 Hey guys, it's MJ the student actually and this video is going to be on tax And this is for subject CT to finance and financial reporting and it is chapter 3 This video is going to be audio only. So without further ado, let's jump straight into the material I'm going to be talking about personal tax company tax taxation of capital gains other taxes and double taxation relief But before I get into the material, let's have a quick little chat about the effects of tax I mean the first thing you guys need to realize is that tax is bad Okay, tax causes behavioral changes that might not benefit the overall economy So remember tax is bad and also tax you're going to see gets quite confusing And it's different in each country and it's almost becomes a game of cats and mouse new rules and regulations are made for tax But their new loopholes are found in order to exploit it and avoid tax now tax overall, it's expensive to calculate it's expensive to collect and Governments need to find other ways of raising capital But until they do that, we still need to learn about it. So here we go Personal tax. Okay, this affects all of us Whether you're earning a salary or a wage That's going to be taxed if you're a sole trader or a partner the profit you make That's tax if you inherit a lot of money from your family That's taxed if you make income on your investments. That's taxed if you basically anything that you're doing economically is getting taxed either directly or indirectly and Tax tends to happen on your cash flows and governments. They are kind of nice They only want to tax those revenues once But when it comes to the rates and allowances they vary country specific and I want to make this a very Generic video, so we're not going to be going into oh so much percentage for this and so much percentage for that Okay, let's jump straight to corporate tax Governments also tax companies Which is a little bit crazy seeing that the more companies that come to a country the better benefits economically and it's a big disincentive for Corporations to go into countries that have large taxes, but anyway incomes taxed capital gains is taxed and One of the big things that I have a problem with is that they're taxing the accounting profits which means The accountants will sit down with the CEO and they'll say look if we buy these certain things that may not necessarily Be beneficial to the company We can cut down on our profit and therefore have to pay less tax. So for an example There's a rumor going around that there is a company that purchases art so they spend millions and millions on art and then every year they Depreciate the art and now they can set depreciation as an expense off their accounting profits To you know make the balance sheet appear like they're making less so they pay less tax And then once they've depreciated this art for us, you know various amounts of years They sell it for a minimum amount like for one round or one dollar to an executive and that executive then takes home Like a 10 million Randall 10 million dollar piece of art But like I said, it's just just a rumor although you do go into some of these corporates and they have stunning art so You've got to be you've got to be curious about what's happening there But that's the thing is government can now you use tax to manipulate Behavior by making these funny tax rules. I mean some countries they can maybe tax dividends And in this way they think oh, it will re it will encourage companies to reinvest in the business and grow Whereas the adverse effect is that it kind of scares away potential shareholders. So remember tax is bad Okay, let's talk about capital gains tax Let's say you buy something and its value increases and you sell it and you make you know a lot of money Well, guess what you have to pay tax. Okay, some assets are exempt and depends on the country You in your private car your home foreign currency and I love this one government securities could be exempt from tax and Another key thing to realize on this is some countries may allow for indexation So what this means? They say you buy a buy an asset and you sell it 10 years later And the only reason it's increasing values because of inflation then this indexation will take that into consideration and you may only have to pay less tax for that But that's the whole thing is that governments love to tax I mean now, let's talk about some of the other taxes They stamp duty tax. There's value-added tax. I was known as that that's when you're paying it on every transaction There's inheritance tax which can be devastating for some people I mean I watch the show in on the BBC about people who have these lovely beautiful homes Parents die and they get taxed on this inheritance now this mention or something cost a fortune They kind of fought to pay the inheritance tax So they have to sell this massive mansion at like half the price just to pay for the tax So in effect, they kind of lose the family home It's it's quite terrible on top of that. There's also property tax They're syntax so you pay more tax on alcohol cigarettes and various things like that There's new things come up called sugar tax so coca-cola and sweets and all those things That's gonna be taxed and you can also be taxed on fuel So yeah, the government taxes a lot of things one thing they try and do is They try have a double taxation agreement with other countries So if you're paying if you're doing business in different countries, there's tax rules so that you only pay once You know, it would really suck if you got tax twice But this opens up another big can of worms I mean if we see Apple have got some offices in Ireland Uber has some offices in Netherlands They're trying to take advantage of the various tax Rules and regulations in different territories so much so you get tax professionals where this is their job is to find out Where these loopholes are I mean, that's why you can you know make an account in Bermuda or go to Tax haven like Monaco to try and get away from tax so overall, I mean taxes bad and Governments need to think of alternative ways of increasing income or decreasing expenditure Because I mean with the rise of new technology say as Bitcoin. It's gonna be quite tricky for governments to enforce tax So hopefully if you're listening to this in three years time Tax is a thing of the past But if you listening to it quite recent like, you know now in 2016 or 2017 You have to know the stuff for your exam, but like I said, hopefully it becomes something of the past Thanks so much for listening and please subscribe because I will be making more videos on chapter 4 and the other topics in subject CT2 Cheers guys