Taxation in Caphiria

Taxation in Caphiria is levied by the Government of Caphiria is collected by the Ministry of the Treasury; specifically, the Office of Quaestores is responsible for the collection of taxes and financial auditing while the Office of Aediles is responsible for approving public fund withdrawals. In 2025, total tax revenue was 30.3% of Caphiria's GDP, or $16.1 trillion.

In Caphiria, the lex tributum (tax code), taxes, tariffs, and duties are solely set by the National Assembly while the Office of Quaestores (within the Ministry of the Treasury) is responsible for tax collection. There are three types of Quaestores - supremus, provincialis, and oppidanus, which represent national, provincial and local tax jurisdictions.

Caphiria's tax system utilizes a base proportional tax on top of using its social stratification system for a class-based progressive tax rate. This tax-by-social-class does not apply for every type of tax category, of which there are 6: Income tax, corporate tax, goods and services tax, wealth/financial tax, and property tax, as well as various fees. Caphiria does not have a capital gains tax.

Income taxes

According to Caphiria's tax code, there are two types of Personal Income Tax. Residential income tax is defined as "any individual (Citizen) living within the Imperium is subject to taxation on all income derived from sources within or outside the Imperium" whereas non-resident is defined as "any individual (Citizen) living abroad more than 183 days shall pay individual income tax only on the income derived or sourced from the Imperium.

The base tax rate for residents is 6.05% and 21.46% for non-residents.

Additionally, there is a payroll tax paid by employers based on total remuneration of all employees.

Tax category	Base tax rate	Tax rate by social class
		Peregrini	Lower-Plebeian	Upper-Plebeian	Equite	Patrician
Personal Income Tax (Resident)	6.05%	18.95%	9.95%	10.45%	13.85%	16.94%
Personal Income Tax (Non-Resident)	21.46%	18.95%	10.55%	11.95%	14.25%	16.94%
Payroll Tax	4.25%	2.25%	3.75%	5.75%	6.00%	6.75%

Corporate taxes

Corporate entities registered and/or based in Caphiria are subject to a Corporate Income Tax. Corporations that are exempt from corporate tax are charitable foundations, church institutions and sports clubs.

Since 1981, Caphiria uses a proportional corporate tax; 20% applies to total annual revenue of up to $1 million, 12.3% applies to all revenue up to $1 billion, and a 10% tax for all revenue exceeding $1 billion.

Prior to 1980, Caphiria used a flat corporate tax rate of 20%, but sweeping economic referendums were passed by Imperator Bogdanko in 1980 which got rid of the flat tax in favor for the proportional system used today. As part of the 2002 Economic Crisis, Imperator Arenris reached a compromise with the Senate that would grant corporate entities that were both already registered, and paying the 20% tax prior to 1980, permission pay a flat tax of 21.3%. This rate is called the hereditas tributum, or Legacy Corporate Tax, and is one of the most coveted things within the Caphirian business world.

Capital gains and dividends derived from qualifying subsidiaries are not taxed, as is income attributable to a foreign business enterprise. Practically all business expenses are fully deductible due to the vague language in Caphiria's tax code; "Deductible expenses must be economically justified and properly evidenced with documents". Taxpayers resolve disputes through court litigation; the Court of Appeals has handled so many accounting cases that its resolutions and rulings form a separate layer of tax law that augments the tax code.

Goods & Services taxes

Caphiria has a General Consumption Tax (GCT) of 10% which applies to most "non-essential" goods and services; "essential" goods and services, such as groceries, electricity, etc. fall under the Necessity Consumption Tax (NCT) which is taxed at 5%. The General Consumption Tax is a broad-based system with few exemptions and is applied to the final price of the product or service being purchased and goods and services are advertised as GCT inclusive.

