Taxation of the of banks

On February 22nd, 2011, the European Union formally requested views from citizens and organizations, including investors, governments, regulators and academics, on new ways of taxation of financial institutions in Europe. By the summer of 2011, the Commission, upon request of the Heads of States of the EU, committed itself to evaluate the effects of proposed new taxes. In Europe, despite the intention to the contrary, financial services, and banks in particular, have faced uncoordinated developments in taxation. Not coordinated between the Member States, and also as part of the regulatory changes.
The Special Tax on banks is set as an example. Although the idea of this tax was hatched through international discussions, different methods of calculation were adopted by the United Kingdom, France and Germany, while other countries did not adopt this measure or are preparing a law in order to implement it. Given the economic and financial crisis plaguing the economies around the world, the evidence for loosening of this measure are becoming more and more remote. The pressure on the Governments of the Member States is increasing, as it is required that the financial sector contributes actively and substantially through taxation to tackle the crisis. Although the EU sought views and ideas on taxation of the financial sector, the first thoughts concern:
 Financial Notional Interest (FNI):
This taxation is likely to apply to all transactions (perhaps at a rate of 0.01%) or to be limited to transactions relating to shares and bonds (perhaps 0.05%).

 Financial Notional Activities (FNA):
This tax is based on the assumption that the financial sector earns higher returns than other sectors because of the direct or indirect government bonds on financial markets. This tax is intended to normalize these yields.
The above thoughts and ideas are in their initial stages and need a serious and thorough study and treatment of all interested parties. Note that any proposal requires unanimity among the Member States and therefore, it seems less likely to be transformed into European law at this time. Perhaps it’s more likely that the EU determines the context in which each Member State design and establishes its own domestic tax law. This framework should aim at avoiding double taxation and distortions in the European markets. Regarding the FNI, it seems unlikely that the Commission would support this measure; as an additional tax may be passed to the final consumer through adjustment of the pricing policy of each organization. In addition, a risk transfer activities outside the EU is visible.
In relation to the FNA, it seems that it is gaining support both by politicians and academics. One method of calculation is the one of the “added value”, which aims to tax the value created by the financial institution on cash flows. Other ways of calculation ,aim at taxing the excess profits – beyond the yield one would logically expect.
In Cyprus, in February 2011, the Minister of Finance submitted to the House of Representatives a draft law on levy for the years 2011 and 2012 amounting to 0.095% of the total deposits (domestic and foreign) in Cyprus, excluding interbank deposits of credit institutions operating in Cyprus. The fee will not exceed 20% of total taxable profits of financial institutions for two years.