Financial Transaction Tax
A proposed tax to be levied on certain financial transactions.
In 2011, the European Commission proposed a harmonised Financial Transaction Tax for the entire European Union. The objectives of the proposed FTT were to:
- prevent the fragmentation of the Single Market that could result from numerous uncoordinated national approaches to taxing financial transactions
- ensure that the financial sector made a fair and substantial contribution to public finances
- discourage financial transactions which do not contribute to the efficiency of financial markets or of the real economy.
The initiative was also designed to be a first tangible step for taxing such transactions on a global basis.
FTTs are designed to be levied at the financial institution level.
It is possible that a treasury centre that conducts financial transactions could be regarded as a 'financial institution' for FTT purposes.
Hence, depending on the transaction, a liability to FTT might arise.
The proposed FTT is sometimes written as Financial Transactions Tax.
- "Tax reforms are not going away ...
- Financial transaction tax is still a possibility."
- Michelle Price, associate policy and technical director, Association of Corporate Treasurers, The Treasurer, August 2018, p24.