GCT -registered organisations and individuals pay GCT only on the difference between GCT-liable sales and GCT-liable supplies (i.e., they pay GCT on the difference between what they sell and what they buy: income less expenditure). This is accomplished by reconciling GCT received (through sales) and GCT paid (through purchases) at regular periods (typically every two months, with some qualifying companies opting for one-month or six-month periods), then either paying the difference to the Ministry of the Treasury if the GCT collected on sales is higher or receiving a refund from the Ministry if the GCT paid on purchases is higher.

Drug tax

Recreational drug use is both legal and extremely popular in Caphiria, despite being discouraged among the patrician order who generally view recreational drug use with disdain. The Narcotics Excise Tax is set at 35% and applied as a sales tax at a licensed apothecarius, or drug pharmacy. Half of the annual tax revenue collected from the narcotics tax is used to fund drug treatment facilities and provide assistance to treat and combat drug addiction.

Gambling tax

Gambling in Caphiria is highly regulated; Caphiria levies excise taxes on both legal and illegal gambling transactions, as well as taxes on the turnover, on player loss and net profit; different gambling services are also taxed in different ways. As gambling operators need to obtain a license to offer their services, certain fees must also be paid.

Gamblers' winnings are not taxed. There are 3 main reasons for that:

• Gambling is not considered a profession, it's treated as a hobby or recreational activity.
• The Caphirian government views gains from gambling activities not as income, but as a result of good luck. Even if someone wins big, they also lose a lot in other gambling sessions.
• The government taxes gambling operators instead

	Gambling Category
	EGMs in hotels	EGMs in clubs	EGMs in casinos	Keno gambling	Table games in casinos
Tax rate	38.9% of gross monthly revenue	0-50% of monthly taxable metered win, depending on monthly metered win	30% of monthly gross revenue	41% of net gambling revenue	20% of monthly gross revenue

As a base, there is a 10% gambling excise tax applied on all gambling transactions. In addition, there is a 33% turnover tax on bookmakers, lottery subscriptions, and draw card machines. There are also various license fees for casinos, poker machines, lotteries, races, sports betting, and minor gambling (bingo, raffles).

Fuel tax

In an effort to support renewable resources for transportation, Caphiria, like most countries, has excise taxes and other taxes on gasoline, diesel, and other liquid and gas motor fuels (collectively called fuel taxes), and also taxes electricity at various administrative levels. This fuel tax is applied to most road motor vehicles with exceptions for local bus services, some farm and construction vehicles and aviation, which pay reduced or no fuel tax. Most common forms of fuel are subject to a 12.614% VAT rate in addition to the excise tax. Other fuel (like avia gasoline, jet fuel, heavy oils, and autogas) prices has no excise tax.

The fuel excise tax rates since 2015 have been as follows:

Fuel	Rate
Gasoline, diesel, biodiesel, bioethanol	$0.6218 per litre
Natural gas used as road fuel (inc. biogas)	$0.1966 per kg
Road fuel gas other than natural gas	$0.3304 per kg

Prostitution tax

Main article: Prostitution in Caphiria

Prostitution is legal and highly regulated like gambling in Caphiria, although activities like pimping and street-walking are restricted or generally illegal. There is a base VAT rate of 30% applied on all prostitution transactions and additional taxes are levied on the prostitute, the client, and the brothel. This base tax applies to stripteases, peep shows, porn cinemas, sex fairs, massage parlors, and licensed prostitution.

The client, in addition to the 30% VAT, must pay a $5 fine, which goes to supplying brothels with condoms, and a $5 tax per act of prostitution, with the proceeds going to the College of Prostitution.

Prostitutes have to pay income taxes, and because prostitution is primarily a cash business, the Caphirian government initiated a system where prostitutes have to pay their taxes in advance, a set amount per day, to be collected and paid to tax authorities by the brothel owners. Prostitutes must also pay a monthly $155 registration fee, half of which goes to funding the College of Prostitution.

Brothels must pay operational fees as well as a 20% revenue tax for each prostitute under its employment. Half of the tax revenue collected from brothels goes directly to the College of Prostitution.