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Taxation of Financial Institutions in the Czech Republic

Author

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  • Veronika Síbrtová

Abstract

This article aims to analyse possible forms of taxation in the financial sector and, based on financial institutions' data, estimate the potential contribution to the state revenue of the Czech Republic, if the tax is levied on the banks' assets with the progression tax rate. The exponential smoothing methods were used to predict banks' assets for the following five years. Actual data from the MagnusWeb database and annual reports for Czech banks from 2008 until 2021 were used. This article estimates tax revenues for the Czech Republic by using the parameters of bank tax proposed by several political parties and comparing the results with the latest windfall tax proposal. Based on the results, the bank tax would represent the additional revenue of CZK 23.4-28.7 bn (0.34-0.39% of GDP) each year for the following five years, with an increasing trend for the basic scenario. The proposed windfall tax should represent the additional tax revenue of CZK 33 bn for 2023 with decreasing trend, as the tax should be temporary and levied only on excessive profits.

Suggested Citation

  • Veronika Síbrtová, 2023. "Taxation of Financial Institutions in the Czech Republic," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2023(1), pages 1-23.
    • Handle: RePEc:prg:jnlefa:v:2023:y:2023:i:1:id:278:p:1-23
    DOI: 10.18267/j.efaj.278
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    References listed on IDEAS

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    1. Veronika Solilová & Danuše Nerudová & Marian Dobranschi, 2017. "Sustainability-oriented future EU funding: a financial transaction tax," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(4), pages 687-731, November.
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    More about this item

    Keywords

    Bank Tax; Excessive Profit Tax; Financial Institutions; FTT; Taxation; Windfall Tax;
    All these keywords.

    JEL classification:

    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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