Taxation in Kiravia

Headquarters for the Federal Unified Taxation Authority in Kartika

Taxation in Kiravia is the largest source of revenue the government has, with tax revenue being 38.6% of Kiravia's GDP or $20,206,601,700. Taxation in Kiravia is administered at both the federal and provincial levels, however, both levels of taxation are overseen by the Federal Unified Taxation Authority the revenue service in Kiravia which handles administration of taxes, advising the government on taxation policy, and responding to and arresting people who commit tax fraud or tax evasion. While multiple methods of taxation exist in Kiravia the primary ones which account for the majority of the government's revenue are:

• The income tax (both corporate and personal)
• The land value tax (LVT)
• The value-added tax (VAT)
• The excise taxes

Of the aforementioned taxes, only income taxes and VAT are imposed at the federal level, and revenues derived from the VAT are divided between the federal and the government of the province where they are collected. All the rest are imposed by governments at the provincial level or below, with the exception of excise taxes on fuel which don't make up a majority of government revenues but are imposed on a national level.

History

For most of Kiravian history, taxes were mainly assessed upon the agricultural output of a jurisdiction and collected in kind. Public revenue was extracted from non-agricultural enterprises mainly in the form of royalties, rents, fees for licenses and monopolies, and similar charges. Exceptions included excises imposed on select high-value, high-volume industries, such as works producing lant, alcoholic beverages, and salt cod. Taxation in coin was practised during the Classical Period but became obsolete in the Postclassical Period as the spatial scale of the economy contracted and legible, organised markets receded, before becoming practical once more during the 14th century AD. From this time until the Republican Restoration, urban authorities depended heavily on octroi taxes, which is why many historic city centres dating from long after the feudal era are walled, though not truly fortified. The rural populace during the same period was still taxed (though now in money) on their farm produce and were obliged to pay duties on various manufactures, such as linen and woolen cloth, paper, distilled liquor, ruxburya, saltpeter, and pins. Several of the later Coscivian Empires and many inland kingdoms and statelets imposed a salt tax. The constitutions of the Kiravian Confederation and Kiravian Federacy authorised the confederal/federal governments to levy a salt tax, but collection was discontinued in 1878 AD.

Politics & Law

Authority to levy taxes belongs primarily to the Federal Stanora and to the legislatures of the Kiravian states and provinces, the latter of which may devolve taxation authority to inferior levels of government, such as cantons, countyships, municipalities, and special tax districts such as school districts, utilities districts, or drainage boards. Indeed, what are commonly termed 'legislatures' in the Occident were historically viewed in Coscivian civilisation as fiscal authorities first and foremost and as lawmaking bodies only secondarily, if at all. Thus, the conception of such assemblies as representing taxpayers is central to the Kiravian republican tradition. The Federal Treasury and the treasuries of most states report directly to the legislature, rather than to the executive power, and most inland revenue agencies report to the treasury.

The Kiravian constitution enumerates what taxes the Federal Stanora may impose, and reserves all other taxation powers to the provincial governments. The Constitution also establishes part of the framework for the sharing of revenues from Kirovat and other taxes on concurrent subjects between the federal and provincial governments. It also forbids federal taxation of the state governments themselves, the incomes of churches and religious institutes, and the endowments of ancestral shrines and noncommercial cemeteries.

Types of Taxation

Personal Income Tax

Kiravia has a tax on income an individual earns, the tax applies to all Kiravian citizens even if they are not currently residing in Kiravia or earn money elsewhere in the world. Individuals who are not citizens of Kiravia but still earn income in the country are also subjected to personal income taxes however only applying to the income they earn in Kiravia. Foreigners earning an income in Kiravia are only subject to taxation on their incomes if they have been earning an income in Kiravia for 6 months or more with this applying regardless of how spaced out their income is or if the source of their income in Kiravia changes however tax evasion of this income is significantly higher than it is for Kiravian citizens due to the complications involved in trying foreigners in Kiravia without them having Kiravian citizenship.

