Taxing Financial Transactions: An Assessment of Administrative Feasibility
IMF Working Papers, August 1, 2011
Source details
- Canonical URL
- Taxing Financial Transactions: An Assessment of Administrative Feasibility
Other formats
Bibliographic details
- Authors: John D Brondolo
- Published: August 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781462309276.001
Overview and scope
- Author: John D Brondolo
- Publication type: IMF Working Paper (Working Paper No. 2011/185)
- Publication date: August 1, 2011
- Pages: 51
- Issue: 185
- Volume: 2011
- DOI: https://doi.org/10.5089/9781462309276.001
- Stock No: WPIEA2011185
- ISBN: 9781462309276
- ISSN: 1018-5941
- Subject areas: Currencies, Financial institutions, Financial instruments, Foreign exchange, Foreign exchange transactions, Money, Securities, Taxes, Transaction tax
- Keywords: Currencies, financial transactions tax, Foreign exchange transactions, forward contract, Global, market participant, OTC transaction, OTC transactions, Securities, stamp tax, tax administration, tax agency, tax liability, Transaction tax, transfer tax, WP
Central research question
- The paper examines how a tax on financial transactions could be applied to three broad and partially overlapping categories of financial instruments:
- (1) exchange-traded instruments;
- (2) over-the-counter instruments; and,
- (3) foreign exchange instruments.
Analytical approach and structure
- For each of the three instrument categories the paper:
- examines the factors that would facilitate or complicate the administration of a financial transactions tax;
- evaluates the options for collecting the tax;
- identifies the types of compliance risks that are likely to be encountered;
- describes measures for mitigating these risks.
Key findings (as summarized on the page)
- A tax on financial transactions can be analyzed separately for exchange-traded instruments, over-the-counter instruments, and foreign exchange instruments, recognizing partial overlap across these categories.
- Administrative feasibility depends on instrument type, market structure, and observable points for tax collection.
- Compliance risks vary by instrument category and by the chosen collection mechanism.
- Mitigation measures are necessary to address compliance risks inherent in different instruments and market practices.
Practical implications and policy considerations (as described)
- Policymakers need to consider:
- the specific administrative factors that facilitate or complicate taxation for each instrument category;
- the available options for collecting the tax given market structures (exchange-traded vs. OTC vs. foreign exchange);
- the likely compliance risks tied to each approach;
- targeted measures to mitigate identified compliance risks.
Metadata and access
- Format indicated: Chicago citation provided on the page.
- Notice: "This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate."
Source: IMF Working Paper — "Taxing Financial Transactions: An Assessment of Administrative Feasibility" (Working Paper No. 2011/185) by John D Brondolo, August 1, 2011.