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Effective tax rate

Effective tax rate

Description

Effective tax rate is a ratio used for measuring company’s tax rate. It indicates a percentage of income paid for the government as a form of tax income. Data to calculate this ratio is collected from the income statement.

Norms and limitations

The lower rate of tax income means that there is less income taxes are paid for the government.

As it was already mentioned, the tax income rate is not the only rate that must be considered.

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