The illegal economy consists of income generated by economic activities carried out in violation of the legal laws that define the scope of legitimate forms of trade. Extortion and drug trafficking are part of the illegal economy. LEVY — A reduction in tax, penalty or valuation of interest if the valuation is found to be erroneous ABUSE OF THE LAW — The doctrine that allows tax authorities to disregard a civil form used by the taxpayer that does not have a business basis ACCELERATED DEPRECIATION — Depreciation method, whereby taxpayers make larger capital cost allowances in the first or more useful years Assets of the business, such as machinery and equipment ACCOUNTING BASIS – method of calculating amounts subject to income tax and VAT. As regards VAT, the tax would be calculated in the form of a percentage levy on the excess of sales over purchases. It is a theoretical concept and no country uses it. ACCOUNTING PERIOD – Period used by the taxpayer to determine tax liabilities – A list of debts currently owed by a person or company, mainly for the purchase of services, inventory and supplies RECEIVABLES – A list of funds owed to a creditor in the current account, which is kept in the ordinary course of the creditor`s business and unfinished receivables and Transactions represent ACCOUNTING DOCUMENTS – All documents and books used in the preparation of the tax return and all financial statements, including the general ledger, sub-registers, sales receipts and invoices. ACCRUAL METHOD OF ACCOUNTING (ACCRUAL METHOD) — An accounting policy in which items of income and expense are included in taxable income or expense when they are earned or accumulated, not when they receive or are paid AD VALOREM TAX — A tax on goods or expenses, expressed as a percentage of the selling price or estimated value of the MANAGEMENT COMPANY — See: ADMINISTRATIVE COSTS OF THE SERVICE COMPANY – Expenses that cannot be easily associated with a particular function such as direct manufacturing and selling costs. It usually includes head office expenses and accounting fees. ADMINISTRATIVE OFFICE – An office that is often located in a country other than that of the head office, parent company or country in which it operates. In other cases, the underground economy may represent a clear net economic gain to society that circumvents or compensates for economic problems caused by government policies. Smugglers and black market traders can be the only source of food and medicine for hungry people in war-torn regions.
Illegal radio stations and news bulletins can circumvent repressive regimes. Buyers and sellers who violate regulations such as price controls and quotas can reverse some of the windfall effects that might otherwise be associated with these types of policies. INCOME TAX — deducted at source as a withholding tax on wages; Taxes withheld in this way are usually deducted from the final income tax (if any). WEAR AND TEAR — Impairment loss due to the ordinary use of an asset. Income tax systems generally allow deductions in the calculation of a company`s profits using buildings, equipment and machinery that are subject to wear and tear during the course of the business. WHITE PAPER — A government document announcing government policy and practice on one or more specific topics. WILL – A legal document that serves as a key tool for transmission in the event of death. LIQUIDATION – The process of liquidating a business. WITHDRAWALS – When income or property is withdrawn from a business of the entrepreneur in his private household (without consideration), the income or value of these items is generally a billable event in the hands of the beneficiary for income tax purposes. Similarly, in most countries using such a system, a withdrawal of goods or services for private use constitutes a taxable transaction for VAT purposes. WITHHOLDING TAX — Tax on income collected at source, that is, a third party is responsible for deducting tax from certain types of payments and transferring that amount to the government. Withholding taxes are found in virtually all tax systems and are often used for dividends, interest, royalties and similar tax payments.
Withholding tax rates are often lowered by tax treaties. WORLD INCOME — A criterion for tax on the income of a company resident or a person in a particular country. In many countries, a resident company or resident individual is subject to corporate tax on its worldwide income, subject to relief from double taxation. WORKING CAPITAL – Funds invested in a company`s cash, accounts receivable, inventory and other current assets (gross working capital). The term generally refers to net working capital, i.e. current assets minus current liabilities. DEPRECIATED VALUE — The value of an asset that can be depreciated for income tax purposes is determined by deducting deductions made for wear and tear or depreciation in previous taxation years from total costs, including installation, etc. 3. Ownership shares of shareholders of a company – shares as opposed to bonds.