A direct tax imposed on persons (whether natural or legal persons such as companies) who practice professions and activities (trade, services…etc.) and whose income exceeds a certain amount of money per year. Where the state deducts part of the profits of people if it exceeds a certain limit.
The tax rate may increase as taxable income increases (referred to as incremental or progressive rates). The tax imposed on corporations is usually known as corporate tax and is levied at a flat rate, while individuals are taxed at different rates depending on the band in which they fall
The concept of income taxation is a recent innovation and presupposes certain conditions: that the economy is based on money, that the accounts are minimally accurate, that receipts are understandable to the parties concerned, that there are expenses and profits, and that there is an orderly society with reliable records.
The taxable income of a taxpayer residing in a particular province or country is the total income minus income-producing expenses and other deductions. In general, only the net gain from the sale of property, including goods held for sale, is included in income. Income of a company’s shareholders usually includes dividends from the company. Deductions typically include all income-producing expenses or business expenses including allowances for offsetting costs of business assets. Many jurisdictions allow presumptive deductions for individuals, and may allow deductions for some personal expenses. Most jurisdictions either do not tax income earned outside their jurisdiction or allow taxpayers to pay other jurisdictions to be deducted on that income. Non-residents are taxed only on certain types of income from sources within the scope of the tax-collecting authority, with a few exceptions.
