The government's proposed 33% tax on bank profits poses many unknowns and some risks, said Lyubomir Karimanski, member of the Governing Council of the Bulgarian National Bank. He questioned the mechanism by which the levy will be determined and collected, as well as its impact on the banking system.
“Where exactly the burden of the tax on the entire chain will fall - it is not yet known, because there is no assessment“, Karimanski told Bulgaria ON AIR. According to him, the lack of clarity creates a problem with the predictability of tax policy.
Karimanski warned that if the tax affects the capital sustainability of banks or they decide to transfer the burden to their clients, loans may become more expensive. He identified the key issue as how the tax will be calculated and to what part of the profit it will be applied.
The issues surrounding the threshold and assets
„There are many unknowns. It is unknown to what extent a bank can be taxed so as not to affect its risk-weighted assets“, said the member of the BNB Governing Council.
According to him, it must be clarified whether all banks will be treated in the same way and whether a threshold for taxation will be introduced. Karimanski pointed out that before the official submission of the entire package of tax laws, it is not clear why preliminary measures are being announced.
The example of Italy
Karimanski called for an analysis of the Italian experience with a tax on bank excess profits. According to him, the budget result in Italy was approximately zero, but the measure encouraged banks to maintain higher capital sustainability.
He noted that the European Central Bank monitors the sustainability of the banking sector. At the same time, Karimanski does not expect foreign banks to withdraw their assets from Bulgaria because of the proposed tax.
Sources: novini.bg