1. Introduction

Taxes and social security affect the way companies carry out their business and must always be accounted for in any financial forecasting. Even when a tax does not have any effect on the income statement of a company, it may impact (either positively or negatively) the cash flows.

First lets distinguish between two types of taxes:

  • Direct taxes: are levied on a person’s or organization’s income or properties.
  • Indirect taxes: are levied on transactions carried out by individuals and organizations.

What distinguishes them is that direct taxes vary according to income or property of an individual or organization, whereas an indirect tax has always the same value independently of the persons wealth and income.

Examples of direct taxes

Examples of indirect taxes

Corporate tax VAT
Personal income tax Stamp duty
Real estate property tax Import duties
Personal property tax Fuel duties
Liquor taxes
Cigarrete taxes
Airport duties
Waste management taxes

This manual covers the basics of VAT, Corporate tax, the taxes that can have the most impact on a business and the ones that can be explicitly forecasted in CASFLO APP. It also covers social security, as these systems imply and added cost with employees and are simulated within the CASFLO APP calculations.

Next Section: 2. VAT