Tax law

Tax law is a system of laws that describes government levies on economic transactions, commonly called taxes. Tax laws are enacted in order to support the government's and public's needs. They are a crucial aspect of the public finance sector and are considered a sub-discipline of law.

Overview

Tax law encompasses the rules, policies and laws that oversee the tax process, which involves charges on estates, transactions, property, income, licenses and more by the government. Taxation also includes duties on imports from foreign countries and all compulsory levies imposed by the government upon individuals for benefit of the state.

Types of Taxes

There are several types of taxes including income tax, property tax, goods and services tax, corporate tax, and capital gains tax. Each type of tax has its own set of laws and regulations provided by the country's tax code.

Income Tax

Income tax is a tax imposed on individuals or entities that varies with respective income or profits. Income tax generally is computed as the product of a tax rate times taxable income.

Property Tax

Property tax is a levy on property that the owner is required to pay, with rates set as a percentage of the home value.

Goods and Services Tax

Goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption.

Corporate Tax

Corporate tax is a direct tax imposed by a jurisdiction on the income or capital of corporations or analogous legal entities.

Capital Gains Tax

Capital gains tax is a tax on the profit realized on the sale of a non-inventory asset.

Tax Law by Country

Tax laws vary significantly by country. For example, the United States has a progressive income tax system, while some countries like the United Arab Emirates have no income tax at all.

Tax Evasion and Avoidance

Tax evasion is an illegal practice where a person, organization or corporation intentionally avoids paying their true tax liability. Those caught evading taxes are generally subject to criminal charges and substantial penalties. Tax avoidance, on the other hand, is not illegal and involves taking advantage of the tax system to reduce one's tax liability.

See Also

• Taxation in the United States
• Taxation in the United Kingdom
• Taxation in Canada
• Taxation in Australia