Taxation of business

A tax is a mandatory payment to the state budget under the law. Taxes finance shared services such as roads, schools and hospitals and help regulate the economy. The amount on which tax is calculated is called the tax base, and tax is the base multiplied by the rate: tax = base × rate. In business you meet profit (income) tax, value added tax, social tax, property and land tax and personal income tax; the VAT rate is 12 %, while other rates are set in the Tax Code, so they should be checked in the current code each time. A business may pay tax under the general regime or, if it meets the conditions, under the simplified regime; the simplified regime has easier accounting, but the law sets limits on the type and size of activity. In the current Tax Code the main simplified regime for small business is the turnover tax; the “single tax payment” named in the textbook is no longer used. Not paying tax on time and in full leads to fines and other liability, so keeping correct records matters for an entrepreneur.