A turnover tax is similar to a sales tax or a VAT, with the difference that it taxes intermediate and possibly capital goods. It is an indirect tax, typically on an ad valorem basis, applicable to a production process or stage. For example, when manufacturing activity is completed, a tax may be charged on some companies. Sales tax occurs when merchandise has been sold.
In South Africa, the turnover tax is a simple tax on the gross income of small businesses. Businesses who elect to pay the turnover tax are exempt from VAT. Turnover tax is at a very low rate compared to most taxes, but it is calculated on gross income without any deductions.
Famous quotes containing the word tax:
“But the tax collector, standing far off, would not even look up to heaven, but was beating his breast and saying, ‘God, be merciful to me, a sinner!’”
—Bible: New Testament, Luke 18:13.