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Taxation in Caphiria: Difference between revisions
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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 (Caphiria)|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. | 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 (Caphiria)|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 ====== | |||
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 | |||
{| class="wikitable" | |||
|+ | |||
! rowspan="2" | | |||
! colspan="5" |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: | |||
{| class="wikitable" | |||
!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 ====== | |||
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 a primarily 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. | |||
== Wealth/Financial taxes == | == Wealth/Financial taxes == | ||
== Property taxes == | == Property taxes == | ||