Business and Taxes: Value Added Tax, Goods and Services Tax and Corporate Tax
–
Business and Taxes
Every state or country has its own government.
Government runs on taxes.
Government charges direct or indirect taxation on every person and business firm.
Form these taxes; the government operates its cabinet, parliament and ministry.
Taxes are revenues for the government.
Some portion of collected taxes utilized for the welfare of the general public.
These public welfare are government hospitals, government schools and colleges.
From these taxes, the government does capitalised expenditure like road and bridge constructions etc.
Different country charges different taxes on business.
These taxes are income tax, sales tax, value added tax (VAT) and goods and service tax (GST) etc.
Business tax is also known as corporate tax, company tax or corporation tax.
It is a direct tax levied on a company’s income.
Corporate taxation is a difficult aspect in a country’s jurisdiction and rules.
It varies a lot from country to country.
Some countries are considered to be tax heaven; and are very valued by corporations due to soft tax policies.
Every business organization has to pay tax to state or central government.
The tax term may be personal tax, sales tax or value added tax.
Tax is calculated on sales of goods or service provided.
There are different types of taxes; they are:
a. Personal income tax
b. Value added tax
c. Goods and service tax
d. Corporate tax
e. Capital gain tax
f. Marginal tax rate
g. Wealth tax
h. Gift tax
Keep in Mind
|
A tax haven is a country that offers minimal tax liability to foreign investors and businesses. |
|
Tax havens do not require businesses to operate out of their country. |
|
Or the individuals to reside in their country to receive tax benefits. |
|
Some most popular tax haven countries are Hong Kong, Mauritius, Monaco, Panama, Curacao, Fiji, Cyprus, Andorra, the Bahamas, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, the Channel Islands, the Cook Islands, The Island of Jersey, The Isle of Man, Lichtenstein, St. Kitts and Nevis. |
#####
|
Click on link for YouTube videos of Class 11: |
|
|
Accounting Equation |
|
|
Basic Journal Entries in Nepali |
|
|
Basic Journal Entries |
|
|
Journal Entry and Ledger |
|
|
Ledger |
|
|
Subsidiary Book |
|
|
Cash Book |
|
|
Trial Balance & Adjusted Trial Balance |
|
|
Bank Reconciliation Statement (BRS) |
|
|
Depreciation |
|
|
Final Account: Class 11 |
|
|
Adjustment In Final Account |
|
|
Capital and Revenue |
|
|
Single Entry System |
|
|
Non-Profit Organization (Non-Trading Concern) |
|
|
Government Accounting |
|
|
Goswara Voucher (Journal Voucher) |
#####
Personal Income Tax
When a person earns income from service, job or self-employed, he has to pay income tax to the government.
Under job, salary, wages, dividend, bonus, interest on investment etc are included.
Under service, professional persons are included and tax paid on service income.
Under self-employed small business owners are included and tax paid on business income.
