Taxation in Puertego

Taxation in Puertego is the governments largest source of revenue with it making up almost 3/4ths of revenue the government collects at an estimated 72%, taxes in Puertego are collected by the National Revenue Commission (NRC) a branch of the Ministry of Finance and legislation on taxation as well as the creation of new taxes are left up to the National Assembly. There are various types of taxes in Puertego though the following taxes make up almost 90% of tax revenue in Puertego

• Personal income tax
• Value added tax (VAT)
• Sales tax
• Payroll tax
• Excise tax

The following taxes are all imposed at a national level with almost no taxes imposed by lower levels of governments as they lack the power to create taxation policies on their own. There is a good deal of corruption regarding taxation in Puertego with it being estimated as much as 14% of government tax revenue is stolen via embezzlement.

Income Tax

Income tax in Puertego is divided into two groups personal and corporate income taxes.

Corporate Taxes

Puertego's corporate tax rate is set to a flat maximum of 7.5% however the government gives many tax incentives to companies to encourage them to operate in Puertego with them only paying a tax rate of 2.5% for their first two years in Puertego with the rate they pay increasing by 1.25% every 2 years they remain in Puertego until they would be paying the normal corporate tax rate, on top of this corporations investing in Puertego are given tax shelters so that only around half the income they make is subject to taxation.

Capital gains tax once existed in Puertego and were set at 20% however this taxation was fairly short-lived being implemented in 2001 and being repealed by a presidential order in 2012. President Torres has claimed that he repealed the taxation as he felt that taxing people more than they already were on their investments in Puertego could be scaring away investment from potential investors and stopping current investors from investing more into Puertego.

Personal Taxes

In Puertego personal income tax is the largest source of tax revenue and is a flat rate of 33.3% however while it is flat in theory in practice the government offers the same tax shelters it offers to foreign investors to high-ranking government officials in Puertego with Puertego's personal income tax system being criticized by international observers as a regressive system. Personal income tax does not apply to Puertegans working outside of Puertego however the money they send back is subject to a 45% remittence tax, personal income taxes do apply to foreigners working in Puertego so long as they've been working in Puertego's jurisdiction for a minimum of 6 months.

Puertego also has a payroll tax of 25% with employers being allowed to deduct up to 10% of employee pay for the tax so long as that wouldn't put employee pay below the minimum wage.

VAT and Sales taxes

VAT and sales taxes in Puertego are the second largest source of tax revenue for the government with sales tax being set at 10% and the nations VAT being set at 15%, included in the legislation for sales taxes in Puertego is also excise taxes which are set as high as 75% on top of normal sales taxes for things such as tobacco, alcohol, gambling, and various other things the government considers to be detrimental to societal morals.

Stop tolls

A form of toll in Puertego is where the police or military often set up checkpoints on highly traveled on roads and require any passerby to pay tolls in order to pass the checkpoint, these checkpoints are also often created around areas meant to attract tourists in Puertego. The money collected from these checkpoints often doesn't enter the government budget directly but instead is used by the police or military to help with funding and are used for the maintenance of roads where they are set up at. These checkpoints are widely unpopular due to there being frequent reports of the officials running these polls demanding things on top of money in order for people to pass and instances of brutality at these checkpoints from people refusing to pay the tolls such as beatings and murders being far from unheard of.