Characteristics of Income Tax

What are the main characteristics of Income Tax? Income Tax has several main characteristics: it is a subjective tax, a direct tax, a central government tax, it uses a self-assessment and withholding system, and it has a progressive tax rate.

Why is Income Tax considered a subjective tax? Income Tax is called a subjective tax because the taxpayer's personal circumstances are taken into account when determining the amount of the tax burden. This is closely related to the principle of "ability to pay," where the imposition of the tax depends on the taxpayer's financial capacity.

Why is Income Tax considered a direct tax? The most defining characteristic of a direct tax is its periodicity. The calculation of a direct tax is performed for a specific period, such as one tax year.

What is meant by the "self-assessment system" for collecting Income Tax? Under the self-assessment system, the taxpayer has the obligation to calculate, account for, pay, and report their own taxes without having to wait for a tax assessment from the tax authority (fiscus).

What is meant by the "withholding system" for collecting Income Tax? The withholding system is a system where the law requires a third party to deduct or collect Income Tax on the income received or earned by a taxpayer. Examples include Income Tax Article 21, Income Tax Article 22, Income Tax Article 23, Income Tax Article 26, and parts of Income Tax Article 4 paragraph (2) and Income Tax Article 15.