Taxes so simple you don't need to file?
February 7, 2006 6:44 AM   Subscribe

Do any countries have a tax system where the average taxpayer doesn't file a return but does pay taxes?
posted by smackfu to Law & Government (11 answers total)
The UK. Most basic rate taxpayers pay through deductions from their salary that are managed by their employer (PAYE). They never normally have to file a return.
posted by crocomancer at 6:49 AM on February 7, 2006

Yeah, in Ireland people generally don't file tax returns (unless they're self employed, I believe). Same as the UK system described above.
posted by jamesonandwater at 6:50 AM on February 7, 2006

My father in law had a shop in Egypt where he carved wooden furniture. Every year the tax man would come and look at how busy his shop was at that moment, and estimate what his income must have been for that year, and give him some egregious amount of tax due. Then he would go to some sort of tax helper guy and they'd make a counter offer that was much lower, and that amount would generally be accepted. From what I'm told, no one pays the first amount they're assigned. It's an entirely disorganized way to do things, but there isn't really any other way they could do it because all the transactions would have been in cash, from the materials he bought to the sales he made to the wages he paid his employees. I would think that things are different in the big cities or at least for big companies that employ accountants or otherwise keep financial records. That's how things are done in his medium sized town, and for shop owners. I don't know how or whether they collect taxes from people who aren't self employed.
posted by leapingsheep at 6:58 AM on February 7, 2006

Germany has that afaik, too. They don't have to fill out tax forms, it gets deducted from their pay before any money lands in their bank account.
posted by slater at 6:59 AM on February 7, 2006

When I worked in Germany the tax system was, like many in Western Europe, relatively hands off. The only real active interaction I had with the tax people was when I went to claim atheist status to avoid paying the church tax.
posted by meehawl at 7:09 AM on February 7, 2006

As mentioned, Ireland doesn't have tax returns for normally-employed folk. However, it makes it a bit more difficult to find out how to get money back when you are owed it (as I am, for example, as a non-resident last year)
posted by antifuse at 7:25 AM on February 7, 2006

Erm, it's correct that tax is deducted from our pay before we get the money here in Germany, but we still fill out forms and file for a return after the year is over (and hey! it's almost that time of year again!) because there are a lot of things that you can deduct, so often we end up getting at least a little bit of money back. Self-employed people have to pay taxes every quarter (depending on the size of the business) but still file a return every year.

In fact, taxes in Germany are so complex that a lot of people need to pay a tax accountant because they aren't able to figure it out themselves.

More on topic, though, there are a few European countries with a flat tax, and if I understand the concept correctly, they don't need to file a return. Examples are Estonia, Latvia, Lithuania, Russia, Serbia, Slovakia, Ukraine, and Romania. See The ups and downs of flat taxes (BBC News) for more information.
posted by amf at 7:28 AM on February 7, 2006

New Zealand has PAYE as well. You can file a return if you want to though. Or if you're self-employed and I'm sure a bunch more reasons.
posted by gaspode at 7:55 AM on February 7, 2006

Since moving to the UK 5 years ago we have twice been "spot-checked" or sampled. (we are both PAYE, pay- as- you- earn workers) Had to file a pretty detailed return, fines of up to £100 for a late return and jail time for a non-return. On both occasions we got a smll amount of money back, which might just be a clever way of getting people to do this every year. I also did this once in my tax-paying years in Ireland.
posted by Wilder at 8:25 AM on February 7, 2006

Finland does have a tax return system, but you get a pre-filled one with all the information the taxman already knows about the money and benefits you have received. Naturally, they don't know everything, so you'll still have to report possible deductions (at least if you want them) or income that they don't know about. However, most people don't have to touch their proposed return. The employer will deduct taxes from your wage during the year, but you can affect the percentage of that deduction by estimating your income wrong on purpose. You will have to pay interest on the taxes you should have payed during the year but as the interest is not very high, people can do this, invest the money and still stay on top.

In order to have a system with no tax return at all, the system would have to either very, very simple (even if there we no deductions or exceptions, capital gains would probably require a return of some sort) or very thorough (the tax agency would have to have complete knowledge of all your financial transactions)
posted by insomnus at 8:31 AM on February 7, 2006

In Bermuda I don't fill out anything. There is a small payroll tax that comes out of my check but that's it. I am not sure how it works if you own property, but I have a feeling its a pretty straight forward process as well. There is no income and capital gains tax here. You gotta love the tax-free domiciles.
posted by jasondigitized at 3:00 PM on February 7, 2006

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