Tax Explained to Kids By Nicolas Boucher

Income Tax

If you earn $10 from selling lemonade and need to give $2 to your parents, that’s income tax. Companies make money and have to give part of it to the government.

Deferred Tax

Earn money today, but pay taxes later. Taxes are based on published financials but recognized in another year.

Corporate Tax

Companies pay a special tax, like a membership fee, to be part of the ‘business club’ in a country. The more they make, the more they pay

Payroll Tax

When you hire a friend to help with your lemonade stand, you pay them a share. Companies do the same when they pay their employees.

Sales Tax

Imagine selling a cup of lemonade for $1. You ask for an extra 10 cents for park cleaning. This is sales tax, added to the price companies charge.

Property Tax

If you have a table for your lemonade stand, you might pay a few coins for using that spot. Companies pay taxes for owning or using land.

Excise Tax

This is an extra price for special products. If you sell super fizzy lemonade, the government may charge a tax for that, called excise tax.

Customs Duties

If you bring lemons from another neighborhood, you pay a few pebbles at the border. This is like customs duties for companies importing goods.

Transfer Pricing

When lemonade stands in different neighborhoods share items, they decide fair charges. Companies pay taxes for products sold between branches.

Value-Added Tax (VAT)

Every time you add something special to your lemonade, like a straw, you pay extra pennies. This is VAT – added each time value is added to a product.

Thank You

Follow us for more content like this