The rates of income tax in Kiravia are progressive and can go from 0% income tax at the lowest level to 25% at the highest level however there are other services taken out of individuals incomes such as 10% for pension funds and 5% for state insurance at the provincial level. Kiravia also has a tax on dividends earned either by Kiravian citizens from Kiravian or international companies, or by people residing in Kiravia earning dividends from Kiravian companies; the rate of this tax is set at 20%. However dividend tax is also imposed on branches of Kiravian companies distributing dividends to non-residents even if they are not in Kiravia.

Corporate Income Tax

The income tax on corporate entities in Kiravia is generally set at a rate of 14.5% however for non-residential corporate entities various other fees from the Kiravian government may be applied that while not legally counted as a tax are considered by many to be very similar such as regular licensing and zoning fees.

Capital Gains

Capital gains taxes in Kiravia are enforced at both the federal and state levels with people being required to pay capital gains taxes in both, however the capital gains tax at the provincial level is smaller and adds up to less in total than the personal income tax as an incentive for people to invest in Kiravia. The taxation rates for the federal level are 10% and while levels for the states vary none are higher than the federal rate with the highest rates being 8% and the lowest being 0% in certain provinces through exemptions though across Kiravia the average provincial rate is 5%.

Value Added Tax

The VAT for Kiravia, known semi-formally as Kirovat, currently sits at 20% as the standard rate, with the base for this tax being made up of various things primarily the movement and sale of goods, services, or property, and construction contracts as well as the import of goods into Kiravia. While the administration of the VAT is handled at the federal level, the revenues from it are split between federal and provincial governments. While the VAT rate is set nationally, some provinces in Kiravia allow for companies to apply for a reduced VAT rate so long as the company has been operating in the province for at least two (2) years and has generated a certain amount of revenue based on the companies' sector.

The tax code permits a corporate group meeting certain criteria to register as a "VAT collectivity" constituting a single entity for the purpose of VAT liability, thereby exempting transactions between companies within the collectivity from VAT, e.g. sales of intermediate goods from one unit of a vertically integrated concern for final assembly, or intellectual property royalties paid from a conglomerate's operating subsidiary to its common IP holding company. This provision exists to accommodate the látuxarin and similar large corporate groups that account for a large share of Kiravia's economic output and manufacturing sector.

The standard VAT rate of 20% applies throughout the Inner Federation (except Koskenkorva) and South Kirav. Lower rates (from 19.5% down to 16% in the Saxalins) are applied to Koskenkorva and incorporated island provinces in the Overseas Regions in recognition of the impact that higher transportation costs have on cost of living and cost of doing business in these provinces. These reduced rates apply only to goods and not to services. VAT rates for provinces outside of the Federacy but within the Kiravian Collectivity are set individually (on a case-by-case basis) by federal legislation. Some such territories, such as Seváronsa and the East Arctic Mandate, are VAT-free. Kirovat does not apply to the associated states of Saint Kennera & Pribraltar.

Certain classes of goods and services are exempt from VAT, such as grocery foodstuffs, pharmaceuticals, child- or midget- sized clothing, printed publications, and private school tuition. Such goods may still be subject to other taxes at the provincial level or below, such as stamp duties on newspapers.

Excise Taxes

Fuel Tax

Fuel tax is the only excise tax that is handled on the federal level and is set at a rate of 22%

Liquor & Tobacco Taxes

Liquor and tobacco taxes in Kiravia are handled at the provincial level and are a general name for many different taxes with the largest earning and most consistent varieties being on liquor and tobacco with each one being set at 12.5%. In some provinces, only hard liquor is taxed, while beer, wine, cider, and perrine are not. This is often the case in small mainland provinces to encourage tourism from larger neighbouring provinces. Similar taxes are levied on kalir and khat. In the Sarolastan provinces and Seváronsa, kava is taxed at 12.5% if sold commercially, though licensed exemptions for community and religious leaders are granted on a shall-issue basis and noncommercial cultivation of the plant is legal and widespread.

