- Parent Category: Business Legalities
- Created on Monday, 24 November 2008 05:22
- Last Updated on Sunday, 14 April 2013 15:17
Taxation of Businesses
Since tax law is subject to fluctuations it is difficult to write down the state of the law. Following provisions will only give you a rudimentary primer on what you need for understanding. For more, detailed and up to date information consult your attorney or tax advisor.
This presentation is reaching out to SME not required to keep books. Since keeping books is a very formal and a sophisticated matter in general, and bigger companies will have their bookkeeping personnel anyway, no need for any such information is assumed here.
BTW: Did you know? Tax Return - its origin:
Until 1694, English sovereigns financed their expenditure simply by issuing credit tokens (IOUs) to taxpayers at a discount. In other words a tax-payer could "prepay" his taxes, for instance by giving the sovereign 8 pounds sterling in goods and services in exchange for a 10 pound token from the Exchequer (Treasury), which could be returned in payment of taxes.
Interestingly, the phrase "tax return" derives from the payment of tax by returning the credit token to the King's Exchequer, and the phrase "rate of return" literally described the time over which the taxpayer could achieve his discount and profit by returning his tokens/credits to the Exchequer. So in the above example, if the taxpayer paid 10 pounds tax in one year, he would make a 2 pound profit on an 8 pound investment and a 25% rate of return. If he paid 5 pounds in tax a year then the rate of return would be 12.5% and so on. It will be observed that no compound interest was involved. But that's history; it is not so easy today anymore.