Can you explain how tax payments work?
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Simcountry is an Online Digital World where you are the President of a country. |
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Can you explain how tax payments work?
The profit of the corporation is taxed by the government of the country where it resides. All corporations, both state owned and private corporations, pay the same tax percentage. The standard is 30% but some presidents change it. The profit is calculated, 30% is paid as taxes. Now what if a corporation had 12 months of loss, did not pay tax and now for the first time gets a profit. It will be unfair to expect the corporation to pay taxes while the profit is only from one month and the last 12 months show a big loss.
So the calculation is a little different. We look at the total profit or loss for the last 12 months and we also look at the amount the corporation paid in taxes in that period. If the amount paid in taxes in the last 12 months, is more than 30% of the profit (in case the tax is set to 30%), then the corporation does not need to pay taxes. This means that if the corporation had a loss for a long time, and now it makes a profit, it will not pay taxes until the total profit grows higher than the loss they had before. This is fair, and it is also very close to the way it is done in the real world. Not exactly the same but quite realistic.
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