Taxation law - Assignment Example

Taxation Law Taxation Law Tax law refers to laws that govern the collection of taxes by the central government to enable it perform its objectives (Cordes, 2005). Taxation includes all forms of income generating activities such as property ownership, licenses and duties. In most countries, taxation law body covers the procedure of tax compliant by citizens at four levels of the government agencies either payable directly or indirectly. Things such as property including land or real estates making the initial business costs fall under direct taxation.

Indirect taxes include levies on products sold to customers and any services meant for consumption. Applying taxation law in the case of Concrete and Transport Ltd, analysis of the implications of the company decision on its activities is necessary. In deciding on whether to carry out repairs, the company needs to consider taxation on the materials required for carrying out the work. In the second option of building new production plant, more capital is necessary to cater for direct taxation, that is, to cater for new premises, and taxation on the materials needed in the construction (Jonathan & Bowen, 2008).

Taxation law differs with operations in business. According to Erdős (2011), for a company to venture into railway transport services, it must be a corporation. For corporations, there is double taxation on all the profits including money for company expenses such as expansion. The management of corporations is a different lawful body and not the owners. Therefore, expanding the railway line means increased taxation to the company. In mechanization, taxation law differs with countries. In developed countries, for example, there is no over taxation.

In developing countries, there is over taxation of the equipment used to encourage the creation of more job opportunities (Jonathan & Bowen, 2008). According to Schanz (2011), taxes have a significant factor in decision-making. This is because investment decisions are prone to distortion by taxation. In any business, the owners of the business they do undergo taxation or sail through without taxation. Therefore, it is necessary for the Concrete and Transport management to do analysis of their proposed company expansion to determine the after tax returns on the capital expected in the new idea.

Expanded business does not guarantee increased returns due to taxes levied. As the business grows, there is a high chance of increased taxes, and in some cases, double taxation occurs, for example, in corporations (Schanz, 2011). Tax research is critical in business decision making. The objectives of tax research are to come up with an optimal plan on how to meet the tax requirements as per the country’s tax laws (Erdős, 2011). Tax research also enables investors to identify the impact of the expected taxes on business performance.

This is because increased taxation may force investors to raise prices risking scaring customers away. The idea of Construction and Transport Ltd expanding business by building a new production plant might mislead the company’s objectives. A new investment in the company premises means a new tax compliant procedure, hence encouraging increased tax rates (Erdős, 2011). Increasing the efficiency of the existing operations could result in increased returns. Renovating the areas in critical condition will lead to increased efficiency in business operations, hence more returns.

The monthly or annual taxes remain constant with only changes in value added taxes. A good thing to note is that VAT runs down to the product end user. This means that at the end of the company’s financial year, the investors are subject to claim back tax returns from the tax collection authority (Jonathan & Bowen, 2008).ReferencesCordes, J. J. (2005). The encyclopedia of taxation & tax policy. Washington, D.C: Urban Institute Press.Erdős, E. (2011). The legal sources and steps of the European tax harmonization.

Juridical Current, 14(2), 40-54.Jonathan, H., & Bowen, B. (2008). The fundamental principles of taxation in the light of modern developments (Book). Harvard Law Review, 35(1), 150. Schanz, D., & Schanz, S. (2011). Business taxation and financial decisions. Heidelberg: Springer.