We explain what the tax credit is, what its main objectives are and the accessories that this type of balance has.
What is the tax credit?
It is known as tax credit balance that a natural or legal person has in their favor when declaring their taxes and which generally represents a deductible amount from your final payment, due to certain conditions of your economy. In other words, it is a positive balance in favor of the taxpayer, which must be deducted when paying taxes.
In this sense, the tax credit is contrary to the tax debit, which represents the person's debt with the State, and the regulations that delimit or calculate each of these amounts will always be included in the legal and legal framework by which each country choose to be guided (that is: the laws).
The tax credit has, in principle, the objective of prevent taxed business transactions from leading a person to pay taxes twice that is, to pay double tax. For example, if a reseller of merchandise pays taxes when purchasing it, that amount paid should be deducted from the tax that must be paid when he sells the same merchandise, since he has already paid the treasury for it.
On the other hand, the tax credit can be used by the State to offer services to citizens instead of the refund of the excess money, thus returning it in the form of prepaid services.
Or you can use that credit as a financial tool for different economic purposes, thus generating more capital. In any case, the management of the tax credit is part of the fiscal strategies of a given nation, and will be established by the ministry of finance or the agency in charge of it.
Tax credit accessories
The tax credit always includes the so-called “accessories”, which are nothing more than items or concepts that allow the figure to be determined in favor of the taxpayer. Examples of this are:
- Surcharges Interest generated by debts to the physical, calculated based on variable rates, according to the country's tax regulations. Extensions for cancellation are often granted, and in this case they are not taken into account.
- Fines Violations due to evasion of tax laws or other conditions that increase the amount payable, or that in some cases, if paid on time, are deducted from the total amount of the tax (as a form of incentive). Everything, again, in accordance with the country's tax legislation.
- Execution expenses Considered administrative expenses, they arise when debts with the State are not settled within the time established in advance, according to a variable formula of interest or surcharges, which are finally added to the person's tax payment.
- Updates Due to economic changes, inflation or certain political and economic conditions, the amounts may require updates in the form of extra installments or additional figures.
- Deductibles On the contrary, these factors are taken into account when calculating the payment of the tax, to subtract some percentage from the total amount based on the person's living conditions or their economic activity. This is to guarantee that those who have the most pay more and those who have the least pay less, but always respecting a series of fiscal and proportionality rules.
