Indirect tax is a term that refers to a tax on consumption, because the tax is included in the price of goods (property) or services that the taxpayer purchases. Indirect, because the tax is included in the price of goods and services and by its nature is therefore paid by the buyer when purchasing but paid to government by the seller. It is levied on the tax returns to be given to the tax office. Indirect taxes raise the price and thereby reduce consumption. The advantage of the state’s perspective is that they do not suppress the motivation to employment and savings. Increasing the tax does not motivate tax evasion and for the state it is easier to increase them.
- VAT (Value Added Tax)
- Consumption Tax
- Ecological Tax
Use of Indirect Tax in practice: for business indirect taxes mean an increasing of selling price of goods by the tax and also an administative burden associated with tax records and regular tax levy to be given to the tax office.