Swedish Tax Agency Opposes Financial Industry Tax

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By Marcus Hoy

A Swedish government plan to introduce a tax on banks and other financial institutions is prompting criticism from an official at the nation’s tax agency.

Tomas Algotsson, head of unit at the agency’s legal department, told the Dagens Industri (DI) newspaper Jan. 15 that the proposed tax would increase administrative burdens both for companies and the tax authority, Skatteverket.

Litigation over the tax’s scope could also prove costly, he said. In a Jan. 17 statement provided to Bloomberg BNA, Algotsson confirmed the accuracy of the comments he made to DI.

On Nov. 7, 2016, a report commissioned by the Finance Ministry (SOU 2016:76) proposed that a new tax should be set at 15 percent of financial companies’ annual salary costs, effective from Jan. 1 2018. According to the report, this would be offset by the fact that financial services are exempt from value-added taxes.

However, Algotsson warned that not all affected companies enjoy significant VAT advantages.

An official tax agency opinion would be provided to the Ministry of Finance in February or March, he said, and its views would be discussed before any proposal was put to parliament.

Titled “Tax on the Financial Industry”, the Nov. 7 government report proposed that banks, insurance companies, fund management companies and other institutions that provide VAT-exempt financial services should be subject to the new tax. Intermediary companies and IT companies that provide financial services could also be affected.

The tax could raise up to 7 billion kroner ($1 billion) in 2018, the report said, depending on wage levels in the financial industry. The revenue would be used to bolster the nation’s stretched welfare services.

Ambiguity Over Scope of Tax

Prominent among the plan’s critics is the Swedish Bankers’ Association, which has said that the proposed tax could result in up to 16,000 job losses as companies relocate abroad. The bankers’ group also has also has said its unclear which companies would be affected.

“The gray area in the tax’s application will be significant,” Hans Lindberg, the association’s chief executive officer, told Bloomberg BNA Jan. 16.

“The administrative costs to manage the tax will not be proportional to the money it brings in. If the government wants to raise the tax on financial services, there are simpler and more effective ways of doing so.”

KPMG attorney Pontus Fornell told Bloomberg BNA Jan. 17 that Algotsson’s published views weren’t new, as similar comments had been made by the tax agency in an appendix to the Nov. 7 document.

“In the report there is a separate opinion from the tax agency, and some of the comments that appear in DI’s article can also be found there,” he said. “As far as we know, the agency has not come up with any additional official statement.”

The proposal is currently out for consultation until Feb. 15, after which the government will study opinions from interested parties with a view to drafting a bill later in 2017.

To contact the reporter on this story: Marcus Hoy in Copenhagen at correspondents@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

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