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
|
Particulars |
Financial year 2074/75 |
Financial year 2075/76 |
Financial year 2076/77 |
|||
|
Assessed as individual: |
|
|
|
|||
|
First slab |
Rs 3,50,000 |
1% |
Rs 4,00,000 |
1% |
Rs 4,00,000 |
1% |
|
Next slab |
Rs 1,00,000 |
15% |
Rs 1,00,000 |
10% |
Rs 1,00,000 |
10% |
|
Next slab |
Rs 4,50,000 |
25% |
Rs 2,00,000 |
20% |
Rs 2,00,000 |
20% |
|
Next slab (Above 2074/75) |
Rs 25,00,000 |
40% |
Rs 13,00,000 |
30% |
Rs 13,00,000 |
30% |
|
Nest slab |
– |
– |
Rs 20,00,000 |
36% |
Rs 20,00,000 |
36% |
|
|
|
|
|
|
|
|
|
Assessed as couple: |
|
|
|
|
||
|
First slab |
Rs 4,00,000 |
1% |
Rs 4,00,000 |
1% |
Rs 4,50,000 |
1% |
|
Next slab |
Rs 1,00,000 |
15% |
Rs 1,00,000 |
10% |
Rs 1,00,000 |
10% |
|
Next slab |
Rs 5,00,000 |
25% |
Rs 2,00,000 |
20% |
Rs 2,00,000 |
20% |
|
Next slab (Above 2074/75) |
Rs 25,00,000 |
40% |
Rs 13,00,000 |
30% |
Rs 13,00,000 |
30% |
|
Nest slab |
– |
– |
Rs 20,00,000 |
36% |
Rs 20,00,000 |
36% |
Example:
Suppose single person earns Rs 820,000 from personal income in the fiscal year 2076/77
|
Now Rs 820,000 |
= |
400,000 first slab |
+ |
100,000 next slab |
+ |
200,000 next slab |
+ |
120,000 next slab |
|
Income tax |
= |
400,000 @ 1% |
+ |
100,000 @ 10% |
+ |
200,000 @ 20% |
+ |
120,000 @ 30% |
|
|
= |
4,000 |
+ |
10,000 |
+ |
40,000 |
+ |
36,000 |
|
|
= |
Rs 90,000 |
|
|
|
|
|
|
Value Added Tax (VAT)
In Nepal, value added tax (VAT) was introduced on 16 November 1997.
This tax was levied in place of the sales tax, hotel tax, contract tax and entertainment tax.
However, it could not be implemented fully until the fiscal year 1998/99 due to political instability and strong opposition from the business community.
VAT replaces the old sales tax, contract tax, hotel tax and entertainment tax.
It has been designed to collect the same revenue as the four taxes it replaced.
It is the collection of both customs duties and income tax.
The VAT rate is 13% in Nepal.
Goods and Services Tax (GST)
Goods and Services Tax is called as GST.
The tax came into effect from 1 July 2017.
It is an indirect tax or consumption tax; it is used in India on the supply of goods and services.
It is a comprehensive, multistage, destination-based tax.
It is comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
It is multi-staged because GST is imposed at every step in the production process.
But, it to be refunded to all parties in the various stages of production other than the final consumer.
It is a destination-based tax; it is collected from point of consumption and not point of origin like previous taxes.
Goods and services are divided into five different tax slabs for collection of tax.
These GSTs are 0%, 5%, 12%, 18% and 28%.
However, petroleum products, alcoholic drinks and electricity are not taxed under GST.
Instead of GST, they are taxed separately by the individual state governments as per the previous tax system.
Keep in mind
|
There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. |
|
In addition, 22% cess (cess is tax on tax) or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products. |
|
Pre-GST, the statutory tax rate for most goods was about 26.5%. |
|
Post-GST, most goods are expected to be in the 18% tax range. |
|
The tax came into effect from 1 July 2017 through the implementation of the One Hundred and First Amendment of the Constitution of India by the Indian government. |
|
The GST replaced existing multiple taxes levied by the central and state governments. |
Corporate Taxes
Here, corporate means company, firm, business entity or industry.
There are two types of taxes under corporate tax.
First is domestic income and second is other income.
On domestic income, normal tax rate is 25%.
Corporate taxes are subtracted from the earnings before tax in a company’s income statement to arrive at net income for a particular period.
Different countries charges different business taxes for different businesses.
