Readers ask: What Are The Purpose Of Taxation In Ethiopia Economy?

What is taxation in Ethiopia?

Taxation. The Ethiopian tax system comprises direct and indirect taxes. Direct taxes include personal income tax, rental tax, withholding tax, and corporation tax, among others. The main types of indirect taxes are VAT, customs duty, excise and turn over taxes. Main taxes are summarized in the table below.

What are the objectives of taxation?

The primary purpose of taxation is to raise revenue to meet huge public expenditure. Most governmental activities must be financed by taxation. But it is not the only goal. In other words, taxation policy has some non-revenue objectives.

What is the purpose of taxes in an economy?

Taxes allow the government to perform and provide services that would not evolve naturally through a free market mechanism, for example, public parks. Taxes are the primary source of revenue for most governments. Governments also use taxes to establish income equity and modify consumption decisions.

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What are the objectives of tax reform in Ethiopia?

One of the main objectives of the Ethiopian tax reforms was to generate adequate tax revenues to finance ever increasing public expenditure on poverty alleviation and development projects. This would be achieved through streamlining of the tax system to mobilize tax revenues from national economic growth.

What are 3 types of taxes?

Tax systems in the U.S. fall into three main categories: Regressive, proportional, and progressive.

What are 5 types of taxes?

Here are five types of taxes you may be subject to at some point, along with tips on how to minimize their impact.

  • Income Taxes. Most Americans who receive income in a given year must file a tax return.
  • Excise Taxes.
  • Sales Tax.
  • Property Taxes.
  • Estate Taxes.

What are the five major objectives of taxation?

It has been an instrument of social and economic policy for the government. Raising revenue, boosting up the economy, redistribution of wealth, minimizing unemployment rate etc. are the main objectives of tax.

What are the main principles of taxation?

The principles of good taxation were formulated many years ago. In The Wealth of Nations (1776), Adam Smith argued that taxation should follow the four principles of fairness, certainty, convenience and efficiency.

What is the purpose and importance of taxation?

Taxation, imposition of compulsory levies on individuals or entities by governments. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well.

What are the 2 types of taxes?

There are many different kinds of taxes, most of which fall into a few basic categories: taxes on income, taxes on property, and taxes on goods and services.

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Do higher taxes hurt the economy?

Taxes and the Economy. High marginal tax rates can discourage work, saving, investment, and innovation, while specific tax preferences can affect the allocation of economic resources. But tax cuts can also slow long-run economic growth by increasing deficits.

What are effects of taxation?

There are two main economic effects of a tax: a fall in the quantity traded and a diversion of revenue to the government. A tax causes consumer surplus and producer surplus (profit) to fall..

What is the role of Ethiopian Revenue and Customs Authority?

The Ethiopian Revenues and Customs Authority (ERCA) is the body responsible for collecting revenue from customs duties and domestic taxes. In addition to raising revenue, the ERCA is responsible to protect the society from adverse effects of smuggling.

How many types of taxes are there in Ethiopia?

In Ethiopia there are two types of tax. These are direct and indirect tax.

What is direct tax in Ethiopia?

Over 5000. —- 35. Taxable business income of companies is taxed at the rate of 30% percent. Other business taxpayers, with business income ranging from ETB 1,801.00 to ETB 60,000.00, pay between 10 and 30 percent.

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