TAX ACCOUNTING

Tax on income of natural persons

1
 Chapter (1) Introduction
Learning objectives:
1.1 Identify some basic terms used in
taxation.
1.2 Classify taxes according to their types.
1.3 Explain the Structure of the Egyptian tax
system.
1.4 Review the history of income taxation in
Egypt.

2
 1.1 Some basic terms used in taxation
1- The Tax
The tax can be defined as “a cash imposition
which is collected by the state from individuals
and establishments according to certain rules and
laws to support the cost of government”.
2- Taxpayer
A taxpayer is any person required by the law to
pay a tax to the state.
It refers to natural persons (individuals & sole
proprietorship) and Legal persons (Partnerships,
corporations or other forms of companies). 3
3- Incidence
The incidence of a tax refers to the burden
represented by the tax.
It means the person who pay a direct tax payment
to the state bears the incidence of such tax.
But in some cases the taxpayer can shift the
incidence to a third party such as value added tax
(sales tax).

4
4- Taxable income
The taxable income is the amount subjected to tax,
it equals the approved (taxable) revenues after
deducting the approved (deductible) expenses.
5- Tax Base
The tax base is the amount subjected to tax after
deducting the exempted bracket.
6- Tax Amount
Tax amount = Tax base × Tax rate
7- Tax Revenue
The total tax collected by the state and available
for public use. 5
 Question (1)
Indicate whether the following statements are true or false, and
correct the false ones:
1. Tax is imposed and collected by individuals according to
laws and regulations.
2. Taxes can be paid in the form of cash or in-kind.
3. Tax is used by government to cover private spending.
4. Tax is used by government to cover public spending such
as health, education, and utilities in the form of roads,
water, electricity.
5. Taxpayers refer to only natural persons (individuals).
6. Taxpayers refer to natural persons (individuals & sole
proprietorship) and Legal persons (Partnerships,
corporations or other forms of companies)
6
7. The incidence of a tax refers to the burden represented
by the tax.
8. incidence means the person or organization that paid a
indirect tax payment to the state bears the incidence of
such tax.
9. In some cases the taxpayer can shift the incidence to a
third party such as the value added tax .
10. The tax base is the amount subjected to tax after
deducting the exempted bracket.
11. The tax amount is the amount subjected to tax.
12. Tax base refers to the total tax collected by the state
and available for public use.

7
 Answer
No T or F Correction
1 F Tax is imposed and collected by the state according to laws and
regulations.
2 F Taxes can be paid only in cash
3 F Tax is used by government to cover public spending such as health,
education, and utilities in the form of roads, water, electricity
4 T
5 F Taxpayer refers to both natural persons (individuals) and corporations
or other forms of companies (Legal persons).
6 T
7 T
8 incidence means the person or organization that paid a direct tax
F
payment to the state bears the incidence of such tax.
9 T
10 T
11 F taxable income is the amount subjected to tax.
12 F Tax Revenue refers to the total tax collected by the state and available for
public use. 8