A tax assessment is the act carried out by the Administration directed to a taxpayer in which the existence of a tax obligation is notified and quantified.
That is, the Administration notifies the taxpayer, through the tax assessment, that a taxable event has occurred for which they have to pay a certain tax.
Characteristics of the tax settlement
The tax settlement has the following characteristics:
- It is an act carried out by the Administration aimed at a taxpayer. As we will see in the last section, when it is the taxpayer himself who performs the settlement, it is called self-settlement.
- Notifies the existence of a tax obligation. If the Administration does not carry out the act of tax settlement there is no duty to pay.
- Quantifies the tax obligation. In the liquidation, as a minimum, the tax base, the type of tax and the tax rate must be quantified. The latter is the amount that the taxpayer has to pay as tax.
In addition to all of the above, other relevant aspects must be reflected in the tax settlement:
- The tax on which the tax settlement is carried out and based on what regulations the Administration performs said settlement.
- A brief motivation for why the tax assessment is carried out.
- The payment term and the way to do it (by payment, bank transfer, etc.).
- The resources available to the taxpayer if they do not agree with the settlement, as well as the term to file them.
Each country can put additional requirements to the previous ones to be able to carry out a tax assessment. It is important to note that, if the Administration does not meet any of the essential requirements established by law, the liquidation could be declared void.
Sometimes, the legislator establishes that it is not necessary for the Administration to inform the taxpayer that he has to face a tax obligation. The Administration may oblige the taxpayer to be the one who performs the tax settlement, without the Administration expressly requiring it. When this happens, a tax self-assessment takes place.
In these cases, the taxpayer is obliged to carry out the self-assessment and, therefore, the payment of the tax, without being notified by the Administration. The law establishes a term for the taxpayer to present the self-assessment. If you do not do so, you are exposed to a sanction for breaching the law and the Administration will proceed to carry out the settlement (because the self-assessment has not been carried out).
In the most important taxes (Income Tax, Corporation Tax, Value Added Tax), in most countries, the self-assessment model has been chosen, as it is easier for the Administration.
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