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definition of income tax

Definition of income tax

it means those specific expenses incurred by the organization and which are paid to governments and which are derived from the existence of profits subject to income tax according to the income tax law during a specified period of time, and the amount of profits subject to income tax may differ from one organization to another based on the existence of A difference in the taxable profit, which is due to the different application of some accounting procedures in accordance with generally accepted accounting principles and international accounting standards, where there is a difference in some cases between the values ​​of some items in the financial statements according to the different application of accounting policies and principles, and the most prominent of these items are net profits, which The amount of income tax varies, and the amount that is paid to the government with the organization after the income is subject to tax is called the accrued income tax.
definition of income tax
definition of income tax

The emergence of income tax

Income tax emerged from the beginning of the development of economic and financial life in human societies, where people belong to countries or kingdoms in which they live and practice their daily activities, and are subject, based on their presence in these countries, to a set of instructions, customs and local laws issued by the ruling authority in them, and to meet For individuals who live in and* to obtain a variety of services and provide them with protection, they have some material obligations towards the state, and from the development of financial sciences, the concept of tax began to crystallize, and the income tax is one of the types of tax, and in this article the concept of income tax will be explained.

Factors affecting income tax

In addition to the existence of different accounting policies and procedures that affect the amount of income tax, there are a number of factors that affect income tax and that lead to an increase or decrease in the value of the income tax due, and there are some cases in which some individuals are exempted from paying income tax, and among the most prominent factors Affecting income tax are the following:
  • General economic situation: where the value of the income tax generally increases in cases of economic prosperity, while a decrease in the value of the income tax is observed in cases of stagnation of the economy. or recession of the country's economy.
  • Income value: The value of income directly affects the value of the income tax due, and even the value of the income determines whether an individual's income is subject to income tax or not, as there is what is known as personal exemption on income tax if the income does not exceed a specific financial value, the owner of the income It is exempt from tax, and in cases where income tax is due, the increase in income leads to an increase in the taxable income, and increases the value of the tax due.
  • Social status: The marital status of the taxpayers affects whether or not they are subject to tax, and the number of family members who are dependent on the head of the family affects the income tax subject to income. According to the Income Tax Law, certain cases are exempted from paying the tax because their income is not subject to tax.

deferred income tax

The concept of deferred income tax refers to a special type of income tax that is deferred to future financial years because there is some difference between the value of the tax due between what is calculated according to generally accepted accounting principles, and what the income tax rules and regulations impose on the amounts due to the organization as tax Income for a specific financial period, and in general, there is a significant overlap between tax accounting principles and generally accepted accounting principles, but there are some differences that appear between them, such as calculating some expenses, as some expenses are considered deductible according to tax laws, while these expenses are not deducted according to accepted accounting principles Generally, this directly affects the net income resulting from deducting or calculating these expenses, which in turn affects the amount of taxable income, and changes the value of the tax due, and accordingly, the taxes payable in some tax returns are different from those accrued that are calculated in the books.

Income tax evasion

The concept of tax evasion is common when the term tax is mentioned, whether this is related to income tax, sales tax, or other types of taxes. Income tax evasion is an illegal act punishable by tax laws in force in many countries around the world. It is from the income tax to hide the true value of the actual income or the expenses incurred in order for the taxable income to be in the lowest possible value in order to avoid paying taxes due of a higher value. Examples include the penalty of imprisonment, seizure of property, or the imposition of specific financial fines, and tax evasion may result through some unintended accounting errors in financial reporting processes. However, such cases do not exempt the owner from the penalty of tax evasion.
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