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Which source of government revenue is categorized as a direct tax?
- a)Value-added tax (VAT)
- b)Corporate income tax
- c)Import duty
- d)Excise tax
Correct answer is option 'B'. Can you explain this answer?
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Which source of government revenue is categorized as a direct tax?a)Va...
Understanding Direct Taxes
Direct taxes are taxes that are levied directly on an individual or organization's income or wealth. They are paid directly to the government by the taxpayer.
Why Corporate Income Tax is a Direct Tax
- Definition: Corporate income tax is a tax imposed on the net income of corporations. It is calculated based on the profits earned by the business after deducting expenses.
- Payment Obligation: Corporations are responsible for paying this tax directly to the government, which distinguishes it from indirect taxes.
- Incidence of Tax: The burden of the corporate income tax is borne by the corporations themselves, as opposed to consumers, making it a direct tax.
Comparison with Other Options
- Value-added Tax (VAT):
- Nature: This is an indirect tax that is collected at each stage of production or distribution.
- Burden: The tax is ultimately passed on to the consumer, which does not fit the definition of a direct tax.
- Import Duty:
- Nature: This is also an indirect tax applied to goods brought into a country.
- Burden: Like VAT, the cost is typically passed on to consumers and not paid directly by the importer in terms of income or wealth.
- Excise Tax:
- Nature: This is a tax on specific goods and services, often included in the price.
- Burden: Similar to VAT and import duties, the cost is transferred to the end-user.
Conclusion
In summary, corporate income tax is categorized as a direct tax because it is levied directly on the income of corporations and is paid by them, unlike VAT, import duties, and excise taxes, which are indirect and passed onto consumers.
Direct taxes are taxes that are levied directly on an individual or organization's income or wealth. They are paid directly to the government by the taxpayer.
Why Corporate Income Tax is a Direct Tax
- Definition: Corporate income tax is a tax imposed on the net income of corporations. It is calculated based on the profits earned by the business after deducting expenses.
- Payment Obligation: Corporations are responsible for paying this tax directly to the government, which distinguishes it from indirect taxes.
- Incidence of Tax: The burden of the corporate income tax is borne by the corporations themselves, as opposed to consumers, making it a direct tax.
Comparison with Other Options
- Value-added Tax (VAT):
- Nature: This is an indirect tax that is collected at each stage of production or distribution.
- Burden: The tax is ultimately passed on to the consumer, which does not fit the definition of a direct tax.
- Import Duty:
- Nature: This is also an indirect tax applied to goods brought into a country.
- Burden: Like VAT, the cost is typically passed on to consumers and not paid directly by the importer in terms of income or wealth.
- Excise Tax:
- Nature: This is a tax on specific goods and services, often included in the price.
- Burden: Similar to VAT and import duties, the cost is transferred to the end-user.
Conclusion
In summary, corporate income tax is categorized as a direct tax because it is levied directly on the income of corporations and is paid by them, unlike VAT, import duties, and excise taxes, which are indirect and passed onto consumers.
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Which source of government revenue is categorized as a direct tax?a)Va...
Direct taxes are levied directly on individuals or entities and cannot be transferred to others. Corporate income tax is a direct tax imposed on the income of companies.
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Which source of government revenue is categorized as a direct tax?a)Value-added tax (VAT)b)Corporate income taxc)Import dutyd)Excise taxCorrect answer is option 'B'. Can you explain this answer? for JAMB 2025 is part of JAMB preparation. The Question and answers have been prepared according to the JAMB exam syllabus. Information about Which source of government revenue is categorized as a direct tax?a)Value-added tax (VAT)b)Corporate income taxc)Import dutyd)Excise taxCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for JAMB 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which source of government revenue is categorized as a direct tax?a)Value-added tax (VAT)b)Corporate income taxc)Import dutyd)Excise taxCorrect answer is option 'B'. Can you explain this answer?.
Which source of government revenue is categorized as a direct tax?a)Value-added tax (VAT)b)Corporate income taxc)Import dutyd)Excise taxCorrect answer is option 'B'. Can you explain this answer? for JAMB 2025 is part of JAMB preparation. The Question and answers have been prepared according to the JAMB exam syllabus. Information about Which source of government revenue is categorized as a direct tax?a)Value-added tax (VAT)b)Corporate income taxc)Import dutyd)Excise taxCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for JAMB 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which source of government revenue is categorized as a direct tax?a)Value-added tax (VAT)b)Corporate income taxc)Import dutyd)Excise taxCorrect answer is option 'B'. Can you explain this answer?.
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