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Tax Law #2

Tax Law #2. Zhanat Alimanov, assistant professor. Calculate tax burden of the company on Masha’s income: under (1) Labor Law, (2) Civil Law (not IE), & (3) Civil law (IE): Salary is KZT 276,000 a month & free lunch (2,900 per lunch, 14 lunches a month)

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Tax Law #2

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  1. Tax Law #2 Zhanat Alimanov, assistant professor

  2. Calculate tax burden of the company on Masha’s income: under (1) Labor Law, (2) Civil Law (not IE), & (3) Civil law (IE): Salary is KZT 276,000 a month & free lunch (2,900 per lunch, 14 lunches a month) Salary is KZT 347,000 a month & free delivery from work to home (cost of the delivery is 900 per day, 23 days). Salary is KZT 174,000 a month & bonus 344,000 Salary is KZT 575,000 a month & business trip within KZ (19 nights, hotel 21,000 a night, food 3,500 a day) Salary is KZT 3 mln. a month & gave clients 9 dinners (50,000) Salary is KZT 547,000 a month & vacation (750,000) Salary is KZT 570,000 a month & forgave the loan from the company in the amount of 300,000. Home assignment (2-3 per day)

  3. Calculate tax burden of the company on Volodya’s income: under (1) Labor Law, (2) Civil Law (not IE), & (3) Civil law (IE). Salary is KZT 170,000 a month Labor Law:PIT + Social Tax PIT = Taxable income * 0.1= (Total Revenue – Deductions&Exemptions – Pension – Minimum Salary)*0.1= (170,000 - 0 – 17,000 (pension) – 19,966 (minimum salary))*0.1 = 13, 303.4 Social Tax = Taxable income*0.11 = (Total revenue – Pension)*0.11=(170,000-17,000)*0.11=16,830 Civil Law (not IE):PIT PIT = Taxable income * 0.1= (Total Revenue – Deductions&Exemptions)*0.1= (170,000 - 0)*0.1 = 17,000 Civil Law (IE): no tax on company Example

  4. Terms • Tax – налог • Revenue (Income) – Доход • Total Personal Revenue – Совокупный личный доход • Net Income – Чистый доход • Personal Income Tax – Индивидуальный подоходный налог

  5. Personal Income Tax & Social Tax When company has to pay Personal Income Tax? How to calculate PIT & Social Tax Differences of taxation of Civil & Labour Contracts Plan

  6. How to calculate PIT & Social Tax Differences of taxation of Civil & Labour Contracts

  7. Masha is a student. She works on a part time basis for KPMD. Her salary is 49,000. She asked also free lunches there. They agreed. Each lunch is worth KZT700 (24 in month). How much will be company’s tax burden? (Labor Law & Civil Law (IE & not IE))? Example 1

  8. Step 1: Calculate Total Personal Revenue (TPR)

  9. Step 2: How much is Tax of the Company?

  10. LABOR LAW Total revenue (Art.163)=all money + in kind income = 35,000 + 800*24 = 54,200 PIT =Taxable Income * 0.1=Total Revenue – – (1) Deductions & Exemptions – (2) Pension & Minimum Salary)*0.1 = (54,200 – 0 –5,420 (pension) - 19,966 (minimum salary))*0.1 = 2,881.4 Social Tax = (Total Revenue – Deductions - Pension)*0.11 = (54,200-0-5,420)*0.11 = 5,365.8 TOTAL TAX = PIT + Social Tax = 2,881.4 + 5,365.8 = 8247.2 Example

  11. CIVIL LAW (Not IE) Total revenue (Art.168)=all money + in kind income = 35,000 + 800*24 = 54,200 PIT =Taxable Income * 0.1=Total Revenue – – (1) Deductions & Exemptions)*0.1 = (54,200 – 0) *0.1 = 5,420 TOTAL TAX = PIT = 5,420 Example

  12. CIVIL LAW (IE) “0” taxes on company Example

  13. Alex’s salary is KZT 1 mln. He went on a business trip for 12 days to Paris. He stayed at the Carlton hotel there for 12 nights. The cost per night was KZT 0.5 mln. At the end, he received bonus from the company in the amount of KZT 1 mln. and a vacation in Hawaii (5 mln. worth). Also, company renovated his house (0.7 mln). How much will be tax burden of the company on Alex’s income? Example 2

  14. Step 1: Calculate Total Personal Revenue (TPR)

  15. Step 2: How much is Tax of the Company?

  16. 1. Total revenue = all income (in money or in kind, art. 163) = = Salary + Bonus + Hawaii + Renovation + Hotel stay = = 1 mln.(salary) + 1 mln.(bonus) + 5mln.(Hawaii) + 0.7 mln.(Renovation) + 0.5 mln.*12 (hotel stay) = 13,700 000 1. Total revenue Monthly payment indicator = KZT 1,731

  17. Deductions & Exemptions (art. 155 & 156) = = business trip (art. 155 (3/4) = 8*1852*12 days (business trip) = =177,792 2. Deductions & Exemptions (art. 155, par. 3 & 156) Monthly payment indicator = KZT 1,731

  18. Maximum Pension = = (75 * 19,966)*0.1 = =149,745 3. Maximum Pension Monthly payment indicator = KZT 1,731

  19. PIT = Taxable income *0.1 = (Total Revenue – Deductions & Exemptions – Pension – Minimum Salary)*0.1 = =(13,700,000 (total revenue) –177,792 (deductions & exemptions) – 149,745(pension) – 19,966(minimum salary))*0.1= =1 335 249.7 4. PIT (Labor Law) Monthly payment indicator = KZT 1,731

  20. ST = Taxable income *0.11 = (Total Revenue – Deductions - Pension)*0.11 = =(13,700,000 (total revenue) – 177,792(deductions) – 149,745(pension))*0.11= = 1 470 970.93 4. Social Tax (Labor Law) Monthly payment indicator = KZT 1,731

  21. Tax Burden of the Company = PIT + Social Tax = = 1 335 249.7 + 1 470 970. 93 = = 2 806 220.63 4. Tax burden (Labor Law) Monthly payment indicator = KZT 1,731

  22. 1. Total revenue = all income (in money or in kind, art. 163) = = Salary + Bonus + Hawaii + Renovation + Hotel stay = = 1 mln.(salary) + 1 mln.(bonus) + 5mln.(Hawaii) + 0.7 mln.(Renovation) + 0.5 mln.*12 (hotel stay) = (13 700 000 – 0 (deductions)) * 0.1 = 1 370 000 1. Tax burden (Civil Law, not IE) Monthly payment indicator = KZT 1,731

  23. = 0 1. Tax burden (Civil Law, IE) Monthly payment indicator = KZT 1,731

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