Direct tax

DIRECT TAX INTRODUCTION A tax is levy without consideration by virtue of the economic capacity shown by the taxpayer, because of certain facts, acts or legal transactions provided for in the taxable event defined by law. Taxes are one of the main sources of a country's revenue, along with administrative fees and special contributions. Taxes being the most important.

BODY In direct taxes, the capacity to contribute is deduced from the personal characteristics of the taxpayer and, therefore, they are applied on the income, richness, or other manifestations of the taxpayer's wealth and, in them, it is normally the taxpayer himself who settles and pays them directly to the corresponding Tax Administration. The main difference between direct and indirect taxation is that direct taxation is levied on the capital of our income or belongings. While indirect tax is levied on the acts of consumption that are conducted with such wealth, or the acts of transmission of the goods that are part of the patrimony. The European Union does not have its own tax system and does not levy taxes, it leaves autonomy to each member country's government. Therefore, each nation decides the amount it collects from each taxpayer and the subsequent percentage of public spending. However, the EU plays a regulatory role with its member countries, overseeing their fiscal rules in certain aspects, those related to EU policies affecting businesses and consumers. The direct taxes of two important countries of the European Union will be developed in detail below, Spain and Poland, to better understand how they work. With respect to direct national taxes in Spain, the most important is personal income tax. As its name indicates, it is responsible for taxing income derived from personal income. It is applied on the economic capacity, which is why we classify it as a direct tax. It is a tax paid by individuals who are residents in Spain or taxpayers on their income obtained during a calendar year. This levy is based on the tax principles of progressivity, generality, and economic capacity. Income Tax campaigns begin at the beginning of April and end at the end of June. Corporate income tax is the second most common tax in Spain. In this case, the tax is levied on the profits that the companies generate annually. Currently, in Spain, the tax rate is 25% and 15% for newly created entities. Next, an analysis of the Polish tax system will be conducted to develop the main direct taxes and how they work. The Polish tax system is based on three pillars: the Constitution of the Republic of Poland, national tax rules and EU tax rules. VAT and excise taxes are one of the main sources of revenue for the Polish budget. The Polish tax system has developed rapidly over the last 25 years. The Polish government made this decision to encourage foreign investment and increase employment. Among the measures taken to achieve this goal, Poland has reduced income tax from 40% to 19%, reaching the 5 lowest rates in Central and Eastern Europe. Taxable companies with their tax residence or board of directors in Poland must pay tax in the country on their worldwide income, otherwise they will only be taxed on income generated in the country. Within the official website of the Government of Spain, in the section of the Network of Economic and Commercial Offices of Spain abroad, you can find the following relevant information about the Polish corporate income tax. The taxable income is the profit after deducting the cost of production of goods or services. However, some expenses are not deductible (such as some advertising and agency expenses). Property and intangible assets can be fully depreciated and deducted when put into service if their value is less than PLN 3500. There are some assets that cannot be depreciated (such as land and works of art). As for personal income tax, permanent residents, including foreigners, are taxed in Poland on their worldwide income, while non-residents are taxed only on income earned in Poland. The fiscal year coincides with the calendar year and applications are submitted annually, with an application deadline of April 30. Taxation is progressive and distinguishes three levels and their corresponding tax rates. To conclude this section, a curious fact about the Spanish government's tax collection in 2021. The data show that they met the revenue budget forecasts for the first time in a decade, which shows the prudence and realism of the estimates included in the Budget.

CONCLUSION In conclusion, it should be noted that the collection of taxes in countries is one of the tasks of governments, since the revenues derived from this activity will be the subsequent public expenditure. In addition, having a consolidated tax system generates a great attraction for the country, always considering the annotations and recommendations of the European Union.

Related articles • Durra, J.M.D. and Esteller, A. (2014) “Tax professionals' view of the Spanish Tax System: Efficiency, Equity and Tax Planning,” Dialnet, pp. 1–9. Tax professionals' view of the Spanish Tax System: Efficiency, Equity and Tax Planning - Dialnet (unirioja.es) • European Commission Directorate-General for Economic and Financial Affairs (2014) “Tax expenditures in direct taxation in EU Member States,” Dialnet, pp. 1–53. Tax expenditures in direct taxation in EU Member States - Dialnet (unirioja.es) • Borrego, A.C, Lopes, C. and Ferreira, C. (2012) “The role of tax agents in taxpayers’ tax compliance,” Dialnet, pp. 1026–1030. The role of tax agents in taxpayers’ tax compliance - Dialnet (unirioja.es)

Authors: Mónica Guijarro Bernabeu, Gabriela Valera Barker and Zaira Bancells Guerrero