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Why Are Banks Paying So Little UK Corporation Tax?
Author(s) -
Meeks Geoff,
Meeks J. Gay
Publication year - 2014
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2014.12040.x
Subject(s) - accounts payable , taxable income , tax deduction , corporation , economics , finance , tax reform , business , value added tax , monetary economics , tax avoidance , ad valorem tax , profit (economics) , indirect tax , double taxation , state income tax , accounting , public economics , payment , gross income , microeconomics
This paper explores the dramatic fall in receipts of UK corporation tax (UKCT) from banks, and the widening gap between the global corporation tax recorded as payable in banks' financial statements and the UKCT receipts recorded by the tax authorities. It reviews possible explanations, including changes in tax rates, in operating profits, in deductions which reduce taxable profits, and in the share of profit originating in, or recorded in, overseas jurisdictions. It assigns significant roles to tax‐deductible asset impairments and to the allocation of profits among different jurisdictions. It suggests reasons why the recovery in banks' global operating profits may not be accompanied by an early sharp recovery in UKCT receipts.