Tax Liability: Basic Concepts and Elements
Tax Liability: General Concepts
Serious Fact: A hypothetical set of circumstances, established by law, to determine the tax, and whose occurrence gives rise to a tax obligation.
Contributor: Natural or legal persons, administrators, or holders of property affected by taxes.
Subject of Tax: A person who must withhold or pay a particular tax.
Taxable Income: The quantification of the serious incident on which to apply the tax rate directly to determine the amount of tax liability.
Tax Rate: The amount of tax per unit basis. It is also defined as the magnitude that, when combined with the tax base, determines the amount of tax.
Subjects of Taxation and Their Rights
No taxation concepts of natural or legal person code have full civil license when it states that they are persons, including natural persons and legal representatives.
Special Situation: Companies in VAT Law
The VAT law recognizes taxpayers, including entities that make taxable sales or services. This concept of a company, in fact, may not be assimilated to a legal person. It is a situation where two or more people operate a business without the legal form of a person. The legislator of the VAT law recognizes this de facto situation and, therefore, calls it a society.
Tax Liability
Tax liability refers to the correlative rights and obligations arising from the exercise of taxation powers between the state and taxpayers or third parties. It is a complex relationship with multiple rights and obligations. Two types of obligations stand out:
- Principal tax liability (paying the treasury a sum of money).
- Accessory tax obligations, also called formal duties (managing and monitoring compliance).
Tax Liability Concept
This is the legal connection, sourced in law, that arises from the occurrence of certain facts defined by law, by which people are obligated to give the state some money for public needs.
Characteristics of Tax Obligation
- It is a legal connection.
- The source of tax liability is the law.
- It is born as a result of the taxed event having happened.
- The content of the tax obligation is the delivery of a quantity of money.
- It aims to provide the state or entity with resources.
Occurrence of a Serious Fact
This refers to the moment when a taxed event occurs. It is the point at which the legislature considers that, given certain defined circumstances, the taxed event has occurred, originating the birth of the tax liability.
It is important because it is forbidden to leave the decision of defining the moment the taxed event occurs to private individuals, especially when it is made up of multiple acts and behaviors.
Elements of the Tax Obligation
- Active Subject: The active subject of tax liability, also known as the creditor, is the Treasury. It represents the state’s patrimonial interest as a legal entity.
- Taxpayer: The taxpayer is the one who must comply with the tax liability, i.e., deliver to the treasury an amount of money.
- Tax Provision: The taxpayer must provide the treasury with the amount of money to be paid for tax purposes.
Distinction
- Taxable Income vs. Tax Liability: The debtor or taxpayer is the one who, by law, must comply with the tax provision. This is entirely in the hands of the tax authorities.
- Person Liable for Tax: The one who committed the serious fact, e.g., the same professional as in Article 42 of the Income Tax Law, who is taxed because the income received was from the sale they made, and therefore incurred the taxed event.
Object of Tax Obligation
It consists of a provision that translates into giving a certain amount of money as the tax base.