Income tax

A tax is a compulsory payment taken from citizens and organisations to fill the state budget; taxes come back as education, medicine, defence, public order, pensions, benefits and stipends. Income tax is a direct tax: it is taken from the income of an individual, that is, the object of the tax is total income — wages, bonuses, income from renting out property, deposit interest, dividends and business income. Until 2019 wages were taxed at a multi-step rate (up to 22.5%); then the system was simplified and a single 12% rate was introduced for wages and most income, with a lower rate for dividends and interest. The company accountant calculates the tax on wages, withholds it and transfers it to the budget, but every citizen should know how to calculate it. Legal entities (firms) pay profit tax on their profit; its rate has changed over the years (today the general rate is 15%, higher in some sectors such as banking), so current rates are set in the Tax Code and examples use a conditional rate. Reducing the tax burden and simplifying the system aims to encourage business and cut tax evasion.