What is an ‘Income Tax’?

tax photoAn income tax is one of the types of tax that Government imposes on the financial income of an individual or organization, earned within their jurisdiction. By Law, business organizations and individuals must be filed their income tax return every year to determine whether they are eligible for Tax Refund or own any taxes. Income tax is one of the main sources through which government support their activities and serve their citizens.

Sales Tax:

Likewise, the income tax, sales tax is also one of the roots of TAX. Sales tax is imposed by the government on the sales of goods and services. A conventional sales tax is levied at the time of sales, it is collected by the retailer or any supplier in the whole supply chain but in the end, it is passed to the government.

Every country has his own Standard Operating Procedures (SOP’s) regarding the implementation of taxes whether it’s a sales tax, income tax or any other tax. In this blog, we are going to discuss tax rates that are imposed in various countries around the world.

List Of Countries:

1. Afghanistan:

Afghanistan economy has been significantly improved in last decade because of infusion of billions of dollars in international assistance. GDP of Afghanistan in 2016 was 64.08 billion and its GDP was ranked 108th in nominal GDP ranking. However, the corporate tax rate is 20%, tax on an individual is also 20% but you will be surprised to know the in Afghanistan there is no implementation of sales tax or Value Added Tax (VAT).

2. Australia:

The Australian economy is one of the largest developed mixed economy having the GDP of 1.69 trillion dollars so far in 2017, Australia ranked at number 14th in nominal GDP rankings. However, the tax rate on corporate sector is 28.5-30%, tax on an individual on capital gain is 49% and VAT on essential items such as bread, clothes etc is 0% but VAT on luxurious items is 10%.

3. Canada:

The Canadian economy is one of the highly developed mixed economies with GDP of  1.67 trillion dollars so far in 2017 and the economy of Canada is ranked on number 10th in Nominal GDP Ranking. However, the corporate tax rate is 31%, tax on an individual is 58.75% and Federal General Sales Tax (GST) is 5%.

4. France:

France is the 6th largest economy according to nominal GDP ranking and the 3rd largest economy in Europe after the 2nd UK and 1st Germany. The GDP of France in 2016 was 2.463 trillion dollars, now that is a huge figure. France has different SOP’s regarding tax collection as compared to other countries. Corporate tax is 15% if the Profit of organization is below the figure Euro 38,120 per year if the profit is above Euro 38,120 per than tax rate will be 33%. The tax rate on individual income is 0% if the income is below Euro 9700 but the tax rate is 45% on the higher incomes. Sales tax is 20% and 10% (restaurant, transportation) and 5.5% (utilities).

5. Japan:

Japan is the 3rd largest economy in the world in nominal GDP ranking, it is also the 3rd largest Automobile Manufacturing Country. The GDP of in 2017 was 4.841 trillion dollars, the corporate tax rate is 32.11%, the tax rate on individual income is from 5-50% according to the income of individual and the sales tax rate on consumption of items is 8%.

6. United States Of America:

An economy of United States is the largest mixed economy in the whole world and also ranked on number 1st in nominal GDP ranking. The GDP of United States in 2016 was recorded $18.46 trillion dollars largest GDP among all the countries in the world. However, the corporate tax rate is 35%+0.12%, tax rate on individual income is up to 47.6% (federal plus state with federal deduction). The sales tax rate is from 0%-11.725% (states plus federal).

7. United Kingdom:

An economy of UK is highly developed and market-orientated economy, it ranked number 5th in nominal GDP ranking. The GDP of UK in 2016 was recorded 2.629 trillion dollars, UK economy is the 2nd largest economy in European Union. However, the corporate income tax rate is 19%, income tax rate on individual income is 0%-20% where the annual income of an individual is less than 100,000 pounds but an individual who earns more than 100,000 pounds annually it is taxed at a rate of 62%. Standard Sales Tax rate is 20% on consumption of items.

8. Pakistan:

Pakistan is an under developing country and it is 42th largest in terms of nominal GDP. The GDP of Pakistan in 2017 was recorded 304.3 billion dollars. The corporate tax rate on big organizations is 35%, the tax rate on individual income is from 7.5-35% if the income of an individual is more than 3800 dollars annually. The Standard Sales Tax rate is 0%-17% on the consumption of basic items.

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