Tax exemption - Financial definition
Concise definition of the term tax exemption
Tax exemption is a status granted to certain individuals or entities, exempting them from paying certain taxes.
Comprehensive definition of the term tax exemption
Tax exemption refers to the privilege granted to specific individuals, organizations, or transactions, relieving them from the obligation to pay certain taxes imposed by the government. This exemption can apply to various taxes, such as income tax, property tax, sales tax, or capital gains tax. Entities eligible for tax exemption typically include nonprofit organizations, religious institutions, government entities, and certain types of investments, like municipal bonds.
Tax-exempt status is often granted to encourage certain behaviors or activities deemed beneficial to society, such as charitable work or infrastructure development. However, the criteria for qualifying for tax exemption can vary widely depending on jurisdiction and the nature of the organization or transaction involved.