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Ekonomika > Tax > Flashcards

Tax Flashcards

1
Q

Tax system of the Slovak Republic

A

The tax system is a legal system for assessing and collecting taxes. The main aim of taxes is to raise revenues for government expenditures.

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2
Q

The state budget

A

The state budget is a financial plan of the government which shows in details the estimated revenues and proposed expenditures for the coming year. In Slovakia, the state budget, together with local budgets, make the public budget. Total expenses of the state budget include expenses of ministries, government, parliament, the office of the President and other governmental organisations.

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3
Q

The state budgeting process to

A

Proposal of the state budget
Ratification of the proposed state budget
Implementation and monitoring of the state budget
Proposal and ratification of the final account of the state

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4
Q

Proposal of the state budget

A

The state budget is the tool through which the government takes control of the economy. It is prepared and presented by the Ministry of Finance of the Slovak Republic while taking into consideration requirements of other ministries.

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5
Q

Ratification of the proposed state budget

A

The proposed state budget is assessed by the government and then ratified by the parliament. Ratified state budget takes the form of law. The parliament can adopt major changes. Minor changes can be adopted by the Ministry of Finance of the Slovak Republic.

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6
Q

Implementation and monitoring of the state budget

A

During the year, revenues are budgeted, and expenditures are spent. The state budget is monitored and if deficiencies are found measures are taken to eliminate them.

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7
Q

Proposal and ratification of the final account of the state

A

The Ministry of Finance of the Slovak Republic prepares the report about the final account of the state which includes the result of state budget revenues and expenses. The parliament ratifies it.

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8
Q

Tax

A

Tax is a compulsory monetary contribution to the state or regional budget, assessed and imposed by the government. Individuals and organisations pay it on the activities, enjoyment, expenditures, income, occupation, privilege, property, etc. It is paid in a certain amount and at a certain maturity date.

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9
Q

Laws regulating taxes in slovakia

A

the Income Tax Law,
the Value Added Tax Act,
the Law on Tax and Fee Administration.

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10
Q

Main functions of taxes

A

the national economy function
the social function

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11
Q

the national economy function

A

he state collects taxes to support the production and exports and to restrict the consumption of certain goods (e.g. cigarettes, alcohol, etc.)

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12
Q

the social function

A

the state influences the income of different groups of people by collecting taxes while several forms of relief or exemption are applied.

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13
Q

Main aims of the taxation

A

fiscal aims
non-fiscal aims

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14
Q

fiscal aims

A

taxation aims to provide enough money to cover the government expenses,

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15
Q

non-fiscal aims

A

taxation aims to support investing, entrepreneurship, environment, science and technology.

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15
Q

the principle of fairness and proportionality

A

there is the same percentage rate for each type of tax,

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15
Q

Main principles of taxes

A

the principle of fairness and proportionality
the principle of neutrality
the principle of non-duplicity
the principle of clarity and simplicity
the principle of effectiveness

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15
Q

the principle of neutrality

A

taxes apply to everyone,

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16
Q

the principle of non-duplicity

A

every tax object must be taxed only once,

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17
Q

the principle of clarity and simplicity

A

the tax object must be clearly defined, and the method of tax calculation should be simple,

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18
Q

the principle of effectiveness

A

the taxpayer should be motivated to pay tax and not to tax evasion.

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19
Q

Taxes according to the recipient:

A

state taxes - taxes are revenues of the state budget,
local taxes - taxes are revenues of local budgets,
sectional taxes - taxes are revenues partly of one budget, but the other part goes to
another budget (e.g. individual income tax).

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20
Q

Taxes according to the object:

A

income taxes - income of individual persons and legal entities are taxed,
wealth taxes - properties (e.g. real estates) are taxed,
excise taxes - taxes are paid regarding the consumption of goods.

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21
Q

Taxes according to the subject (taxpayer):

A

individual taxes - taxes applicable to individual persons,
corporate taxes - taxes applicable to legal entities.