Nepal Government charges these tax rates (fiscal year 2020/21)
|
Types of business |
Normal |
Rebate |
Tax |
|
|
Tax Rate |
|
Rate |
|
General companies or firms (trading company, normal business) |
25% |
0 |
25% |
|
Manufacturing industries |
25% |
0 |
25% |
|
Special Industry under section 11 for the whole year |
25% |
20% |
20% |
|
Constructing and operating ropeway, cable car, railway, tunnel or Sky Bridge |
25% |
40% |
15% |
|
Constructing and operating roads, bridges, tunnel, railway and airports |
25% |
50% |
12.5% |
|
Having export income from a source in Nepal |
25%* |
20% |
20% |
|
Banks and financial institutions |
30%* |
0 |
30% |
|
General Insurance |
30%* |
0 |
30% |
|
Engaged in tobacco, alcohol and related products |
30%* |
0 |
30% |
|
Telecom and Internet Services |
30%* |
0 |
30% |
|
Capital market, securities, and related |
30%* |
0 |
30% |
|
|
|
|
|
|
No income tax for cooperative operating in rural municipality; tax to be levied at 5%, 7% and 10% for cooperative operating in municipality, sub metropolitan and metropolitan respectively. |
|||
Keep in Mind (KIM)
|
Tax Concessions-1 |
|
|
Type of employment provided |
Tax Concessions |
|
Direct employment to 100 or more Nepalese citizens throughout the year |
10% of AR/NR |
|
Direct employment to 300 or more Nepalese citizens throughout the year |
20% of AR/NR |
|
Direct employment to 500 or more Nepalese citizens throughout the year |
25% of AR/NR |
|
Direct employment to 1,000 or more Nepalese citizens throughout the year |
30% of AR/NR |
#####
|
Click on link for YouTube videos |
|
|
Share (Accounting for Share) |
|
|
Share in Nepali |
|
|
Debentures |
|
|
Final Account: Class 12 |
|
|
Final Account in Nepali |
|
|
Work Sheet |
|
|
Ratio Analysis (Accounting Ratio) |
|
|
Fund Flow Statement |
|
|
Cash Flow Statement |
|
|
Theory Accounting Xii |
|
|
Theory: Cost Accounting |
|
|
Cost Accounting |
|
|
LIFO−FIFO |
|
|
Cost Sheet, Unit Costing |
|
|
Cost Reconciliation Statement |
|
#####
Capital Gains Taxes
Capital gains realized from selling real property.
It is considered ordinary income and taxed at the standard income tax rate.
At present, capital gain tax rate is 10%.
In arriving at effective capital gains tax rates, the Global Property Guide makes the following assumptions:
The property is directly and jointly owned by husband and wife;
The time is for 10 years;
It has appreciated in value by 100% over the 10 years to sale.
Keep in Mind (KIM)
|
In many countries a holding period is less than 5 years, results in capital gains being taxable. |
Thank you for investing your time.
Please comment on article.
You can help me by sharing this article at your social media platform.
Jay Google, Jay YouTube, Jay Social Media
जय गूगल, जय युट्युब, जय सोशल मीडिया
26 Comments to Business and Taxes: Value Added Tax, Goods and Services Tax and Corporate Tax
For Posting a Comment You must be Logged In.
