US : 18 % • Japan : 9 % • Singapore : 7 % • Germany : 5 % • Switzerland : 4 % • Hongkong : 4 % • France : 4 % • remaining 18 % : 8 countries account for 14 %

  6. Context : THE GLOBAL FOREX MARKET (cont’d) • market share : 90 % in 7 currencies • US $ : 45 % • € : 19 % • Yen : 11 % • £ : 8 % • Sw F : 3 % • CN$ : 2,3 % • AUS$ : 2,1 %

  7. Context : THE GLOBAL FOREX MARKET (cont’d) • worldwide market makers : 20 • banking system : • UK : 17 banks have 75 % market share • US : 13 banks have 75 % market share • 10 ww- banking groups have 50 % market share

  8. CTT : Estimated Potential Revenue • globally : + 50 to 200 billion $ • EU & Switzerland : 0,01 to 0,02 % = 17-20 to 30-40 billion $ • UNU – Wider report : +/- 30 billion $ • EU-commission estimates revenues at 0.01 % = 15 billion €

  9. Currency Transactions Tax • legistic inspiration of draft treaty • indirect tax on transactions Residence / source / origin / destination irrelevant ? Market tax mechanism • taxable transactions exchanges of currencies financial instruments having equivalent effect • taxable event : payment – settlement • location : parties / intermediaries / currency • taxable persons / tax liability Intermediary MN O – single entity Reverse charge - joint liability • tax rates (minimal) normal rate on all transactions within bandwidth (e.g. Belgium 0,02 %) (dissuasive) surcharge only on transactions with one currency in excessive fluctuation (e.g. Belgium 80 %) • taxation at wholesale level (settlement)

  10. CTT is a « GLOBAL » tax • treaty based • global tax base • global localisation • avoiding international double taxation • foregoing international tax avoidance ; simplicity – compliance costs (transactions costs) - minimal rate and world global wholesale financial market & legal security risk • collection through global architecture of financial sector supervised by Central Bank / Prudential supervision, (payment settlement, CLSB) MNO • local implementation (administration enforcement), global administrative & judicial monetary cooperation • funding of global public goods : redistribution of resources / democratic allocation of funds • tax burden on labour & household consumption vs capital (quid other capital markets)

  11. Taxation at wholesale level • central Banks control legal tender (national payment systems) • settlement institutions & CLS • Provided by Central Banks • Groups 70 fin. org. instit. & serves + 480 fin. memb. cust. • Aims at 80 % market share • prudential supervision • intra MNO transactions : • Single entity – consolidated approach • External auditing • reverse taxation ; joint liability • ML – legislation ; EU financial interest

  12. Tax avoidance & evasion : • delocalisation, deferral, substitution • payment and settlement system ; world financial architecture • joint liability ; reverse charges • single entity – approach MNO’s • external auditors role • International cooperation in • administrative tax control and collection tax • financial police and judicial enforcements • money laundering regulations & Financial Intelligence Units

  13. Unilateral European Ctt Law 1. PROCEDURE • shared competence in tax matters MS can introduce ; EU can harmonize unanimity at EU required ; Enchanced cooperation possible ; min. 9 • shared competence in development policy • in Eurozone : monetary surcharge exclusive EU competence ; Cooperation ECB • preferably : EU – Directive and Member State implementation (administration)

  14. Unilateral European CTT law 2. SUBSTANCE • concurrence of EU and CTT objectives • principles of internal market non discriminationvs. Justified distinction and acceptable fiscal disparity (CTT = distinct financial market (value fluctuation risk) with global economy benefits ; coexistence of Euro and other currencies in principle acceptable) free movement of capital, e.a. - Global and neutral tax base - Low rate : no market distortion - Justifications : development policy and monetary policy • EC Commission Reports 2002 - 2005

  15. CurrencyTransactions Tax

More Related