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Taxes are the payment which an individual or a legal entity has to make to the government or equivalent of  the government of the area in which they are located. Taxes are usually paid in the currency of  the nation , but some times they are paid in kind or as labour.

The governing authorities in most areas have imposed taxes for thousands of  years. Before  the advent of  the welfare state in the last century, the taxes were usually used for defense and supporting the lifestyle of the rulers and nobility. Today, in most countries with a functioning democracy, the use of taxes is budgeted and subject to audits

Taxes can be direct or indirect.  Direct taxes are collected from the individual or legal entity. For indirect taxes, the person depositing the taxes is different from the persons who actually pay it.  In most countries, there is a dedicated agency for collection of  taxes. Failure to pay taxes can result in fines, forfeiture of  property or even imprisonment. However, some people get around paying tax legally, by using an Offshore Company Formation.