Direct Tax

AAA

DEFINITION of 'Direct Tax '

A tax that is paid directly by an individual or organization to the imposing entity. A taxpayer pays a direct tax to a government for different purposes, including real property tax, personal property tax, income tax or taxes on assets. Direct taxes are different from indirect taxes, where the tax is levied on one entity, such as a seller, and paid by another, such a sales tax paid by the buyer in a retail setting.

INVESTOPEDIA EXPLAINS 'Direct Tax '

A direct tax cannot be shifted to another individual or entity. The individual or organization upon which the tax is levied is responsible for the fulfillment of the tax payment. Indirect taxes, on the other hand, can be shifted from one taxpayer to another.

RELATED TERMS
  1. Goods and Services Tax - GST

    A Canadian value-added tax levied on most goods and services ...
  2. Income Tax

    A tax that governments impose on financial income generated by ...
  3. Indirect Tax

    A tax that increases the price of a good so that consumers are ...
  4. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  5. Surtax

    A tax levied on top of another tax. A surtax can be calculated ...
  6. Luxury Tax

    A tax placed on products or services that are deemed to be unnecessary ...
Related Articles
  1. Tax Treatment Of Roth IRA Distributions
    Taxes

    Tax Treatment Of Roth IRA Distributions

  2. Tax Tips For The Individual Investor
    Retirement

    Tax Tips For The Individual Investor

  3. Tax Tips For Financial Advisors
    Taxes

    Tax Tips For Financial Advisors

  4. 10 Money-Saving Year-End Tax Tips
    Taxes

    10 Money-Saving Year-End Tax Tips

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center