Rate base

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Rate base is a value or quantity (unitary) recognized a taxable amount. Value recognition is the expression of the taxable amount in monetary units. An example is an amount of income earned during the tax year expressed in a particular currency [1]. The taxable amount in this recognition will, therefore, be a specific monetary amount. In quantitative (unitary) terms, the tax base will be expressed in units of measurement (area, number of pieces, etc.). An example maybe the size of a breeding flock expressed in units or the agricultural area of a holding expressed in hectares [2]. In normative terms, on the other hand, the tax base can be understood as [3] :

  • a set of legal norms regulating the institution of the tax base,
  • the designation of the size of the tax base according to the given tax,
  • the tax base established in the tax investigation in terms of individual and specific categories.

Real value and estimated value

The taxable amount may be expressed in real or estimated terms. The actual value shall be expressed when it can be accurately determined. On the other hand, it is an estimate where the determination of the real value of the tax base is very complicated or not possible.

The tax authority shall determine the tax base by estimation if[4]:

  • there are no tax books or other data necessary to determine the tax base,
  • data resulting from tax books do not allow to determine the tax base,
  • the taxpayer breached the conditions entitling him to use a flat-rate form of taxation.

Tax base and tax calculation base

The concept of a tax base is almost distinct from that of a tax base. The tax base may be equal to the tax calculation base, but in certain situations, it is subject to various adjustments provided for in tax laws. These are e.g. deductions or additions of certain amounts. Taxpayers may deduct from their pre-tax income amounts earmarked for donations, further education, housing, and other purposes. Within the scope of these deductions, there is, of course, a limit on the amounts that can be deducted from income before it is taxed. Only when we have adjusted the tax base by deductions and other adjustments will it be the tax base for calculating the tax. At this point, we should also pay attention to the tax-free amount, i.e. a certain limit provided for by the legislator, which is not taxed [5].

Tax base on the basis of the tax

The tax base in the case of [6] :

  • income tax from natural and legal persons is income,
  • A VAT is a net value of goods or services, otherwise known as turnover, i.e. the amount due on account of the sale, less the amount of VAT due,
  • excise duty on alcohol shall be the quantity of that alcohol expressed in liters and on cigarettes the quantity in units,
  • property tax is the value of assets which are the subject of a taxable transaction,
  • The tax on civil law transactions is based on the value of the subject matter of the contract.

Income tax is levied on all kinds of income (all income of a natural person, obtained without limiting their assets and taking out loans), which a taxpayer may obtain from various sources. Under the Act, income includes all income, third party cash benefits, inheritances, gifts and lottery profits from which interest on debts and property losses are deducted. Therefore, the tax base is the total sum of income from all sources of income, otherwise the surplus of the sum of income over the costs of obtaining it, achieved in a given tax year [7]. If the deductible costs exceed the total revenue, the difference is a loss from the source of revenue.

The subject of corporate income tax is income, regardless of the type of revenue sources from which it was earned [8]. In the case of income from participation in profits of legal persons (e.g. dividends) and income of foreign entities from the so-called license fees (e.g. interest) - the subject of taxation is income. The subject of corporate income tax may also include revenues from copyrights, rights to invention projects, trademarks, and ornamental designs, as well as from the sale of such rights [9]. Within the meaning of the provisions of the Corporate Income Tax Act, tax revenues are not only the money received but also other values, e.g. exchange rate differences, the value of goods, rights or other benefits received free of charge or partially against payment [10].


  1. A. Lymer, J. Hasseldine,2002, pp.1
  2. A. Lymer, J. Hasseldine,2002, pp.1-2
  3. J. Yang, V. Metallo,2018, pp.2-4
  4. I.V. Gashenko, Y. S. Zima, A.V. Davidyan, 2019, pp.33-39
  5. M.A. Jamison, 2005, pp.2-5
  6. A. Razin, E. Sadka, 2014, pp.32-35
  7. M. Jarczok-Guzy,2017, p.4
  8. K. Raczkowski 2015 pp. 58
  9. K. Raczkowski 2015 pp. 58-59
  10. K. Raczkowski 2015 pp. 59

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Author: Hubert Olech