Banks and Corporate Income Taxation: A Review

Gawehn, Vanessa

doi:10.2139/ssrn.3498843

Cited by 4 publications

(2 citation statements)

References 68 publications

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“…An increase in interest rates means that banks are able to shift the tax burden onto customers. A review of various empirical studies by Gawehn (2020) agrees with this finding: corporate income taxation has an impact on banks' pricing decisions, which leads to a higher tax burden on customers.…”

Section: Literature Reviewmentioning

confidence: 53%

The Impact of Bank Tax on Lending Margin

Čeponis

Kuslys

Šarapovas

2021

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In February 2016, Poland implemented a bank tax paid by monetary financial institutions based on the assets of their balance sheets. Two years later, the same tax was proposed in Lithuania. Critics of the tax claimed that the tax burden in Poland shifted to customers by increasing the lending margin, and were this tax to be implemented in Lithuania, negative economic consequences would be likely. The aim of this paper is to estimate the potential impact of the bank tax on the lending margin in Lithuania by evaluating the case of Poland. Currently, research studies do not provide a definitive answer about the effects of bank taxation, mainly because various types of bank tax exist. Further research of the bank tax implemented in Poland could provide more information about the consequences of the bank tax applied to the assets of financial institutions. Also, a previous investigation of Poland’s bank tax was limited by a short time series. Currently, a more accurate analysis could be done by using data over a longer period of time. Following previous research, difference-in-differences estimation is used to evaluate the impact of the policy change and uses data from the period 2012 to 2020. The results of the analysis are significant and show that the bank tax had a positive impact on lending margins in Poland by an average value of 0.39%. The descriptive analysis of the Herfindahl index shows that the banking sector of Lithuania is highly concentrated, implying that the tax burden would be shifted to bank customers by increased lending margins. In this way, the banking sector in Poland managed to avoid paying the levy by shifting the burden onto consumers. The same outcome is to be expected in Lithuania. The findings of the paper suggest that Lithuania should consider alternative ways of taxation since increased lending rates could have a negative effect on the overall economy of the country.

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Section: Literature Reviewmentioning

confidence: 53%

The Impact of Bank Tax on Lending Margin

Čeponis

Kuslys

Šarapovas

2021

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“…Corporations frequently remit corporate taxes in advance, in installments, or on the stipulated deadline in an effort to enhance their financial efficacy. Gawehn (2020) undertook a German-based study that aimed to explore the correlation between corporate income taxation and banks. The investigation revealed that taxes play an integral role in various key areas such as debt financing, tax incidence, organizational form choices, profit shifting, financial reporting transparency, and customers' tax avoidance.…”

Section: Empirical Literature Reviewmentioning

confidence: 99%

Relationship between increased Taxation and Financial Performance of Kenyan Firms

Aringo

2023

AJOCS

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Taxation plays a critical role in financing government activities, public services, and economic development. This study focuses on examining how taxation impacts the financial performance of firms in Kenya. The complex interplay between tax policies and financial outcomes is multifaceted, and understanding these dynamics is crucial for effective tax strategies and financial optimization. The theoretical frameworks of "Ability to Pay Theory," "Classical Taxation Theory," and "Political Power Theory" are explored to provide insight into the relationships between taxation and business performance. These theories help us understand how tax rates, incentives, and political influences can affect firms' profitability, investment, and overall financial performance. By reviewing existing literature and conducting empirical research, this study aims to shed light on the specific challenges and opportunities that taxation presents to businesses in Kenya. The study observed that the influence of taxation on the financial performance of Kenyan firms is significant and multifaceted. Understanding the effects of customs duty, PAYE, and VAT is crucial for informed decision-making and effective management of financial resources in the business environment. Further research should explore the specifics of these impacts and potential mitigating measures.

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The impact of the effective tax rate change on financial assets of commercial banks: The case of Visegrad group countries

Andrejovska,

Glova,

Regaskova

et al. 2024

E+M

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While many tax professionals have discussed corporate taxation in the banking sector and its effectiveness on bank institutions, investment decisions, bank size, asset structure, or bank rentability, there is little evidence of tax efficiency within V-4 Group. The research on banks and tax rates is mainly based on American data. Few papers solved banking stability and corporate taxes within the European countries. This paper examines effective corporate taxation in the banking sector of the V-4 Group and aims to find out how the effective tax rate change affects commercial banks’ financial assets. In this study, we examine the relationship between variables using regression analysis in which we assess the impact of ETR on bank financial assets. We examined data in the consolidated financial statements data of commercial banks and tested their impact on the economy. Our findings supported the theory that ETR impacts the banking sector, particularly capital and equity financing. However, the results did not prove the research hypothesis, in which we assumed that an increase in ETR would lead to an increase in financial assets. Based on our results, it leads to an increase in equity assets (7.34%) and a decline in debt assets (16.83%).

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Banks and Corporate Income Taxation: A Review

Cited by 4 publications

References 68 publications

The Impact of Bank Tax on Lending Margin

The Impact of Bank Tax on Lending Margin

Relationship between increased Taxation and Financial Performance of Kenyan Firms

The impact of the effective tax rate change on financial assets of commercial banks: The case of Visegrad group countries

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