Tax benefits are any type of savings in tax rates of income obtained from any type of exemption, deduction, bonus or tax reduction.
Tax benefits are what are called savings or improvements in the assets of a person or entity as a result of lower tax payments . These types of improvements are usually provided for in current legislation and are granted when some natural or legal person performs certain practices considered benign, which rewards them with a lower tax payment. They are usually related to compliance with certain social, labor and environmental practices, and because the administration wants to encourage and develop certain praxis in the market.
Generally, tax benefits are preceded and derived from the legal regulations of an administration , since it is responsible for regulating and establishing legal requirements to qualify for tax rate reductions. The tax benefits must be thus taken by the administration itself, since otherwise it would be as tax fraud, because in no case the tax benefits are due to an evasion of resources to the treasury .
In general terms, the concept of fiscal benefit also refers to when a public administration obtains higher income from taxes than the expenses needed for its own operation, which gives an idea of a surplus in the administration .
Types of tax benefits
There are different types of tax benefits, depending on the origin and activity.
- Exemption: are those rents that are totally exempt from paying taxes, either for compliance with regulations that collect it or for their social or environmental nature.
- Deduction: is a reduction in the tax base of a tax, following compliance with certain established requirements.
- Reduction: itis a reduction in income or income subject to taxes, directly reduced on the gross amount.
- Bonus:is any reduction in the amount to be paid of a tax.
- Certain types of subsidiesare also tax benefits, since these are not refundable and are what are known as lost funds.