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What is meant by “tax”?
Tax is defined as mandatory contributions imposed by governments on individuals, institutions, or companies, whether these companies are local, regional, or national, so that the governments of tax-imposing countries use tax revenues to finance government activities, including public works and services, such as maintaining roads, hospitals, and schools and preparing them to serve the community and increase the level of well-being in it, in addition to providing basic services to support the infrastructure in these countries. profits, or on capital gains through increased investment, or payments made for the purposes of purchasing goods and services, and many other types of tax.
What is the difference between income tax and sales tax?
Paying the tax as the owner of a company, institution, or business is no different than paying the tax as an individual, but in order to pay the tax correctly, you must be able to distinguish between income tax and sales tax, and business owners or managers frequently get confused in the distinction.Therefore, if you want to distinguish between income tax and sales tax, you must familiarize yourself with the concept, characteristics, and requirements of each. To help you understand this, you can review the following:
The definition
The term “income tax” refers to the tax that is paid based on the total income generated by companies and individuals to governments based on a tax declaration submitted at the end of each year, and these revenues are used to support and finance the services that governments perform for society, while the definition of “sales tax” as a percentage is considered a consumption tax that customers or consumers must pay when purchasing certain items or commodities from the company and commercial outlets, so that the business owner then passes this tax to the tax authority or the authorities responsible for collecting it, such as governments, based on the country.
Requirements
Almost every organization or company is required to pay income tax, while not everyone is required to pay sales tax, as companies that provide tangible services or sell products to final consumers are required to pay sales tax on what they provide, while this does not usually apply to sales of services or goods that businesses buy in bulk.
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Tax calculation mechanism
Companies must submit their tax returns at the end of each year to determine the income tax required of them by governments. This declaration includes detailed questions about the expenses and revenues received by the owners of the companies, while the sales tax is calculated in an easier way. To find out the sales tax, you must multiply the total The amount of the sale of a particular commodity at the sales tax rate that is imposed by the governments of the countries and that is stipulated in their tax laws
Read also: Things You Didn’t Know About Income Tax
