Double Taxation happens when income tax is paid twice on the same source of income. Double taxation is very common with dividend income because a corporation is seen to be different from it’s shareholders. Also if the tax payer earns incomes from a different states/countries which doesn’t have double taxation agreement with his/her own state/country.
This is legal but unconstitutional in most countries. However a single shilling/dollar of income may be legally and constitutionally taxed up to 4 to 5 times and this may not be necessarily be deemed to be double taxation.
A good example is when you earn a salary you pay PAYE (Pay As You Earn), if this money is paid through the bank your bank will tax it again (excise duty).Assuming you have bought airtime/internet data with that same income you’ll be charged VAT and excise duty.Assuming your going to use the same internet data for social media, in some countries you’ll have to pay OTT .
This means your paying;
1. PAYE
2. Excise duty
3. VAT
4. Excise duty
5. OTT
All these taxes are legally constitutional. Are the law makers aware of this!? Yes they are.The law makers put it for us to deal with it through calculative tax planing to minimize the number of times our income suffers tax. Fellow citizens Plan your taxes to minimize the number of times your shilling/dollar suffers tax.
Jaluum Herberts Luwizza is a Speaker,Writer, Columnist with the C.E.O Magazine and Contributor with the Nile Post.He is also a Business Consultant with YOUNG TREP East Africa’s No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.twitter:jaluwizza
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