How calculate businsss profit tax formula

The formula to calculate business profit tax is:

Business Profit Tax = (Net Income - Deductions) * Tax Rate

Where:

• Net Income is the total revenue generated by the business minus all expenses
• Deductions are any allowable expenses that can be subtracted from the net income
• Tax Rate is the percentage of profit that must be paid as tax

For example, if a business has a net income of $100,000, deductions of $20,000, and a tax rate of 25%, the calculation would be:

Business Profit Tax = ($100,000 - $20,000) * 0.25
= $80,000 * 0.25
= $20,000

Therefore, the business profit tax in this example would be $20,000.

In Ethiopia, the corporate income tax rate is a flat rate of 30%. The formula to calculate business profit tax in Ethiopia is as follows:

Business Profit Tax = (Net Profit - Allowable Deductions) * 30%

Where:

• Net Profit is the total revenue generated by the business minus all allowable expenses
• Allowable Deductions are expenses that are deductible according to Ethiopian tax laws

For example, if a business in Ethiopia has a net profit of 500,000 Birr and allowable deductions of 100,000 Birr, the calculation would be:

Business Profit Tax = (500,000 - 100,000) * 30%
= 400,000 * 0.30
= 120,000 Birr

Therefore, the business profit tax in this example would be 120,000 Birr.