What is the difference between statutory and average tax rates?
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les
Apprentice
Joined: 12 Dec 2005
Posts: 11
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 Posted: 06/26/08 - 08:13 Post subject: |
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| Hello to you all. My name is William and I would appreciate if you could give me some help about taxes. I am trying to figure out all the details about our tax system and there is one thing that I don’t understand. Can you tell me what is the difference between statutory and average tax rates? Thank you. |
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quentin
Apprentice
Joined: 02 Nov 2004
Posts: 9
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| Posted: 07/26/08 - 00:18 Post subject: |
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| Hello William. Well, the matter is quite simple. Statutory tax rate is the one which is legally imposed and how it is written in the law. For example, if the law says that income tax rate is 10% that is the statutory tax rate. Average tax rate is the one that you calculate when dividing tax liability with the taxable income. For example, if you have to pay 100 pounds of tax for your 2000 pound income, average tax rate would be 5%. And that is all. As you can see, nothing complicated. I hope that I managed to explain this to you. Bye! |
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