Tax terminology can sometimes be complex and difficult to understand. Two of these terms are “narrow taxpayer” and “full taxpayer”. In this article, we will explain the concept of taxpayer and these two different types – narrow taxpayer and full taxpayer. By examining the functioning and key differences between these two concepts in tax systems, we aim to provide a better understanding of tax payments and obligations.
What is a Taxpayer?
A “taxpayer” is a term that describes a person or business that is liable to pay tax within a tax system. Those who have the obligation to pay taxes are responsible for tax revenues and complying with their other legal obligations. Taxation is a fundamental mechanism for collecting government revenues and financing public services.
What is a Narrow Taxpayer?
Narrow taxpaying refers to a situation where a person or business has limited tax liability in a particular country or territory. Generally, factors affecting narrow taxpayers include the length of time a person or business has been engaged in a particular activity, their sources of income, or their tax liability reaching a certain limit. Narrow taxpayers are only liable to pay tax on a certain type of income or activity.
What is a Full Taxpayer?
Full taxpayer refers to the situation where a person or business is obliged to comply with all tax laws and obligations of a country. Full taxpayers are subject to general tax laws in a country and have the obligation to pay taxes on all their income and activities. This means that individuals or businesses report all their financial activities to a country’s tax authority and pay all relevant taxes.
Main Differences Between Narrow Taxpayer and Full Taxpayer:
- Scope of Tax Liability: Narrow taxpayers have a limited tax liability and pay tax only on a certain type of income or activity. Full taxpayers, on the other hand, comply with general tax laws on all their income and activities.
- Country Boundaries: Narrow taxpayers are limited to activities in a particular country or territory. Full taxpayers comply with the full tax laws of a country and are usually citizens of that country.
Narrow taxpayer and full taxpayer are two important terms that determine the tax liability of a person or business and how it operates under the laws to which it is eligible. Narrow taxpayers pay taxes for a specific limited activity, while full taxpayers generally comply with the full tax laws of a country. Tax obligations and practices can vary by country and region, so individuals and businesses should comply with local tax laws. In Turkey, for example, full taxpayers are taxed on all their earnings both inside and outside Turkey. However, limited taxpayers will only be taxed on income earned within Turkey
