Chapter 1-1

Tax Accounting

Chapter 1-2

we will discuss the following issues:1. Basic concepts in tax accounting: Definition and Objectives2. The structure of the Egyptian Income tax low.3. The general characteristics of tax on individual's income.4. Tax on the revenues of Built Realties.5. The definition of General sales Tax.6. General characteristics of the General sales Tax.7. Conditions of Levying the General Sales Tax.8. Calculating the General Sales Tax.

Course outlineCourse outlineCourse outlineCourse outline

Chapter 1-3

Basic concepts in tax accounting: Definition and Objectives

Basic concepts in tax accounting: Definition and Objectives

Chapter 1-4

What is Tax?What is Tax?What is Tax?What is Tax?

SO 1 Explain what accounting is.SO 1 Explain what accounting is.

- It is an obligatory payment paid by the persons (tax payers) to the government as a contribution in financing the public services.

- Avery person pays the tax according to his ability to pay not according to his benefit from the public services. Example: Rich persons pay taxes more than poor. However, the poor persons may benefits more than the rich.

- Tax is imposing on the income not on the capital.

Chapter 1-5

2- Types of taxes:

Any tax system includes two main types of taxes:1. Direct tax:

• It is imposed on income when it is earned.• Under it the taxpayer can't shift tax amount to others.

• Like: commercial tax, salaries tax.

2. Indirect tax:• It is imposed on income when it is spent or utilized.

• The tax amount could be easily shifted from taxpayer to other one.

• Like: general sales tax.

Chapter 1-6

It is an accounting branch providing financial information for the taxpayer to enable him to prepare the tax return to determine the due tax that should be paid to the tax authority.

3- What is tax accounting?3- What is tax accounting?

Chapter 1-7

Two groups:1- Natural persons (individuals): Any individual is considering a natural person. He has to submit the tax return within three months from the end

of the taxable year (calendar year). The last day to submit the tax return is March, 31 each year.

2-Juridical persons (companies): Juridical persons include all different types of companies such as

solo Company, Partnership, and Corporation. They have to submit the tax return within four months from the

end of the taxable year. The last day to submit the tax return is first of May each year.

4- Persons subject to tax in Egypt.

Chapter 1-8

Note: If the tax payer didn't submit the tax return within

this legal period he has to be punished by paying fine (penalty) from LE.2000 to LE.10000 in addition to the original tax.

Chapter 1-9

5- Kinds of tax systems

There are two types of tax systems:1- Scheduler tax system: Under this system:

A separate tax is imposed for each kind or source of incomes after some deductions.

Each kind of tax has its subject, revenue, rate, ……..etc.

The taxpayer has to present more than one tax return to the tax authority for each activity like

commercial, free profession, real estate.

Chapter 1-10

5- Kinds of tax systems

2-Unified tax system: Under this system: One tax is imposed on the aggregated income

from all sources in one base, after deducting some allowances and deductions from the total income from all sources.

Only one tax return should be presented to the tax authority, including all incomes from all sources.

Chapter 1-11

Advantages of the unified system: It is fairer than the scheduler system, because under it

the taxpayer will pay tax according to his ability (the tax is imposed on total income from all sources).

It is easier than the scheduler system because only one tax return is presented to the tax authority.

Disadvantages of the unified system: Under this system if the taxpayers try to escape from

paying tax, so he will escape from all taxes for one time, but under scheduler system, if he escapes from one source of income, it will be difficult to escape from all other sources.

Chapter 1-12

Assignment (true or false with Justification ) 1. Tax is an optional payment paid by the taxpayers

to the government as a contribution in financing the public services.

2. Avery person pays the tax according to his benefit from the public services.

3. Tax is imposed on the capital.4. Direct tax is imposed on income when it is spent or

utilized.5. Under direct tax the taxpayer can shift tax amount

to others.6. Only natural persons are subject to tax in Egypt.7. Under unified tax system a separate tax is imposed

for each kind or source of incomes after some deductions.