Lesson-2 on Tax

Question: What is Double Taxation?

Answer:

Double taxation occurs when a taxpayer is taxed twice for the same asset or income.

For example, corporations pay taxes on their annual earnings, just as individuals do. When corporations pay out dividends to shareholders, those dividend payments incur income-tax liabilities for the shareholders who receive them, even though the earnings that provided the cash to pay the dividends were already taxed at the corporate level.

Question: What is Earning Stripping?

Answer:

Earnings Stripping is the Practice of reducing the taxable income of a corporation by paying excessive amounts of interest to related third parties.

Question: What is Effective Tax Rate?

Answer:

Effective  Tax rate is  percentage of Actual income tax paid divided by net taxable income before taxes. It is the rate at which a taxpayer would be taxed if his tax liability were taxed at a constant rate rather than progressively.

Question: What is Environmental Tax?

Answer:

Environmental Tax is a tax imposed for environmental reasons, e.g. to provide an incentive to reduce certain emissions to an optimal level or taxes on environmentally harmful products.

Question: What is Excise Tax?

Answer:

 Excise tax is an inland tax on the production for sale or sale of a specific good within the country.  An excise tax can be a per unit tax or an ad valorem tax. The first is a fixed amount of tax per item, whereas the second is a percentage of the value of the item .Excise Tax is more commonly known as Excise Duty.

Question: What is Expatriation Rules in Tax?

Answer:

Expatriation Rules  is the Rules under which a taxpayer continues to be subject to tax when he relinquishes his residence or his citizenship in order to avoid tax.

Question: What is Export Duty?

Answer:

It   is the Tax levied on exports of basic commodities entering into world trade, such as rubber, copper, palm oil, sisal, tea, cocoa and coffee

Question: What is Foreign Exchange Tax ?

Answer:

 It  is the  special tax imposed on transactions involving sales of foreign exchange by domestic banking institutions and authorized exchange brokers.

Related post