Taxation in Montecara

Taxation in Montecara is administered by the Secretariat for Finance. Montecara is known as a tax haven and offshore financial hub thanks to its lack of income, capital gains, and estate taxes. The state does, however, assess a variety of other taxes and fees that contribute to its overall operating revenue. Montecara operates a single-tier tax system; i.e., there is no dividend tax. There are no extant double taxation avoidance agreements.

Note that this article does not cover profits earned by state-owned enterprises in Montecara such as Poste de Montecara and Aeracara or dividends earned on Montepietà, the sovereign wealth fund.

Excises

Tax stamp for cigarettes sold in Montecara

Excises are per unit taxes paid on specific types of goods.

Type Rate 2017 revenue
(millions Ł)
Alcohol Ł65/liter of pure ethanol 752
Cannabis Ł15/g 657
Electricity Ł22/MW·h 316
Fuel
Coal and coke Ł15.50/Gj 29
Diesel Ł6.35/l 4,171
Gasoline Ł5.75/l 4,966
Heavy fuel oil Ł2.85/l 4,796
Kerosene Ł3.00/l 940
LPG Ł1.90/l 154
Natural gas Ł2.55/m³ 3,389
Tobacco Ł12/pack of 20 cigarettes
Ł7/cigar ≤ 10g
Ł9/cigar > 10g
Ł0.65/g loose tobacco
2,433

Tariffs

The Montecaran tariff system is complex, with rates varying by national origin and type of good, but are generally low by international standards (with some notable exceptions). For instance, the trade with the Euclean Community is tariff-free; general tariff rates with other countries range from 0% (for many types of goods and utilities) to 45% (for private cars, trucks, and vans). Montecara collected Ł3.215 million in tariff revenue in 2017.

Taxes

Hospitality tax is assessed on spending at hotels, casinos, brothels, and car rental agencies. Land value tax is assessed on the unimproved value of land. Withholding tax is assessed on income earned in Montecara by non-resident foreign workers (entertainers, athletes, etc.).

Type Rate 2017 revenue (millions Ł)
Air transport tax Cargo Ł16/tonne 13
Passengers 5% of ticket price 508
Corporation tax
Income earned in Montecara by entities incorporated abroad 13.5% 735
Income earned abroad by domestically incorporated entities 7.5% 48,205
Domestic income earned by domestically incorporated entities 0% 0
Foreign insurance tax 4.75% of premium 85
Franchise tax Varies 3,962
Hospitality tax 22% 2,398
Land value tax 0% - 2.75% 17,059
Mortgage tax 0.9% of each payment 271
Value-added tax 0% - 6% 32,223
Withholding tax 18% 402

Fees

Type Rate 2017 revenue
(millions Ł)
Notes
Air and sea transit Varies 62 Charged to aircraft and ships transiting Montecaran seas and airspace.
Cruise ship passenger fee Ł425/passenger 81
Incorporation Ł2,500 17 Flat fee assessed on incorporating a new business.
Landing and docking Varies 10,445 Assessed on aircraft and ships using Montecara's port or airport.
License plate auction revenue Varies 623
Road use vignette Varies 10,445
Ship registration Varies 43 Costs vary with size, class, and age of ship. Montecara has an open ship registry and is a popular flag of convenience.
Vehicle registration Varies 8,623

Hypothecated fees and surcharges

Revenue from these sources is dedicated to specific purposes rather than being paid into the general account.

Type Rate Notes
Climate surcharge Ł88.20/tonne emitted CO2‑e Assessed on emissions of carbon dioxide, methane, nitrous oxide, and fluorinated gases not otherwise taxed. Revenue is earmarked to subsidize replacement technologies for these gases.
Electronic goods recycling fee 3% Collected at sale and earmarked for e-waste recycling.
Fishing equipment surcharge 12% Collected at sale and earmarked for the cleanup of waste from Montecaran waters and beaches.
Landfill waste collection fee Ł80/tonne Assessed on domestic, commercial, and industrial landfill waste and earmarked for processing costs.
Public broadcasting surcharge 13% Assessed on cable television, Internet service, and cellular data bills in order to fund Telèradio Montecara.

Discontinued

Salt tax

Salt tax (Montecaran: gabèla) was first imposed under the Latin Republic, and was levied in some form up to the late 19th century. It was for many centuries up to the early modern era the single largest source of income for the Montecaran state, though it was often bitterly resented by common people. At times it even included the compulsory purchase of a fixed quantity of salt per month by every man, woman, and child in Montecara.

Stamp tax

First levied in 1708, stamp tax was imposed on official documents, newspapers, cheques, and other printed matter. It was finally repealed in its entirety in 1953.