Budget: Taxation terms you need to know
What does zero rating mean? Here are some of the key taxation terms that relate to the budgeting plans -- explained:
Zero rating
When a commodity is zero rated, the government doesn’t tax its sale. The manufacturers are allowed to claim credits for the value-added tax (VAT) paid on inputs.
Tax exemption
If a good or business is “exempt,” the government doesn’t tax the sale of the good, but producers cannot claim a credit for the VAT they pay on inputs to produce it.
Exempting breaks the VAT’s chain of credits on input purchases hence raises prices and revenues.
Value-added Tax (VAT)
This is the 16 per cent taxed on goods at the point of purchase, usually borne by the consumer.
Income taxes
Taxes levied on the income you earn from employment or business
Presumptive tax
These are taxes aimed at reducing the compliance burden for small businesses
Tax base
All items or activities subject to a tax.
Tax burden
the amount of tax borne by an individual or a business depending on income and the rate applied.