There are five main functions of taxation: fiscal, redistributory, regulating, controlling, and promoting.. 1) The main function of taxation is the fiscal one. Tax accounting is the subsector of accounting that deals with the preparations of tax returns and tax payments. Non-Revenue Objective: Finally, another extra-revenue or non-revenue objective of taxation is the reduction of inequalities in income and wealth. Required fields are marked *. If the cost of collecting the tax is greater than the revenue generated from the tax, and the primary objective of the tax is to raise revenue, then it would be better not to impose such a tax at all. Five Reasons that Contribute to Non Compliance with Tax Laws, Scope and Objectives of Investment Portfolio Management, Double Taxation Avoidance Agreement (DTAA), Evaluation of Subsidiary Performance in Multinational Operations, Taxation Aspects of Multinational Corporations in India. Foreign neutrality: The theory behind Foreign neutrality in international taxation is that the tax burden  placed on the foreign subsidiaries of domestic companies should equal that imposed on foreign-owned  competitor operating in the same country. total … World welfare will be increase if capital is free to  move from countries were the rate of return is low to those where it is high. Taxation - Taxation - Principles of taxation: The 18th-century economist and philosopher Adam Smith attempted to systematize the rules that should govern a rational system of taxation. Ascertainment of debts-liabilities, property, and assets i.e. The main objectives of International Taxation are the Neutrality and Equity. This can be done by taxing the rich at higher rate than the poor or by introducing a system of progressive taxation. The fundamental objective of taxation is to finance government expenditure. ... taxes should be coordinated to ensure tax neutrality and overall objectives of good governance. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well. Your email address will not be published. According to Dalton, that system of taxation is the best which is based on the principle of maximum social advantage i.e. Principles or Canons of Taxation: The government requires carrying out various development and welfare activities in the country. Short-range and long-range Tax Planning: The tax planning which is made every year to arrive at specific or limited objectives, is called short-range tax planning. A neutral tax is one that would not influence any aspect of the investment decision such as the location of the investment or the nationality or the investor. This site uses Akismet to reduce spam. The main objectives of International Taxation are the Neutrality and Equity.. Tax Neutrality. Taxation in Norway is levied by the central government, the county municipality (fylkeskommune) and the municipality (kommune).In 2012 the total tax revenue was 42.2% of the gross domestic product (GDP). Definition of taxation principles: Basic concepts by which a government is meant to be guided in designing and implementing an equitable taxation regime. The two basic kinds of taxes are excise taxes and property taxes. Hence, it is very difficult to frame a comprehensive tax policy, which will help to realize the manifold objectives discussed above. All Companies should be taxed on income, regardless of where it is earned. greatest good of the greatest number. All other objec­tives are supplementary to these basic objectives. Equality in taxation is achieved when no higher rate in proportion to value is imposed on one individual or his or her property than on other people or property in similar circumstances. For this, it needs a huge amount of funds. This form of equity should neutralize the tax consideration in a  decision on foreign location versus domestic location. A neutral tax is one that would not influence any aspect of the investment decision  such as the location of the investment or the nationality or the investor. It is through fiscality that taxes play their role in the formation of the state budget necessary for the realization of national and holistic state programmes. Taxation is very important in every nation as it is used to achieve a variety of important things. In The Wealth of Nations (Book V, chapter 2) he set down four general canons: Although they need to be reinterpreted from time to time, these principles retain remarkable relevance.

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