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22
Q

Taxes according to the liability of the taxpayer:

A

direct taxes - taxes that cannot be transferred or shifted to another person, for instance, the income tax an individual pays directly to the government,
indirect taxes - indirect taxes can be shifted to another person (e.g. VAT is included in the bill of goods and services that some procure from others while the initial tax is applied on the manufacturer or service provider, who then shifts this tax burden to the consumers by charging higher prices for the commodity by including taxes in the final price).

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23
Q

Taxes according to the regularity of payment:

A

regular taxes - taxes are paid regularly (e.g. monthly, quarterly, annually),
irregular taxes - taxes are paid irregularly, only when the reason for the payment has arisen (e.g. a win in the lottery).

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24
Q

Taxes according to the subjective conditions of the taxpayer:

A

personal taxes - the subjective conditions of the taxpayer are taken into consideration (e.g. deduction of income tax due to an unemployed wife or husband),
real taxes - the subjective conditions of the taxpayer aren’t taken into consideration (e.g. taxes on property).

25
Q

Tax subject (in general)

A

Tax subject is any individual person or legal entity that fulfils taxation obligations:
taxpayer - a person who is charged (taxed) by the tax administrator (e.g. an individual who pays income tax),
contributor - a person who is responsible for the calculation and imposition of tax (e.g. contributor of the VAT is the manufacturer or service provider, but consumers are taxpayers),
debtor - an individual person or legal entity which is liable to pay tax

26
Q

Tax object (in general)

A

Tax object is an object or phenomenon, which is being taxed according to the law: income (income tax), wealth (real estate, land), wealth transfers (inheritance and gift tax), consumption (excises and VAT).

27
Q

Tax base (in general)

A

Tax base is a quantitative expression of the tax object which can be expressed in monetary units (€, S, £, etc.) or natural units (kilograms, pieces, meters, litres, etc.).

28
Q

Tax rate (in general)

A

Tax rate is the percentage at which an individual person or legal entity is taxed:
fixed tax rate - determined by a fixed amount per unit of measurement (e.g. excise tax on the vine, property tax, etc.),
floating (percentual) tax rate - determined by a percentage of the value of the tax base
(e.g. income tax),
combined tax base - one part of the tax base is taxed by the fixed tax rate and another by the floating (percentual) tax rate (e.g. excise tax on cigarettes).

29
Q

Compulsory tax features

A

Tax subject
Tax object
Tax base
Tax rate

30
Q

Optional tax features

A

Tax administrator
Territorial jurisdiction on the tax subject
Taxing period
Tax declaration
Tax exemption

31
Q

Tax administrator

A

Tax administrator is an authority which checks the accuracy of the tax calculation, accepts a contibutor’s registration, accepts tax payments, returns tax overpayments, imposes fines, etc. (tax office, customs office, district office).

32
Q

Territorial jurisdiction of the tax subject

A

Territorial jurisdiction of the tax subject is an aid for determining a proper tax administrator (individual person - residence, legal entity - registered office).

33
Q

Taxing period

A

Taxing period is a period for which the tax is payable (e.g. a month, quarter, year).

34
Q

Tax declaration

A

Tax declaration is a form on which the tax subject submits information about the calculated tax liability.

35
Q

Tax exemption

A

Some tax objects are exempted from paying taxes (e.g. cemeteries, schools, etc.).

36
Q

Excise tax

A

excise tax - mineral oil
excise tax - tobacco products
excise tax - alcoholic beverages
excise tax - electricity, coal and natural gas

37
Q

Local tax

A

property tax
dog tax
tax on the use of the public areas
accommodation tax
tax on vending machines
tax on non-winning gaming devices
tax on the entry and stay of motor vehicles in historical parts of towns
nuclear facility tax

38
Q

Income tax

A

An income tax is a direct tax which is levied on the annual income of individuals and legal entities. It is regulated by the Income Tax Law. The term income means monetary payment and payment in kind (even if obtained through the exchange).

