How many types of Tax? Get to know each tax type and its caution

Taxation is an important tool used by the government to manage national resources and finances, which can be divided into two main categories: direct and indirect taxes. ACU PAY will explain details about each tax and related characteristics and precautions.

Direct Tax

Direct taxes are taxes levied from individuals or corporations that earn income from occupations and businesses when income reaches the taxable threshold. This is divided into two main categories: personal income tax and corporate income tax.

1. Personal Income Tax

Highlights

How to levy: Personal income tax is levied on people’s income, such as salaries, remuneration, investment profits, and other income, according to the law.

How to calculate: Using a Progressive Tax collection system, which means that the tax rate increases with higher income levels.
Tax filing: Income earners must submit tax returns between January to March of the following year to calculate the tax payable in that year.

Cautions

Tax planning: Taxpayers should carefully plan their taxes to avoid paying excessive taxes by exercising their rights for deductions allowed by law.
Income report: Income should be reported accurately and completely to avoid legal problems that may arise from misinformation. Most people usually calculate slightly more or less because they may be subject to additional fines if the calculation is less than what the Revenue Department requires.

2. Corporate Income Tax

Highlights

How to levy: Corporate income tax is levied on the income of a corporation or corporate partnership, including profits from business operations.
Tax rate: Corporate income tax rates are usually clearly defined and vary according to the type of company and size of the business.

Cautions

Accounting record: Companies should have a transparent and accurate accounting system to ensure accurate tax calculations and avoid being audited.
Tax planning: Companies should make long-term tax plans to increase tax management efficiency and reduce tax burden through appropriate strategies.

Indirect Tax

Indirect taxes are taxes levied on the purchase of consumer goods and services, which are often reflected in the prices of goods or services that consumers have to pay from their daily spending to specific businesses, including VAT, specific business taxes, and stamp duty.

1. Value Added Tax, VAT

Highlights

How to levy: VAT is levied on sellers of goods and services, usually added to the price of goods and services at 7%.
How to manage: Entrepreneurs must levy taxes on customers and hand them over to the state.

Cautions

Compliance with the law: Operators should comply with laws on VAT, such as the issuance of tax invoices and accurate tax reporting.
Impact on goods prices: VAT may lead to higher prices of goods, which may affect consumers’ buying decisions.

2. Specific Business Tax

Highlights

How to levy: Specific business taxes are levied on specific business activities, such as real estate-related businesses, entertainment businesses, gambling businesses, etc.
How to manage: There are usually specific laws and regulations for each type of business.

Cautions

Policy Check: Business owners must strictly review specific business tax requirements and regulations.

3. Stamp Duty

Stamp duty is a type of tax according to the Revenue Code. It is levied from 28 acts of the stamp as defined in the stamp duty account.

Highlights

How to levy: Stamp duty is levied on making financial instruments or documents such as real estate transaction contracts, lease agreements, or business documents.
How to calculate: Fees will depend on the type of document and the value of the transaction.

Caution

Document management: The person who makes the instrument must ensure that the correct and complete documentation has been prepared to avoid fines or legal problems.

Conclusion

Understanding the types of taxes and their distinctive characteristics will help you effectively manage your taxes. Knowing the relevant precautions will help you avoid potential problems and smooth your financial management.

References from
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