indirect tax


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Indirect Tax

A tax that is shifted to another person or entity. For example, sales taxes are levied on a seller but are paid by buyers; that is, the government expects sellers to pay the sales tax, but they pass the cost on to their customers. An indirect tax differs from a direct tax like a tax on income or assets, which the person or organization on whom they are levied must pay directly. There is disagreement as to whether a corporate tax is a direct tax or indirect tax.

indirect tax

A tax paid by an entity other than the one on which it is levied. For example, a retail sales tax is collected and remitted to the government by a business even though the tax is ultimately paid by the consumers. Compare direct tax.

indirect tax

a TAX imposed by the government on goods and services (which is incorporated into the product's final price) in order to raise revenues and as an instrument of FISCAL POLICY in managing the economy. The main forms of indirect tax in the UK are VALUE ADDED TAX, EXCISE DUTY and CUSTOMS DUTY. See BUDGET (GOVERNMENT), EXPENDITURE TAX.

indirect tax

a TAX levied by the government that forms part of the purchase price of goods and services bought by individuals (households) and businesses in order to raise revenue and as an instrument of FISCAL POLICY. Examples of an indirect tax are VALUE-ADDED TAX, EXCISE DUTY, SALES TAX and TARIFF.

Indirect taxes are referred to as ‘expenditure’ taxes since they are incurred when income is spent, unlike DIRECT TAXES, such as INCOME TAX, which are incurred when ‘income’ is received.

Changes in indirect tax can be used as part of fiscal policy to regulate the level of AGGREGATE DEMAND, increases in tax serving to reduce disposable income available for consumption spending, while decreases in tax increase disposable income. Indirect taxes can be used to affect the shape of demand as well as its level, increases in indirect tax serving to discourage consumption of socially disapproved products like cigarettes or alcoholic drinks, while reductions in indirect taxes encourage consumption of socially approved products like basic foodstuffs or books.

Unlike a DIRECT TAX, which varies according to the income of the taxpayer (PROGRESSIVE TAXATION), indirect taxes are regressive, insofar as the same amount is paid by each taxpaying consumer regardless of income. See TAXATION, REGRESSIVE TAXATION, INCIDENCE OF TAXATION.

References in periodicals archive ?
The active participation of the audience and insights of the speakers enabled the attendees to gain a much better understanding of VAT and the opportunities available for businesses in the new indirect tax regime
These Indirect Tax Partners include Robert Tsang from Deloitte Southeast Asia, who has led the Deloitte Asia Pacific and Southeast Asia Indirect Tax businesses, as well as the Consumer and Industrial Products Tax team.
He specifically advised multinational businesses on indirect tax and customs issues in the energy and resource sector including projects involving M&A activity, cash-flow incentives and local in-country VAT/GST compliance and disputes.
Previous studies attempting to estimate indirect tax burdens on households include those by Poterba (1991), Go et al.
Mani, Senior Director, Indirect Tax, Deloitte India.
All the other WHT deductions should simply be merged with the nearest indirect tax.
Within most multinational companies, transfer pricing, customs, and indirect tax are managed independently.
9]: Indian Gross Other Indirect Tax Revenue series is buoyant to change in its Base.
The Indian indirect tax system can be broadly divided into two categories: federal taxes and state taxes.
Autoregressive Integrated Moving Average model simulation seems to show minimum error in long-term total federal revenue and indirect tax collection data forecasting.
ONESOURCE Indirect Tax enables companies to practically eliminate the effort associated with maintaining ERP systems based on frequently changing domestic and international tax rules and regulations.
Dr Collins said if the Government wants to help more people, the indirect tax route would be a better route, and more people would gain from cuts.