Fisher-Weil duration and Tax incentive: Difference between pages

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''Risk management''.  
1.  ''Tax and treasury''.


Duration calculates the weighted average timing of the cashflows of an instrument, weighted by the present values of the cashflows.  
Tax incentives usually are tax-beneficial legal structures, designated physical locations, investments, activities, financial arrangements or instruments that are intended by the revenue authority attract exemption from - or reduced liability to - different forms of taxation.


Tax incentives are designed by the tax rule-setting authorities to encourage particular wanted activities, contrasted with unintended tax "loopholes" and over-aggressive tax planning.


Two forms of the duration measure are Macaulay's duration (which is simpler) and Fisher-Weil duration (which is more refined).


Macaulay’s duration assumes a flat yield curve - in other words the same yield (to maturity) for all maturities of cashflow.
This kind of tax incentives are also known informally as ''tax breaks''.


Fisher-Weil duration is a refinement of Macaulay’s duration which takes into account the term structure of interest rates.


2.


Fisher-Weil duration calculates accordingly the present values of the relevant cashflows (more strictly) by using the zero coupon yield for each respective maturity.
Additional tax - or less favourable tax treatment - attaching to activities, or omissions, that the tax rule-setting authority wants to discourage.


This refinement is particularly important when the cash flows are longer term and when yields vary significantly for different maturities.


== See also ==


== See also ==
* [[Advance tax ruling]]
* [[CertFMM]]
* [[Business rates]]
* [[Duration]]
* [[Capital Gains Tax]]
* [[Macaulay duration]]
* [[Capital tax]]
* [[Yield curve]]
* [[Carbon tax]]
* [[Charge]]
* [[Claims and elections]]
* [[Cliff edge]]
*[[Code]]
* [[Concession]]
* [[Corporation Tax]]
* [[Customs duty]]
* [[Determination]]
* [[Direct tax]]
*[[Directive]]
* [[Double tax treaties]]
* [[Double taxation]]
* [[Duty]]
*[[Ethics]]
* [[Federal Corporate Income Tax]]
* [[Foreign tax credit]]
*[[Framework]]
* [[Global minimum corporate tax rate]]
*[[Good practice]]
*[[Governance]]
*[[Guidance]]
* [[Incentive]]
* [[Income Tax]]
* [[Indirect tax]]
* [[Inheritance tax]]
* [[Internal Revenue Code]]  (IRC)
* [[Jurisdiction]]
* [[Landfill Tax]]
* [[Law]]
* [[Legislation]]
* [[Levy]]
* [[Marginal rate of tax]]
* [[National Insurance ]]
* [[OECD model tax convention]]
* [[Output tax]]
* [[Payroll tax]]
* [[Preferential tax regime]]
*[[Principle]]
* [[Profit after tax]]
* [[Profit before tax]]
* [[Regime]]
* [[Regulation]]
*[[Reporting]]
*[[Reputational risk]]
*[[Rules]]
* [[Sales Tax]]
*[[Standards]]
* [[Stealth tax]]
* [[Supertax]]
* [[Surcharge]]
* [[Tax]]
* [[Tax arbitrage]]
* [[Tax avoidance]]
* [[Tax base]]
* [[Tax compliance]]
* [[Tax credit]]
* [[Tax depreciation]]
* [[Tax evasion]]
* [[Tax harmonisation]]
* [[Tax haven]]
* [[Tax planning]]
* [[Tax rate]]
* [[Tax relief]]
* [[Tax risk]]
* [[Tax ruling]]
* [[Tax shelter]]
* [[Tax shield]]
* [[Tax yield]]
* [[Treasury]]
* [[Trust]]
* [[UK Bank Levy]]
* [[Value Added Tax]]  (VAT)
* [[Wealth tax]]
* [[Withholding tax]]
 
[[Category:Accounting,_tax_and_regulation]]
[[Category:Financial_products_and_markets]]

Revision as of 19:17, 28 January 2024

1. Tax and treasury.

Tax incentives usually are tax-beneficial legal structures, designated physical locations, investments, activities, financial arrangements or instruments that are intended by the revenue authority attract exemption from - or reduced liability to - different forms of taxation.

Tax incentives are designed by the tax rule-setting authorities to encourage particular wanted activities, contrasted with unintended tax "loopholes" and over-aggressive tax planning.


This kind of tax incentives are also known informally as tax breaks.


2.

Additional tax - or less favourable tax treatment - attaching to activities, or omissions, that the tax rule-setting authority wants to discourage.


See also

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