Lump tax: concept, examples

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Various taxes are the main part of the income of any state. The federal budget of the Russian Federation, for example, receives the largest income from VAT, excises, taxes on the extraction of minerals, as well as from income taxes. The above fees are calculated based on the amount of resources extracted or income received, using government approved rates.

Types of income taxes

Income taxes include all types of income taxes, in the Russian Federation, for example, for individuals it is personal income tax, and for legal entities it is income tax.

The personal income tax rate in Russia varies from 13 to 35% depending on the type of income received, and corporate income tax is calculated based on a 20% rate. In the case of legal entities, the tax base, that is, the amount on which the tax will be imposed, is calculated according to a different principle. Not all income is taken into account, but only the profit of the organization, that is, the difference between income and expenses.

By the way, the Bahamas, Bermuda, the Virgin Islands and the UAE have no income tax at all.

What is a lump sum tax?

If allthe above taxes have fixed rates and directly depend on the amount of income or profit received, then there are taxes with a fixed amount of payment. The opposite of income tax is the lump-sum tax, which does not depend on income received.

Luxury taxes are set by the state and represent a permanent, that is, an unchanged amount that does not depend on the amount of income or purchases made. The tax levied as a fixed amount is also called lump-sum and autonomous.

Examples of lump-sum taxes in world practice

In Switzerland, for example, a we althy foreigner can become a tax resident and obtain a residence permit if he agrees to pay an annual lump-sum tax, which is calculated separately for each family. The amount of tax depends on expenses, the number of Swiss and foreign assets, as well as the regularity of income. Thus, a family of foreign citizens pays about 230 thousand euros annually.

Italy also applies a lump-sum tax in the form of a levy for we althy foreigners who live outside of Italy but have certain assets within the country. This fixed fee is €100,000 and is paid annually.

Thailand applies an Internet tax, which is a flat rate of about $30, billed monthly.

Chord taxes in Russia

Fixed contributions toFFOMS and a pension fund from individual entrepreneurs. The size of these payments is calculated on the basis of the minimum wage set at the state level (SMIC), this indicator has nothing to do with either the average salary or business income.

It can be argued that the payment by notaries, lawyers and any individual entrepreneur of an annual fixed contribution of 27,990 rubles to two funds is a lump-sum tax, as it is calculated on the basis of the minimum wage, which in 2017 (until July 1) was equal to 7,500 rubles. The only condition that an individual entrepreneur must comply with in order to save this amount of tax is not to exceed an annual income of 300 thousand rubles.

By the way, UTII also refers to the lump-sum type of taxes.

UTII

A striking example of a lump-sum tax is UTII. What is it in simple words? This abbreviation is deciphered as a single tax on imputed income. Such a tax is fixed, and it is paid by each individual entrepreneur who has chosen the appropriate taxation regime. UTII can be applied to entrepreneurs only with certain types of activities, the list of which is approved by state bodies.

The UTII rate as of 2017 is 15%. In addition, changes have been made that allow regional authorities to halve the size of UTII, that is, to 7.5%. Also, since 2017, a new declaration form for quarterly reporting has been in force. IP requirements for UTII remained the same:

• number of staff no more than 100 people;
• may not have a current account;
• right to refuse to use cash register.

UTII, or “imputation”, as it is commonly called, is considered an additional tax, since it does not exempt individual entrepreneurs from paying taxes according to the previously chosen taxation system.

Who pays UTII and how to calculate it?

According to Russian laws, the possibility or obligation to pay UTII applies to the following activities:

• paid parking lots, parking lots;
• retail trade in tents or stalls, area less than 150 sq. m.;
• veterinary services;
• cargo and passenger transportation;
• vehicle repair and maintenance;
• household services for individuals.

At the local level, authorities have the right to change UTII rates for the following activities:

• catering establishments up to 150 sq. m.;
• outdoor advertising services;
• transfer of land and places for trading.

To calculate UTII, you need to find the product of the base yield and a physical indicator, and multiply the resulting amount by two deflator coefficients and by a rate of 7, 5 or 15%. All elements of the formula, except for the physical indicator, are standardized for each industry and may change periodically, while the physical indicator depends on the number of employees employed by the enterprise.

Thus, if an individual entrepreneur does not have hired workers, then UTII is a fixed tax. Now you know what it is - UTII - in simple words.

Conclusion

Among the huge variety of taxes, lump-sum taxes, that is, taxes with a fixed amount of payment, which does not depend on the profitability of the enterprise, have received the least popularity. The first historical mention of lump-sum taxes in Russia can be attributed to the tribute imposed by Prince Oleg on the city of Novgorod in the 9th century. Then the inhabitants had to pay an annual fixed fee in the form of 300 silver bars, each of which weighed about 200 grams. In modern Russia, UTII and fixed payments to funds from individual entrepreneurs can be partially attributed to lump-sum taxes.