Question

Under the Duties Relief Program, What tax/duty is deferred? What tax/duty is not deferred?

1) Income tax is deferred, Sales tax is not deferred
2) Sales tax is deferred, Income tax is not deferred
3) Both income tax and sales tax are deferred
4) Neither income tax nor sales tax are deferred

Answer 1

The Duties Relief Program typically defers customs duties and import taxes, but not income tax or sales tax, which are levied on earnings and retail sales respectively.

Step-by-step explanation:

Under the Duties Relief Program, customs duties and import taxes on merchandise are typically the taxes deferred. Specifically, this can include excise taxes on imported goods and duties on items that are brought into the country for a specific use, such as manufacturing or resale, but have not yet been sold to the end consumer. In contrast, income tax on both individuals and corporations, and sales tax generally assessed at the point of retail sale, are not deferred under this program. Whereas customs duties are linked to the importation process and its regulation, income tax is based on individual and corporate earnings, and sales tax is applied to the sale of goods and services within the domestic market.