39
Q

Tax subject (individual income tax)

A

The tax subject of the individual income tax is divided into two groups:
taxpayer with an unlimited tax liability (resident)
taxpayer with a limited tax liability (non-resident)

40
Q

taxpayer with an unlimited tax liability (resident) (individual income tax)

A

an individual with a permanent address (permanent residence)/legal residence (registered office) in Slovakia or an individual who doesn’t have a permanent address/legal residence in Slovakia but is present in Slovakia for at least 183 days (in aggregate) in a calendar year (habitual abode) → a domestic and foreign income is taxed while respecting the principle of non-duplicity (income earned from employment performed abroad is exempt in Slovakia if the taxpayer can prove that such income has been taxed abroad),

41
Q

taxpayer with a limited tax liability (non-resident) (individual income tax)

A

an individual who doesn’t have a permanent address/legal residence or habitual abode in Slovakia an income achieved in the territory of Slovakia is taxed.

42
Q

Tax rate (individual income tax)

A

annual taxable employment income up to the valid subsistence minimum multiplied by 176.8 (€ 36,256.38 in 2019) is taxed at 19%,
annual taxable employment income above the valid subsistence minimum multiplied by 176.8 (€ 36,256.38 in 2019) is taxed at 25%,
income from capital is taxed at a flat rate of 19%,
income from dividends is taxed at 7%,
an additional tax of 5% is to be paid by the representatives of constitutional bodies (e.g. the president, members of parliament) on their employment income.

43
Q

Tax object (individual income tax)

A

income from dependent activity (employment income) - income derived from an existing or former employment, service, public office, or memberships, or a similar relationship, in which the taxpayer performing his/her work for the payer of the income must follow the orders or instructions of such a payer,
enterprise income, other self-employment income, lease income and income from the use of work and artistic performance income from agricultural production,
forest and water management, or trade,
income derived from capital - income or interest derived from securities, deposits, or shares,
other income - e.g. income from occasional activities.

44
Q

Tax base (individual income tax)

A

The tax base (TB) can be separate tax base (STB) which is the tax base that is taxed in advance (e.g. credit interest at the bank) or calculated as a total of partial tax bases (PTB) of the income decreased by the tax allowances:

PTB₁ = income from dependent activity (employment income),
PTB2 = enterprise income, other self-employment income, lease income and income from the use of work and artistic performance,
PTB3 income derived from capital,
* PTB4 other income.
TB = PTB₁ + PTB2 + PTB3 + PTB4

45
Q

Tax allowances (individual income tax)

A

Tax allowances shall reduce the tax base calculated from the separate tax base or the sum of partial tax bases:

46
Q

the basic personal allowance

A

if a taxpayer reaches a tax base which is equal to or lower than valid subsistence minimum (the valid subsistence minimum from July 1, 2018 to June 30, 2019 is € 205.07) multiplied by 100, the non-taxable portion of the tax base per year is the valid subsistence minimum multiplied by 19.2 (€ 3937,35 in 2019)

47
Q

the annual tax allowance per spouse

A

if a taxpayer reaches a tax base which is equal to or lower than the valid subsistence minimum multiplied by 176.8 ( 36,256.38 in 2019) and the taxpayer’s spouse living with the taxpayer in this tax period does not have income, the annual tax allowance per spouse shall be the amount corresponding to the valid subsistence minimum multiplied by 19.2;
if a taxpayer reaches a tax base which is equal to or lower than the valid subsistence minimum multiplied by 176.8 (€ 36,256.38 in 2019) and the taxpayer’s spouse living with the taxpayer in this tax period has income of no more than the valid subsistence minimum multiplied by 19.2, the annual tax allowance per spouse shall be the difference between the amount corresponding to the valid subsistence minimum multiplied by 19.2 and the spouse’s income,

