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What is Ad Valorem Tax and how does it work?
3 days ago by accountinglads
Ad Valorem Tax is a type of tax that is based on the value of a certain item that is assessed, in a case of real estate, personal property, or goods. Ad valorem is a Latin word, which translates to according to value. This tax is used by governments to make taxpayers fairly contribute depending on the value of their assets. One such ad valorem tax would be property taxes and import duties. The value of property is the larger the tax the higher. This system will ensure equity since tax amounts to be paid will be pegged on the real value of the property but not a flat rate to everybody.