2020-09-24
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Read the text and complete it with the following words.
levy depreciation tax rates government spending
profits by all levels economic production
DEFINITION OF CORPORATE TAX
A (1) ___________ placed on the profit of a firm, with different rates used for different levels of profits. Corporate taxes are taxes against (2) __________ earned by businesses during a given taxable period. They are generally applied to companies' operating earnings and (3) __________ have been deducted from revenues.
Corporate taxes are usually levied (4) _________ of government. Corporate (5) _________ and laws vary greatly around the world, as different governments and countries view corporate taxation in different ways. For example, those in favor of lower corporate tax rates point to the possibility for greater (6) __________ if companies are taxed less. While others see higher corporate tax rates as a way to subsidize (7) ______________ and programs for the nation's citizens.
Exercise 5. Text completion.
(a) Read this article about Corporate Profit Tax in which some headlines are missing. Discuss with a partner what headlines you would expect to find in each gap.
Corporate Profit Tax
1. _________________________
Regional revenue is derived mainly from Corporate Profit Tax (CPT), which is levied at a standard rate of 20 percent on pre-tax profits. Previous limits on the deduction of expenses have been abolished and nearly all business expenses are currently considered fully deductible when related to the daily operations of a business and properly documented by receipts.
2. _________________________
The Tax Code defines the exact procedure for the deduction of expenses. What is significant is that this procedure also differs from standard Russian accounting practice, which results in Russian companies being compelled to complete both statutory and fiscal accounting.
3. _________________________
A company’s tax on dividend income is set at 9 percent. Under certain terms, dividend income is entitled to exemption when received by companies that maintain a controlling interest in the business. Specifically, when a founding Russian shareholder (which may be either a business entity or an individual, according to Russian Corporate Law) owns at least 50 percent of a Russian company or foreign subsidiary paying dividends for no less than 365 days with an investment exceeding 500 million rubles ($17.07 million), the double taxation of dividends is eliminated. Foreign entities located in tax haven jurisdictions are exempt from this rule and are subject to dividend taxation.
4. __________________________
Small businesses with annual sales of less than 60 million rubles ($2.05 million) are entitled to the use of a simplified taxation system for which banks, insurers, foreign companies, and certain other professions and businesses are ineligible. To be eligible, a company must employ less than 100 workers and its assets must not exceed 100 million rubles ($3.4 million). Tax is assessed either on gross receipts at 6 percent, or on profits before income tax at 15 percent. The choice is left to the taxpayer. An eligible business may also decide whether to use the simplified system or not.
5. ___________________________
If during the course of a year a business becomes ineligible for the simplified system, it continues to operate according to that system through the end of the year. At the end of the tax year, the company must then recalculate its liability according to general taxation rules from the moment it became ineligible to participate in the simplified system. With tax imposed at 6 percent on gross receipts, this system is generally used by small businesses with negligible profits. IT companies, like most B2B companies, choose to file under the rules of general taxation, because the number of available exemptions is higher.
(b) Match these headlines (A-E) with the gaps in the article (1-5).
A The conditions of a simplified taxation system for business if it becomes
ineligible
B A simplified taxation system
C The important features of the Tax Code
D Dividend taxation
E Regional revenue formation
Exercise 6.
Fill in the following prepositions where necessary.
with from to (x2) on of in
A Corporate tax refers (1) ______ a tax imposed on entities that are taxed at the entity level in a particular jurisdiction. The tax is generally imposed (2) ______ net taxable income. It is a financial statement income (3) _______ modifications. The tax may have an alternative base, such as assets, payroll, or income computed (4) _______ an alternative manner.
For both Russian legal entities and foreign legal entities, the basic corporate profits tax rate consists of a 2% rate payable to the central government and rates ranging (5) _______ 13.5% to 18% payable to the regional governments. A 0% tax rate applies to profits (6) ________ Russian companies performing educational activities and medical activities if they satisfy certain criteria. The 0% tax rate applies from 1 January 2011 (7) ______ 1 January 2020.
Exercise 7. Word formation.
Complete these sentences using the base word given at the end of each sentence. You need to form an appropriate word. The first one (0) is given as an example.
0 A company’s tax on dividend income is set at 9 percent. (DIVIDE)
1. Capital gains are included in ________ income and taxed at the regular rates. (TAX).
2. The __________ of shares or participation interests is subject to a 0% rate if shares or participation interests satisfy the following conditions: they are not circulated on the organized securities market. (DISPOSITION)
3. All taxpayers are required to make advance tax _____ monthly. (PAY)
4. Taxpayers may choose to pay tax by the 28th of each month based on _______ actually earned in the preceding month. The final return for the year and the tax liability are based on actual results. (PROFITABLE)
5. In general, the _______ income tax is a tax collected from companies and from profit organizations or institutions. (CORPORATION)
6. Usually, the amount of corporate income tax rate is based on the net income companies obtain during one business year while exercising their business __________. (ACT)
7. In Russia, the Corporate Income tax rate is a tax _________ from companies. (COLLECTION)
8. The tax base is calculated as total income less _______ expenses. (DEDUCT)
Exercise 8.