48
Q

the tax allowance according to the contributions to the complementary pension saving scheme (domestic and foreign)

A

the taxpayer’s contributions to the complementary pension saving scheme can be deducted from the tax base in the amount in which they were provably paid in the tax period, but no more than € 180 a year,

49
Q

the tax allowance for spa services

A

the taxpayer who paid for services of spa resorts that have licence pursuant to special legislation, can claim deduction in the amount of maximum € 50 per year,

50
Q

Tax bonus (individual income tax)

A

Any taxpayer who earned a taxable income equal to not less than 6 times the minimum wage, may claim a tax bonus of € 22.17 per month (since January 1, 2019) concerning each dependent child sharing a common household with the taxpayer (the tax bonus shall be deducted from the tax).

51
Q

Payment of individual income tax

A

Advance payments - when an employer calculates and counts out money form the employee’s wage (e.g. permanent employment) on monthly basis, imposes it to the tax administrator and settles it in an annual tax settlement:
overpaid tax-advance payments were higher than the tax liability,
underpaid tax-advance payments were lower than the tax liability

52
Q

Deduction from wage

A

when an employer calculates and counts out money form the employee’s wage (e.g. part-time job) and imposes it to the tax administrator.

53
Q

Tax declaration

A

when an individual submits the tax declaration and has to pay income tax
afterwards or gets the tax return

54
Q

Corporate income tax

A

In Slovakia, the corporate income tax is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year.

55
Q

Tax subject (corporate income tax)

A

taxpayer with an unlimited tax liability (resident) - a company with a legal residence (registered office) in Slovakia → a domestic and foreign income is taxed (no unilateral double taxation relief is provided, double taxation is relieved only on the basis of tax treaties),
taxpayer with a limited tax liability (non-resident) - a company which doesn’t have a legal residence in Slovakia an income achieved in the territory of Slovakia is taxed.

56
Q

Tax rate (corporate income tax)

A

income and capital gains - the corporate income tax is levied at a rate of 21%,
withholding tax on domestic payments - withholding tax of 19% is levied on income from participation certificates, debentures, vouchers and investment coupons and interest from bank deposits and current accounts in general;
withholding tax of 7% shall apply to dividends.

57
Q

Tax object (corporate income tax)

A

The tax object depends on the type of the taxed legal entity:
taxpayers registered in the Commercial Register (companies which have been established to conduct business) - the tax object includes all types of income (earnings and revenues),
taxpayers not registered in the Commercial Register (organisations which have not been established to conduct business) - the object of taxation shall be restricted to income earned from activities which do, or may, generate profit.

58
Q

Tax base (corporate income tax)

A

The tax base (TB) is represented by the trading income of a legal entity which is adjusted by:
the deductible items - items which reduce the tax base because they already have been taxed by withholding tax (e.g. income from donation or inheritance),
the attributable items - items which increase the tax base because they couldn’t have been taxed or included in costs (e.g. excessive consumption or fines)

59
Q

The method of calculating the tax base (corporate income tax):

A

the single entry accounting legal entities - the difference between earnings and
expenditures.
the double entry accounting legal entities the difference between revenues and
costs

60
Q

Payment of the corporate income tax

A

A legal entity is required to file the tax declaration within three months from the end of the tax period:
a calendar year- it includes 12 months from January to December,
a fiscal year - it includes any consecutive 12 months (not identical to the calendar year)

61
Q

the tax allowance for the young mortgage

A
  • the taxpayer up to 35 years old can lower his/her tax base by the half of the interest paid on his/her mortgage in the relevant tax period in the amount of maximum € 400.
62
Q

Indicators of state budget

A

A - Taxes
A1 - Tax from revenues, profits and capital assets
A2 - Domestic taxes for merchandise and services
A3 - Taxes from international trade and transactions
A4 - Sanctions
B - Non - tax revenues
C - Grants and transfers

Ekonomika (5 decks)

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