CLASSIFICATION OF TAXES 1 - CLASSIFICATION OF TAXES There...

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CLASSIFICATION OF TAXES There are five major classifications of taxes. These are: 1. Direct Taxes A direct tax is one whole impact and incidences are on the same person. The impact of a tax is its money burden. A tax has impact on the person on whom it is legally imposed. The incidence of a tax is on the person who ultimately pays the tax whether or not it was legally imposed on him. Therefore a direct tax is one which is paid (incidence) by the person on whom it is legally imposed (impact). Examples are Pay As You Earn, corporation tax among others. 2. Indirect Taxes Indirect tax is not held to be indirect merely because it is collected form one person and paid by another. For example, tax on employment income, Pay As You Earn (PAYE) which is collected form the employees and paid by the employer.

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