, Chief auditor, Ministry of finance and economic affairs, Iran
, PhD, Vice President for Legal Affairs and Audit, Concern “NICMAS”, Ukraine
The article formalized the effect of income taxation of banks on the basic characteristics of their activities. The necessary actions to achieve this goal is developing an econometric model which involves maximizing the bank’s total profit after tax, and variable interest rate on deposits and loans, as well as the tax rate on profit. The system of limitations are formed in solving the tasks, namely: summary of balance sheet assets must equal its liabilities; should be done legislatively established requirements for capital adequacy. The conducted study allowed to formalized the impact of the rate of tax on bank profits on deposit and lending rate, which is the basis for counter-cyclical tax regulation of banking activity by differentiating the rate of income taxation of banks depending on the phase of the economic cycle: at stages of recovery in order to contain the possible credit boom and the emergence financial imbalances should reduce the tax rate, given that this leads to an increase in the cost of loans and a decrease in demand for deposit other services due to cheapening of their value. At the downside, on the contrary, it is necessary to increase the rate of this tax in order to stimulate cheapening of credit resources and increase the value of deposits.
Keywords: tax burden, profit ability of the bank, economic-mathematical modeling.
JEL Classification: G21.
Cite as: Mazloumfard H., Glantz V. (2017). The influence of tax burden on the profit of banks in conditions of monopolistic competition: economic-mathematical modeling. Financial Markets, Institutions and Risks, 1(4), 28-36. DOI: 10.21272/fmir.1(4).28-36.2017
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