What is the tax base?

The tax base is the amount or value used to calculate the payable tax under a given tax category. It can be a monetary amount (e.g. income minus expenses), a quantity (e.g. litres or kilograms), or a specific value (e.g. engine power of a vehicle). The tax base determines the tax liability, making it a fundamental concept in taxation.

Types of tax bases

Depending on the tax type, the tax base can vary:

• Income tax: net income after deductions.
• VAT: net value of goods or services.
• Corporate tax: pre-tax profit adjusted by tax rules.

Why is accurate calculation important?

An incorrectly determined tax base can lead to penalties and surcharges. Understanding and applying the correct tax base is essential for both individuals and businesses to remain compliant.

Official definition

The tax base is the value to which the tax rate is applied in order to determine the amount of tax due under the specific tax regulations.