Abstract

http://ssrn.com/abstract=1604992
 
 

Footnotes (149)



 


 



Imposing Value Added Tax on Interest-Bearing Instruments and Life Insurance


John Prebble


Victoria University of Wellington; Monash University; Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien

Sybrand Van Schalkwyk


Staples Rodway

2004

Asia-Pacific Tax Bulletin, Vol. 10, pp. 471-468, 2004
Victoria University of Wellington Legal Research Paper No. 31/2013

Abstract:     
Exemption of financial services from Value Added Tax (VAT) is commonly accepted as being an anomaly in the New Zealand goods and services tax legislation. While exempting financial services from VAT is attractive to the legislature because it is a simple way of addressing the difficulties of applying VAT to financial services, it causes significant distortions, for instance tax cascading, which in turn causes price distortions. The application of VAT to interest-bearing financial instruments and life insurance is complicated by the way in which financial intermediaries charge for these services.

The first part of this article investigates how interest-bearing instruments can be taxed under VAT, and the second part how life insurance can be taxed under VAT. There are several options for the treatment of interest-bearing instruments. They can be exempted, zero-rated, or included in the tax base. In this last category, there are three possible methods of including interest-bearing instruments: the invoice, cash flow, and truncated tax flow systems. The last is recommended because policy makers have come to realize that the cash flow system cannot be applied without significant modification.

Number of Pages in PDF File: 19

Keywords: Income Tax, Value Added Tax, Financial Services, Goods and Services Tax, Non-Discrimination Principle

JEL Classification: K34

Accepted Paper Series


Download This Paper

Date posted: May 15, 2010 ; Last revised: June 19, 2013

Suggested Citation

Prebble, John and van Schalkwyk, Sybrand, Imposing Value Added Tax on Interest-Bearing Instruments and Life Insurance (2004). Asia-Pacific Tax Bulletin, Vol. 10, pp. 471-468, 2004; Victoria University of Wellington Legal Research Paper No. 31/2013. Available at SSRN: http://ssrn.com/abstract=1604992

Contact Information

John Prebble (Contact Author)
Victoria University of Wellington ( email )
PO Box 600
Wellington, 6140
New Zealand
+64 4 463 6311 (Phone)
Papers Indexed at HOME PAGE (Fax)
HOME PAGE: http://www.victoria.ac.nz/law/staff/prebble-scholarly.aspx

Monash University
Victoria 3084
Australia

Monash University Business and Economics Logo

Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien ( email )
Welthandelsplatz 1
Vienna, Wien 1020
Austria

Sybrand Van Schalkwyk
Staples Rodway ( email )
3rd Floor 85 The Terrace
PO Box 1208
6140 Wellington
New Zealand
Feedback to SSRN


Paper statistics
Abstract Views: 549
Downloads: 93
Download Rank: 164,339
Footnotes:  149

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.297 seconds