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Taxation Principles and Practices
Taxation Principles and Practices
5. Non-compliance's Impact:
1. Incorporated Companies:
2. Unincorporated Businesses:
3. Depreciation deductions:
c. Depreciation deductions:
The flat rate VAT system aims to streamline VAT calculations for
small enterprises. Businesses under this system calculate the VAT payable
to tax authorities by applying a set percentage to their gross turnover.
Prons: The flat rate VAT plan simplifies VAT accounting and saves
administrative expense for smaller firms.
Businesses keep the margin between the flat rate VAT % and the regular
rate, which might offer a cash flow benefit.
Cons: The fixed rate % may not precisely represent the true VAT obligation,
which could result in payments that are either more or lower than those
under the usual plan. Businesses might not reclaim VAT on inputs, limiting
the opportunity for VAT recovery.
c. Yearly Accounting Scheme:
Businesses can use the yearly accounting system to file VAT returns
and pay VAT once a year instead of every quarter. This plan is
advantageous for organizations with consistent revenue and can help
stabilize cash flow.
The annual accounting plan decreases the frequency of VAT reporting and
payments, making administration easier for qualifying enterprises.
Consistent payments can enhance the management of cash flow.
Cons: Businesses need to predict their yearly VAT obligation, which could
lead to excess or underpayments, necessitating adjustments at the end of
the year.
This strategy may not be suitable for enterprises with fluctuating revenue.
b. Reputation harm:
f. Heightened examination:
References:
1. Smith, J. (2018). "Taxation: Principles and Applications." Pearson
Education.
2. Murphy, S. (2019). "Understanding Taxation: Law, Principles, and
Practices." Routledge.
3. Jones, M. L., & Brown, K. S. (2017). "Tax Policy and Economic
Development: Principles, Practices, and Performance." Springer.
4. Becker, G. S., Feldstein, M. S., & Feenberg, D. R. (2013). "The Effects of
Taxation on Capital Accumulation." University of Chicago Press.
5. Lawton, P. (2016). "Taxation in the Global Economy: Theory and
Evidence." MIT Press.
6. Australian Taxation Office. (2020). "Taxation Principles and Practice
Handbook." Australian Government Publishing Service.
7. OECD (Organization for Economic Cooperation and Development).
(2015). "Principles of International Taxation." OECD Publishing.