Assesses are individuals or entities who are liable to pay taxes on their income or profits to the government. The tax system of a country may categorize assesses into various types based on their residence status, such as resident, non-resident, and resident but not ordinarily resident. The categorization of assesses based on their residence status is crucial, as it determines the taxation rules and rates applicable to them.
Resident assesses refer to individuals who have stayed in a particular country for a specified period and have acquired residency status. Typically, an individual is considered a resident if they have stayed in a country for a minimum of 183 days in a financial year. The taxation rules applicable to resident assesses differ from those applicable to non-resident assesses. For instance, the income earned by a resident assess is taxed on a progressive scale, i.e., the tax rate increases with an increase in income.
Non-resident assesses refer to individuals who have not stayed in a particular country for a specified period and have not acquired residency status. The taxation rules applicable to non-resident assesses are different from those applicable to resident assesses. Generally, the income earned by non-resident assesses is taxed at a higher rate than resident assesses. The tax rates for non-resident assesses are generally fixed and do not depend on the income earned.
Resident but not ordinarily resident assesses refer to individuals who are residents of a particular country but do not have a permanent home in that country. This category of assesses is mainly applicable to foreign expatriates who come to work in a particular country for a limited period. The taxation rules applicable to resident but not ordinarily resident assesses differ from those applicable to resident assesses. The income earned by resident but not ordinarily resident assesses is taxed only on income sourced within the country.
Deemed resident assesses refer to individuals who are not physically present in a country for the specified period but are still considered residents for tax purposes. This category of assesses is mainly applicable to individuals who maintain significant economic ties with a particular country, such as owning a property or conducting a business. The taxation rules applicable to deemed resident assesses are similar to those applicable to resident assesses.
In conclusion, the categorization of assesses into different types based on their residence status is crucial in determining the taxation rules and rates applicable to them. The residency status of an individual plays a significant role in determining their tax liabilities, and it is important for assesses to be aware of the different categories of residency status and their implications.