4. This type of tax is
usually applied to
income and capital
and is paid by
individuals.
5. Examples
1. Income tax
• A percentage of the taxpayer’s income
over a certain threshold amount is taken
from their wage packet.
• It is normally paid by the employer.
6. Exercise
• Assume Antonio is paid $55,000 per
annum. He is allowed a personal
allowance of $25,000 because he has
expenses to cover every year. The income
tax rate is 12% of taxable income.
a. Calculate his taxable income.
b. Determine his monthly tax payable.
7. Solution
Taxable income = Gross wage – personal allowance
؞ Taxable income = $55,000-$25,000
= $30,000
Annual taxes = $30,000 x 12%
= $3,600
Monthly taxes =
$3,600
12
= $300
8. 2. Corporation tax
• This is a tax which is applied to the
declared profits of an incorporated
business.
• Therefore sole traders and partnerships
do not pay corporate profits.
9. 3. Capital gains tax
• This is a tax on increases in the value of
assets.
• The tax is levied on the increase in the
sale price of the asset compared to the
price of the asset when it was initially
purchased.
10. Example
• Pierre purchased 1100 shares issued by
Pet Stop Inc in June 2018. Each share was
sold at $0.25. In June 2019 he sold each
share at $0.41. Capital gains tax in the
country is 5%.
• Calculate the capital gains tax that Pierre
would have to pay in 2019.
12. 4. Capital transfer tax (inheritance tax)
• This is a tax on money and assets
given by one person to another, for
example in the will of a relative who
dies.
• The tax is levied on gifts of over a
certain amount specified by the
government.
14. • These taxes are levied on consumption of goods and
services and are usually paid by the manufacturers or
importers.
15. • These taxes can either be:
– specific taxes - tax is a certain amount levied on
each good, such as a $5 tax on every bottle of rum
– ‘ad valorem’ taxes – a percentage applied to the
value of the good, such as 14% tax
16. Examples
1. Custom duty
• These are taxes applied to imported goods.
• They are paid by the importer at the point of entry
and passed onto customers.
17. Example
• Hunte & Browne Motors imports a car valued at
$10,000.
• The customs duties on new cars is 250%.
• The company will pay ($10,000 x 250% =) $25,000 in
customs duties
18. 2. Excise duty
• These are levied on
goods that are deemed
to have a negative
effect on society, such
as alcohol and
cigarettes.
19. • There is a 10% excise
tax on sweetened
beverages in Barbados.
20. 3. Stamp duty
• This is a tax charged on
the legal recognition of
certain documents,
such as the deed of sale
on a house or a receipt
for the sale of goods.
21. 4. Sales/consumption tax
• This kind of tax is applied to goods and services that are
consumed.
• A consumption tax is collected for the government by
• producers.
22. • Examples of sales/consumption taxes include:
• Value Added Tax in Barbados (VAT) - 17.5%
• General Consumption Tax in Jamaica (GCT) – 15%
• Sales Tax in Miami (7%)
• Sales Tax in New York (4%)