The rules and regulations regarding taxation and finance are quite intricate and they differ from one country to another. In the United States, it might happen that tax has to be paid to four separate government tiers.
A tax is a levy or financial charge which is imposed by various state and central governments on individuals or legal entities. Administrative divisions like local governments, counties, municipal bodies, or provinces can also impose tax. Non-payment or partial payment of tax leads to civil penalties or criminal penalties.
The taxation system has a lot of effects on the finance and economy of a country.
The principal needs for imposing taxation are the following:
Collectively, they are known as the four “R”s.
Taxation is broadly categorized into two types: direct taxation and indirect taxation. The taxation law constitutes who is liable to pay tax or bear the tax burden. The percentage on which the taxes are imposed is known as the tax rate.
Following are the examples of different types of taxes:
- Excise duty
- Corporation tax
- Capital gains tax
- Consumption tax
- Income tax
- Inheritance tax
- Property tax
- Poll tax
- Sales Tax
- Retirement tax
- Transfer tax
- Value added tax (VAT)
- Wealth tax or net worth tax