Many people will wonder what the income tax?, how is the calculation of the income tax?. The answer is simple. The income tax applies to all persons or businesses that generate a profit or utility at the end of each year. To calculate the income tax that must be paid to the persons or undertakings, better known as contributors is: refunds, discounts, costs, expenses and deductions attributable to such income will be deducted on all taxable income. This result we call it taxable. Example: Let’s say that the Ecuador company. In 2010, it has sold $500,000; its costs were $400,000; return $20,000; discounts $5,000 and their expenses of $50,000. We are going to determine the taxable base for the calculation.

Detail value sales 500,000 – costs 400,000– Discount 5,000 – 20,000 returns costs 50,000 = 25,000 taxable under this example the basis for the calculation of the income tax is $25,000 calculation procedure for the calculation of the income tax is made on the basis of the table that provides us the internal revenue service each year; This table is used for natural persons (companies or individuals) and undivided (inheritances that you’ve not been distributed); for societies automatically calculation is made with 25% of the base. See table and the full year, the calculation of the tax on the income for the year 2010, then see the table of the income tax we continue with the example: in our example, the taxable amount is $25,000; This value we see in the table in that range; (it is between $17,030-$ 34,060). The base impossible we subtract the basic fraction ($25,000 17,030). This does not give a result of $7,970. The found result multiplied by the percentage of that 15% range ($7,970 x 15%) = $1,195.50 A this value we add, basic tax fraction ($1,195.50 + 747) = $1,942.50 then the tax payable is $ 1,942.50 taxable income from work in dependency ratio consists of the income taxed less the value of the personal contributions (9.35%) to the Ecuadorian social security Institute (IESS)except when they are paid by the employer. natural persons that does not exceed $8,910 base; they do not pay the tax income. Original author and source of the article.