Tax Exemption, Base Calculation, and Tax Liability
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Tax Exemption and No Liability
We have established that a taxable event gives rise to a tax. However, in cases of no liability, the taxable event is not completed, and therefore, no tax liability arises. This means that if no taxable event occurs, there is no liability.
An exemption occurs when a taxable event takes place, but the legislature has provided a factual assumption that prevents the tax liability from arising. Article 22 of the LGT defines exemption as follows:
"Exemptions are those assumptions that, despite being taxable, the law exempts from compliance with the principal tax liability."
Methods of Determining the Tax Base
The taxable amount is the monetary value resulting from the measurement and valuation of the taxable event.
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