Sin and Pigovian Taxes

Provinces have imposed numerous other excises with the dual policy aims of collecting revenue and encouraging changes in behaviour among their populations. Examples include taxes on lottery earnings, men's magazines, contraceptive products, colour photography, tattoos and piercings, indoor tanning services, bicycles, and videographic games, video vixens, and "enriched energy drinks". In recent decades, some provinces and localities have adopted or considered various excises to correct for negative environmental externalities.

In 2028 AD, Ilfenóra State and neighbouring Venèra State passed legislation to establish a poll tax on unmarried men over the age of 25. Enforcement is currently suspended while litigation over the constitutionality of the taxes is pending. Though not an excise, it is nonetheless intended to incentivise behavioural change.

Historically, many urban municipalities maintained taxes on dogs kept for purposes other than consumption, as stray dogs were considered a public nuisance. In modern times, due to difficulties in enforcement, such taxes have been superseded by taxes on dog food and are intended to address the negative externalities of dog fouling, offset the costs of animal control services, and cut down on food waste by encouraging denizens to feed their dogs table scraps.

Dangerous proposals by rogue municipal governments to impose sugary drink taxes have been heroically thwarted by the independent consumer advocacy NGO Kiravians for Consumer Freedom.

Land Taxes

Property taxes in Kiravia are collected in the form of a land value tax where instead of the provincial governments taxing the buildings and additions to the property the property is taxed for its inherent value such as proximity to roads among other things. The tax rate for the LVT in Kiravia is dependent on the provinces starting cumulative value (SCV) with an average tax rate of 1% however the rates for the SCV are as such.

Caption

SCV	Tax rate
Excess of SCV by less than 5 times	1.5%
Excess by more than 5 but less than 10	2.5%
Excess of more than 10 but less than 15	3.5%
Excess of more than 15 but less than 20	4.5%
Excess of more than 20	5.5%

Taxation of land used for agricultural purposes is considered a separate tax from the land value tax with it being taxed at a flat rate of 0.07%

Stamp Duties

Provincial governments levy taxes on various classes of transactions and documents. The stamp tax base varies by province, but can include financial market transactions, real estate transfers, credit cards, goodwill, mortgages, corporate restructuring processes, trust articles, newspapers, blank cheques, airline tickets, and playing cards.

Stamp duties are particularly lucrative for provinces where major financial exchanges are located, such as Kaviska, Devahoma, and Hanoram.

Tariffs

Authority to levy tariffs and impost duties is the exclusive preserve of the federal government.

There are multiple customs territories within the Kiravian Collectivity. The Kiravian Main Customs Area comprises the Federation, South Kirav, Atrassica, and Eusa. All Kiravian international trade agreements apply to the KMCA automatically and in full, without derogations for outlying or special subregions within it. Sarolasta and the special themes of Sydona and the Melian Isles are separate customs territories. Provinces in the Overseas Regions do not fall under a single customs regime; applicable duties are fixed on a province-by-province basis by Customs Acts. One such province, New Ardmore has specially-tailored customs policies to allow for a degree of economic integration with the Levantine Union.

Tax Administration

Federal Unified Taxation Authority raid on a tax evader

The administration of taxation in Kiravia is managed by the Federal Unified Taxation Authority. It is the government administrative body and the most important tax authority responsible for collecting of the national taxes as well as for investigating, auditing, and arresting people who have committed evasion or fraud for their taxes in Kiravia. The organization also assists both the federal and provincial governments in designing their tax policies even though they have no power to change the policy or pass taxation laws on their own. The Federal Unified Taxation Authority usually audits large businesses yearly while medium and small sized businesses are often audited on a biannual basis. The Federal Unified Taxation Authority currently reports having 280,000 employees though in recent year this number has been slowly decreasing, 196,000 employees for the organization work full time while the rest are seasonal workers.

Tax returns in Kiravia are not filed automatically and citizens must have their returns turned in to the government by March 1st, on average citizens of Kiravia and residents spend 170 hours annually filing tax returns and paying taxes.