Taxing Financial Transactions: An Assessment of Administrative Feasibility

This Working Paper should not be reported as representing the views of the IMF. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management. This paper considers how a tax on financial transactions could be applied to three broad and partially overlapping categories of financial instruments: (1) exchange-traded instrum ents; (2) over-the-counter instruments; and, (3) foreign exchange instruments. For each category, the paper examines the factors that would facilitate or complicate the administration of a financial transactions tax, the options for collecting the tax, the types of compliance risks that are likely to be encountered, and measures for mitigating these risks.