Tax Awareness in Qatar
People have a possibility to live in a civilized society because of the institution of a state. The task of each government is to satisfy different collective needs of a society, such as defense, maintenance of
social order, maintenance of state authorities, education, public health, and others. To perform these functions, governments require monetary resources, which could be obtained through the collection of taxes. There are different classifications of taxes. Firstly, they may be direct and indirect. Economic agents pay direct taxes on the income obtained from different factors of production (for example, income tax).
Indirect taxes are the taxes on goods and services and are included in the final price of those goods and services (for example, sales tax, customs duty, excise, and value-added tax in some countries). Taxes may be
progressive when tax rates are higher for higher income, regressive when tax rates are lower for higher income, and proportional when tax rates are fixed for any level of income. Depending on an administrative structure of a country, taxes may be general or local.
Taxes perform different functions. However, a fiscal function is the most fundamental, while all other functions are derivative. The fiscal function ensures that a state budget receives a sufficient amount of money and governments can perform their functions efficiently. The social function of taxes allows governments to redistribute available resources from more affluent people to more vulnerable social groups, who need
additional state support and protection. Regulating and controlling functions of taxes mean that governments are able to implement their economic and social policies effectively and control the amount of budget revenues and expenses.
Taxes are also very important for the regulation of economic relations among residents and nonresidents. For example, low taxes on corporate income may serve as an incentive and stimulate business activities. In
addition, governments can provide different types of tax credits and tax discounts for small and medium enterprises, agricultural companies, or companies in particular industries. To attract foreign investments, state
authorities may impose reduced tax rates for companies with foreign capital.
However, taxes can also prevent the development of economic activities. For example, high rates of customs duty will have a negative impact on international trade and increase the value of imported goods. If
a government wants to reduce the sale volumes of specific socially negative goods (alcohol, cigarettes), it may impose high excise rates. Such actions will lead to the increase in the prices for these goods (because excise as
indirect tax is included in the final price of goods and services) and the sales will decrease.
As for Qatar, the country has one of the most favorable tax systems in the world. According to a joint publication …
