Principles:Taxes
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Contents
Profit Tax
Profit tax is a basic tax in the game. All commercial operations (including sales from warehouses, production enterprises and stores) are to be taxed. Tax must be paid only for already manufactured (production) or sold (сommerce) goods.
Such algorithm excludes double taxation when there are badly organized shipments, which usually appear in the business of beginners.
Profit tax is calculated as follows (per 1 unit of produced and sold goods):
PT = (SP — PP) x (PT_rate/100), where: |
Prime cost
Variable costs + Fixed costs (per 1 unit of produced goods) = prime cost. Prime cost includes the cost of raw material, cost of energy etc., and conditionally fixed expenses (per 1 unit of produced goods).
- Cost of raw materials (funds spent on purchasing of materials, used for production), considering transport costs and customs duties
- Salary
- Cost of energy and fuel
- General production costs
- Management costs
- Defective goods cost
- Royalty
- Amortization of equipment
- For livestock farms: cost of livestock (purchase or replacement)
Prime cost for resellers (stores, warehouses), taxation considers:
- Salary expenses
- Rent expenses
- Cost of one sold product purchase
One example for better understanding:
In case if cost of 1 bread stick = $1, and the bakery bared fixed costs = $10 000, then in case if production volume is 10 000 bread sticks, prime cost of 1 piece will be:
$1 + 10 000 / 10 000 = 2.0
However, if the factories is full producing 100,000 pcs. and the factory will work at full power, then prime cost of 1 bread stick will be:
$1 + 10 000 / 100 000 = 1.1
As you can see from the example, it will be more profitable to produce maximum possible amount of goods as long as the enterprise can sell it all. In this case prime cost will be lower.
The expenses of products purchase are taken into account according to the expended (sold or used for production) supply of goods
I.e. it is possible that an enterprise pays profit tax even when its balance is negative.
There are cases when the profit tax is not collected.
This happens when a player sells for prices which are lower than the production prices, or when the rate of profit is lower than the basic production profitability equal to the regional profit tax rates
In this case we apply the Common tax for imputed earnings.
Tax holiday
Each company which has just been registered is provided with the right for tax holiday which lasts for 26 updates on the condition that the development of the company is moderate (without external investments).
Therefore, during the first 26 updates of their existence companies are taxed according to the following table:
Profit tax rate | Index allowing tax holiday |
---|---|
0% | Assets are lower than 2 mln |
50% | Assets are lower than 5 mln |
100% | Assets are higher than 5 mln |
Transfer from tax holiday to standard taxation is automatic and happens during the update upon the expiration of 26 days. Every update is calculated separately, i.e. if a company oversteps the limits of the border indices of assets cost during the period when tax holiday may be brought to effect (26 updates) and then returns to follow the limits, the company has the right to get another easing of the taxation scheme.
Tax on the sale of technologies and licenses
Sale of technologies
On May 24, 2010 the tax on the sale of technologies was brought to effect. The tax is collected from the seller in the moment of purchase. The rate is single and is equal to 7% from the selling value of the technology.
Sale of licenses
On May 24, 2010 the tax on the sale of licenses for technologies was brought to effect. The tax is collected from the seller in the moment of installation. The rate is single and is equal to 7% from the selling value of the license or, if the price has been lowered, the percentage is drawn from one fiftieth of the maximal price of the relevant technology on the common market of the level which is less or equal to the one being installed.
Property sale tax
Property sale tax is a tax collected upon any kind of sale of property via the Enterprise market or Enterprise auctions. The base tax rate is 10% from the selling value of the property. If the receipts from the sale of an enterprise exceed the cost of the enterprise’s assets, the tax is calculated as 10% from the receipts. If not, the tax is calculated as 10% from the cost of assets of the enterprise.
Common tax for imputed earnings
Common tax for imputed earnings (CTIE) of Virtonomics is the tax which determines the minimal sum of the tax on the production activity (is not applied to commercial subdivisions).
CTIE is not an extra tax to the profit tax for the operating subdivisions collected in Virtonomics.
The scheme of collecting the CTIE is activated in case the products are sold for the price which is lower than their cost price, or if the products are sold with the rate of profit lower than the basic production profitability equal to the regional profit tax rate (specific connection between the rate of profit and the profit tax rate in the region is conditional).
If the produced goods are sold for the price where the rate of profit is higher than the regional profit tax rate, the CTIE is not charged and a player pays the profit tax only.
CTIE for one item of produced and sold goods is calculated according to the following formula:
Template:Example
The red part of the formula is taxable income determined by the product of "PP" (calculated production price of produced goods) and basic production profitability which (in Virtonomics) is equal to the PT_rate (profit tax rate (per cent) in the specific region where the production subdivision is situated).
The blue part of the formula is the tax rate of the CTIE.
The CTIE rate is a microeconomic way to control the efficiency of different kinds of production.
In Virtonomics for the productions which are currently highly profitable and massive we use the tax rate up to 1,0 (100%).
I.e. the CTIE is charged from full taxable profit without any kind of benefits.
For the productions which are not developed enough according to the level of supplies and other analytical data we use differentiated benefits for each kind of products.
The benefits can be quite significant: CTIE for some kinds of products are up to 20 times lower (when the imputed earnings for the product are equal to 5%)
In order to learn the current CTIE rates you need Game world ► World map ► Choose any country ► Region, and then from the list of the cities switch to the CTIE rates