Chapter 1 - Features of taxation and regulatory environment Flashcards
1
Q
What is the incidence of a tax?
A
The distribution of the tax burden (who pays it)
2
Q
What are the 2 elements of incidence?
A
Formal and Actual/effective
3
Q
What is formal incidence?
A
Who is legally obliged to pay the tax
4
Q
What is actual/effective incidence?
A
Who actually bears the burden of the tax
5
Q
What are the sources of tax rules?
A
- Legislation
- Precedents set by case law
- Tax authorities
- Directives from international bodies
- Tax treaties
6
Q
How can the double taxation of foreign incomes be avoided?
A
Tax treaties
7
Q
What tax records do companies need to maintain?
A
- Corporate IT
- Sales tax
- Overseas subsidiaries
- Employee tax
- Tax return
8
Q
How long must records be kept for?
A
6 years
9
Q
What methods are used to prevent tax avoidance and evasion?
A
- Reducing opportunity
- Simplifying tax structure
- Increasing detection
- Communication
- Change social attitudes
- Reduce lost revenue
10
Q
Why do governments set deadlines for filing tax returns?
A
- Entities know when payment is due
- Tax authorities can forecast earnings
- Provides reference for late payment
- Prevent entities from spending tax money deducted from employees
11
Q
What can tax authorities give out pens based on?
A
- Late payment of tax
- Late returns
- Errors on returns
