Essay on tax

purpose of taxation

Health insurance premiums, accident insurance, life insurance, dual-purpose insurance, and scholarship insurance, which paid by individual taxpayers, unless paid by the employer and the premium is calculated as income for the relevant taxpayer; Replacement or compensation related to work or services with provided in kind and pleasure, except for the provision of food and beverages for all employees as well as reimbursement or compensation in kind and the pleasure in certain areas and relating to the implementation of the work assigned by the finance minister's decision.

Model Answer People work hard and earn money which ideally they would like to retain for themselves.

But recently a new mechanism of imposing national sales tax has been brought to the table.

role of taxation in development of country essay

Without taxes, the government would not be able to fulfill its obligations. Income Tax Act, chapter 6 2. Thus, although the prices charged do not reflect the fair market price, the tax authorities of a country should not make a correction if the transaction is conducted by parties who have no special relationship.

Importance of tax

Therefore, the government will need more funds to cover those responsibilities. In most of the cases, both countries tend to maximize revenue through tax collection through. Write about the following topic: Some people believe that they should be able to keep all the money they earn, and should not have to pay tax to the state. Tax Evasion Schemes The problem of evasion is much more glaring under the direct assessment method under which the self-employed such as the businessmen, contractors, traders and professionals are taxed than with in the indirect assessment method under which employees are taxed. Sedan On the acquisition costs and purchase or repair of vehicles or similar cars owned and used by the company to certain employees because of the position or job, may be deducted as business expenses for fifty percent of the total cost or the purchase or major improvements through depreciation of fixed assets. Since this was not the case, the court held that, the Board could not contend that the settlor had benefited under the settlement. OECD Guidelines provides guidance to tax authorities and the multinational companies in dealing with transfer pricing issues. In connection with abuse of transfer pricing, Lyons define it as an inappropriate allocation of income and expenses is intended to reduce taxable income. OECD Guidelines, paragraph In general there are three methods of arm's length principle: Traditional methods:. Therefore, the definition of special relationship is very important in the context of transfer pricing.

Haemakers, 3. Gunadi, Because of the limited time loss compensation five years for the means of taxation, the amount of retained earnings available for dividends cumulatively will not be the same with the amount of taxed profit reduced by tax load in the calculation of commercial accounting.

But once the child is married or has attained the age of 21 if unmarried, the transfer will be effective.

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Essay on Government Taxation