You might also like
Income Statement under NFRS | Balance Sheet under NFRS | P&S 1
Balance Sheet under NFRS | Statement of Financial Position under NFRS | Solution
Income Statement under NFRS | Profit or Loss Statement under NFRS | SOLUTION
Income Statement under NFRS | Balance Sheet under NFRS | EXPLANATION
Financial Statement under NFRS| Classification of Accounting Standards
Swar | Vyanjak | A Aa I Ee | Ka Kha Ga Gha | Ka Kaa Ki Kee | Barahkhadi | Kra Khra Gra
ABCD | British Phonetic ABCD | American Phonetic ABCD | ABCD in Devanagari
The Half-closed Eyes of the Buddha and the Slowly Sinking Sun | All Solution | NEB English Class 12 | Short Story Q&A
You made a few nice points there. I did a search on the topic and found a good number of folks will agree with your blog. Agatha Guy Annamarie
I have read so many posts concerning the blogger lovers but this post is genuinely a good post, keep it up. Shell Ezra Ciapas
Very good article! We will be linking to this great post on our website. Keep up the great writing. Florencia Rice Tiebold
Great post! We are linking to this great content on our website. Cassandre Mitchell Evvy
Since the admin of this website is working, no question very soon it will be renowned, due to its feature contents. Gipsy Mike Boleyn
Pretty nice post. I just stumbled upon your blog and wished to mention that I have truly loved browsing your weblog posts. In any case I will be subscribing to your rss feed and I hope you write once more soon! Betteann Trefor Goat
Howdy! I simply would like to offer you a huge thumbs up for your great info you have here on this post. I am returning to your site for more soon. Fiann Nappie Gagne
You take a very interesting website. I like the occupied word that you accommodate with every article. Stevena Dewain Octavla
Ridiculous story there. What happened after? Good luck! Molli Vassili Walkling
Really enjoyed this article, how can I make is so that I receive an alert email every time you publish a fresh article? Jenica Theodoric Ambrosane
Quickly maximize timely deliverables for real-time schemas. Dramatically maintain clicks-and-mortar solutions without functional solutions. Kris Dewain Gunthar
I love looking through an article that can make men and women think. Also, thanks for allowing me to comment! Hannis Dennison Olivette
Hi mam..saan po ako makabili nito cs reviewer? Im very interested po..pls contact me.. 09326705575..etxt nyo po ako den I will call you po Adrienne Rollin Zellner
Hiya, I am really glad I have found this info. Nowadays bloggers publish only about gossip and internet stuff and this is really frustrating. A good blog with interesting content, this is what I need. Thank you for making this web site, and I will be visiting again. Do you do newsletters by email? Dania Ange Ferde
The statistics that say that this type of business works I would like to know if there are surveys carried out. Novelia Benyamin Marchese
Everything is very open with a very clear explanation of the issues. It was truly informative. Your website is extremely helpful. Many thanks for sharing! Aaren Corey Hamrah
Very good point which I had quickly initiate efficient initiatives without wireless web services. Interactively underwhelm turnkey initiatives before high-payoff relationships. Holisticly restore superior interfaces before flexible technology. Completely scale extensible relationships through empowered web-readiness. Kaycee Egon Harrell
What a stuff of un-ambiguity and preserveness of precious know-how regarding unpredicted emotions. Roxanna Reinald Fraze
Hiya, I am really glad I have found this info. Today bloggers publish just about gossip and internet stuff and this is actually annoying. A good blog with exciting content, that is what I need. Thanks for making this web site, and I will be visiting again. Do you do newsletters by email? Kaitlin Kasper Kauslick
Fantastic advice, Ev! It takes time to develop a consistent brand, but with your expert advice, authors now have an exact roadmap of how to get from point A to B. I still cringe when marketing my books, though. LOL Catherin Zachary Mable
Thanks for sharing your thoughts. I really appreciate your efforts and I am waiting for your next post thank you once again. Adrian Hansiain Maximilien
When I initially commented I seem to have clicked on the -Notify me when new comments are added- checkbox and from now on every time a comment is added I receive four emails with the same comment. Perhaps there is a way you are able to remove me from that service? Thanks a lot! Lonee Waylen Karilla
Wow, wonderful blog format! How long have you ever been blogging for? you made running a blog look easy. The overall look of your web site is magnificent, as smartly as the content material! Alanna Ange Berneta
Far far away, behind the word mountains, far from the countries Vokalia and Consonantia, there live the blind texts. Separated they live in Bookmarksgrove right at the coast of the Semantics, a large language ocean. A small river named Duden flows by their place and supplies it with the necessary Rosy Lemmy Wendy
After looking into a few of the blog articles on your web page, I truly appreciate your way of blogging. I added it to my bookmark site list and will be checking back in the near future. Take a look at my website as well and let me know what you think. Agata Braden Docilu
I carry on listening to the news bulletin speak about receiving boundless online grant applications so I have been looking around for the most excellent site to get one. Could you advise me please, where could i acquire some? Agna Bronson Mildred