Naslov
Introduction to Taxation of Interest on Term Deposits in Croatia

Autori
Šubić, Roman ; Ivanov, Marijana

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Global Business Conference 2014 Proceedings: Questioning the Widely-held Dogmas / Hair, Joe ; Krupka, Zoran ; Vlašić, Goran - Dubrovnik : Institut za inovacije, 2014, 438-450

Skup
Global Business Conference 2014

Mjesto i datum
Dubrovnik, Hrvatska, 01.10.2014. - 04.10.2014

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
Taxation of interest; interest expenses; outflow of deposits

Sažetak
The paper discusses the environment of the current Croatian tax system and the impact of the taxation on interest as a new form of taxation. Although most of the EU countries have been applying the taxation of interest on savings for many years, announced taxation is expected to be implemented in Croatia from the beginning of 2015. Considering the significant importance of tax revenues for the central government budget, the paper compares the level of tax burden in Croatia with the level of tax burden in economic peer countries from CEE region. Despite the fact that overall tax burden in Croatia is lower than the EU average, it could be concluded that, from the investor's perspective in CEE countries, the tax environment in Croatia is unfavourable. Moreover, the tax environment refers not only to the tax burden, but also to frequent changes in tax regulations. The intention to write this paper was the assumption that the implementation of tax may impact the status of depositors and consequently that it will affect financial stability of banks. For the purposes of this paper, banks have been divided into three peer groups (large, medium-sized and small banks) and it was found that medium-sized and small banks rely more on deposits, particularly retail term deposits, as a source of financing and they, therefore, bear higher costs of funding and operational costs. Analyzing the potential effects of taxation, it has been concluded that small and medium-sized banks are much more sensitive to potential outflows of retail deposits which would be reflected to their liquidity and profitability. Potential spill-over effects could happen if banks decide to transfer their interest expenses to debtors through the increase of interest rates on loans. Although the effects of interest taxation may individually affect certain bank in terms of relation between sources of funding and granted loans, it is unlikely to expect serious distortions in banking system that would result from this new form of taxation.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA