TAXATION

Taxation

Taxation System in the UK and Hong Kong

Introduction

A tax is a payment made to the government by an individual who has earned a certain amount during a year. Income tax is a most important basis of income to the government. In other words, it is an amount charged by a government on products, income, or activities. There are two types of taxes direct tax (which is charged on personal and corporate income directly) and indirect tax (which is charged on the prices of services and goods) (Myron, 2009, 36).

The Value Added Tax: The Value Added Tax (VAT) is a tax on consumption, which applies to the sale of things, the provision of services and imports of certain goods. The Value Added Tax is called a cascading tax, because each production cycle it moves to the next until reaching the final consumer, who cut the chain transfer. To keep the VAT as a consumption tax, there is a compensatory mechanism by which the debts generated by the sale of products can be paid through the tax paid upon purchase of supplies or payment for services to third parties. Adam smith has recognized this tax on consumable commodities. He defined consumable commodities as luxury and expensive goods (Myron, 2009, 36).

Excise Tax: These taxes only apply to individuals who pay for certain goods: alcohol and alcoholic beverages, oil, snuff and registration of means of transport. The Excise Tax is a consumption tax. It is levied on sale in the country at the product level of certain goods, the importation thereof, in the country selling the same goods when performed by the importer and gambling and betting. Adam Smith was somehow against the excise tax. Similar to what happens with the General Sales Tax This tax is immediately realizable, but it is determined monthly. The tax rates range from 0 to 118%, depending of the asset, according to the respective tables (Jon, 2009, pp 96).

Income Tax: The tax on personal income (PIT) is fundamental for citizens of all countries. For many years, the income tax rate is different for the main types of income (personal income tax = 13%). As a general rule, income tax (PIT) is held by a tax agent in the calculation of payments to individuals (e.g., employer). In some cases, the taxpayer must self-assess and pay income tax on the basis of the tax period (years). This occurs when the self-generating income, in particular - the sale of property (apartment, house, land, car parts company, securities, mutual fund shares) (Myron, 2009, 36).

The idea of taxation is to generate profit for government expenses. One of the most important uses of taxes is to generate profit for public goods and services, such as street cleaning and street lighting. Public services and goods do not permit a defaulter to be excluded, or permit elimination by a consumer there can no market in the good or service exist if it is not financed by some entity. The financial assistance by the government is to ...