The most prevalent treatment of loan intermediary services in global VAT treatment is the characterisation of the services as exempt or input taxed supplies. It is almost universally recognized that this treatment is suboptimal in terms of VAT theory and outcomes, leading to compounding overtaxation of registered enterprises using the services and undertaxation of final consumers. Developing workable alternatives is a challenge, however. While some jurisdictions have adopted partial solutions for particular types of taxpayers or transactions—zero-rating some supplies, taxing others using additive methods to determine the base, recharacterizing finance leases as taxable supplies—no jurisdiction has successfully tackled the full problem. This chapter reviews the merits and drawbacks to the various alternatives that have been tried and proposed.
|Title of host publication||VAT and Financial Services|
|Subtitle of host publication||Comparative Law and Economic Perspectives|
|Editors||Robert F. van Brederode, Richard Krever|
|Place of Publication||Singapore|
|Number of pages||19|
|Publication status||Published - 8 Mar 2017|
van Brederode, R. F., & Krever, R. (2017). Taxing loan intermediary services: theory and design considerations. In R. F. van Brederode, & R. Krever (Eds.), VAT and Financial Services: Comparative Law and Economic Perspectives (pp. 15-33). Springer. https://doi.org/10.1007/978-981-10-3465-7_2