What is your firm's tax burden: how should it be calculated and what should it be compared with?
"How much tax are we paying out of revenue?" To answer this question correctly, which taxes should be added, which base should be taken and who should the result be compared with? Step by step, using a sewing firm as an example.
At the end of the year, Gulbahor, the owner of "Gulbahor Tikuv" LLC, asked her accountant Akmal a simple question: "Out of every 100 soum of revenue, how much goes to the state?" Akmal named a first figure and then stopped himself: they first needed to agree which taxes to add and what to divide by.
What is the tax burden?
It is the ratio of the taxes a company has paid to its revenue:
Tax burden = total taxes ÷ revenue × 100%
This is not a rate set by law, it is an analytical indicator. It helps you track your own business by year and by quarter, and to compare options when choosing a tax regime. To be useful, it must be calculated the same way every time.
Step 1: which payments do we add?
| Payment | Do we add it? | Why |
|---|---|---|
| VAT | Yes, the part paid to the budget | Not all the VAT collected from customers: the amount remaining after input VAT is deducted from output VAT |
| Corporate profit tax | Yes | The company's own tax |
| Social tax | Yes | Paid at the employer's expense |
| Property and land tax | Yes | The company's own tax |
| Personal income tax withheld from employees | On a separate line | The company withholds it from employees' income and transfers it as a tax agent |
| Late-payment interest and penalties | On a separate line | This is not a tax, it is an indicator of payment discipline |
Whether or not to include the tax withheld from employees is your choice. What matters is to show both options and keep the same approach every year.
Step 2: we choose the base
The base is revenue excluding VAT. Revenue including VAT contains the VAT itself. If you add it to the base, you count the same amount in both the numerator and the denominator.
Step 3: we calculate
Amounts in mln soum, hypothetical.
| Indicator | Last year | Current year |
|---|---|---|
| Revenue excluding VAT | 2 000 | 2 400 |
| VAT (paid to the budget) | 92 | 96 |
| Corporate profit tax | 24 | 30 |
| Social tax | 16 | 18 |
| Property and land tax | 6 | 6 |
| The company's own taxes | 138 | 150 |
| Tax burden | 6.9% | 6.25% |
| Personal income tax withheld from employees | 20 | 24 |
| Tax burden (including withheld tax) | 7.9% | 7.25% |
Check: 138 ÷ 2 000 = 6.9%; 150 ÷ 2 400 = 6.25%; 158 ÷ 2 000 = 7.9%; 174 ÷ 2 400 = 7.25%.
Look at the composition too
The composition of the 150 mln soum in the current year:
| Tax | Amount | Share |
|---|---|---|
| VAT | 96 | 64% |
| Corporate profit tax | 30 | 20% |
| Social tax | 18 | 12% |
| Property and land tax | 6 | 4% |
| Total | 150 | 100% |
At the sewing firm, VAT accounted for the largest share. So to understand the tax burden you first need to understand VAT accounting: have invoices been issued completely and on time so that input VAT can be deducted?
The burden went down: is that good?
Revenue grew by 20% (2 400 ÷ 2 000), while taxes grew by only 8.7% (150 ÷ 138). Akmal looked for the reason and found it: new sewing lines were bought during the year, and input VAT on them increased. This is a one-off situation. If there are no purchases next year, the burden may rise again.
Conclusion: if the burden changes, do not immediately say "good" or "bad". First find which tax changed and why.
What can it be compared with?
- Your own past periods: the most reliable comparison.
- Another firm: only if the type of activity and the tax regime are the same. Comparing a turnover tax payer with a VAT payer is meaningless: the composition of taxes is completely different.
- The plan: write down the expected burden at the start of the year and compare it with the actual figure at the end of the quarter.
Practical tips
- Choose once whether to take accrued or paid taxes and do not change it. Otherwise amounts paid in December and accrued in January will muddle the figures.
- Update the calculation once a quarter, together with the payments in the tax calendar.
- Track late-payment interest and penalties on a separate line: they should be close to zero, otherwise the problem is not in the rate but in discipline.
Test yourself
5 questions on this topic: pick an option or reveal the answer.
"Kumush ip" LLC accrued a dividend of 40 000 000 soum to its participant Malika Rustamova, a resident of Uzbekistan, on her share in the charter capital (the LLC does not issue shares; Malika does not belong to a special category granted a tax benefit). Under the Tax Code, how much personal income tax is withheld from this dividend?
In a pre-audit analysis, the tax authority found a discrepancy in the return of "Sayhun mebel" and sent a notice to its personal account to make a correction. Under the Tax Code, within what period from the day the notice is received must the company submit an amended return or an explanation of the discrepancy?
"Sayram choy" LLC accrued dividends of 30 000 000 soum to an individual who is its participant and a non-resident of Uzbekistan (assume no relief under an international treaty applies). Applying the rate in Article 382 of the Tax Code, how much personal income tax is withheld at source?
An individual, Karim, has died. His land tax debt is 6 000 000 soum, the late-payment interest accrued on it is 900 000 soum and the fine is 500 000 soum. The documented value of the inherited property is 10 000 000 soum, and there is one heir. Under Article 94 of the Tax Code, how much must the heir pay on the tax debt?
Unless the Tax Code provides otherwise, what is the limitation period within which the tax authority may carry out a tax audit or send a demand to pay off a tax debt?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- Example, amounts and calculations · compiled by the author, hypothetical; the tax amounts show assumed results, not rates
- Calculation method · tax burden as an analytical indicator; compiled by the author