What is the meaning of Formal economy? Concept, Definition of Formal economy

What is: 'Formal economy' ‒Definiciones and concepts -

1. Concept of Formal economy

The formal economy is one that is formed by industrial or exploitative, most organizations they are within the GDP; the cost of the products and services offered by retailers are formal more expensive products within the informal economy, this economy to pay taxes; While the informal economy is the opposite to the above, it is one in which itinerant trade or even some businesses are the main source, which are not included in the gross domestic product, do not pay taxes even though they consume resources and demand services, this economy generates


2 Concept of Formal economy


Economics is human activity that tries to meet the needs of the population, which can be devoted to primary (such as agriculture, animal husbandry and mining) activities, secondary or industrial or tertiary or services.
The economy is based on the production of goods and services and the demand for consumption or use. Thus generated an Exchange and circulation of money.
Those lucrative activities are regulated by the State, which establishes them through legislation, fiscal and administrative regulations. Individuals and companies dedicated to these purposes, shall be registered, as well as their employees if they have them, and pay taxes.
Taxes are paid essential public services, which the State is responsible (education, safety, health and justice), and with the registration of the employees, they enjoy benefits and social protection, as aguinaldo, vacation, wages, family allowances, licenses, insurance, etc.
On these registered activities, statistics and measurements can be made. To this way of exercising economic activities, which conforms to the legal rules, in its Constitution and operation, in terms of obligations and requirements, referred to as formal economy.
Aside from the formal economy regulated and controlled, there is the informal, not registered, resulting in tax evasion in the case of workers, checkout. Threatens the well-being of the entire population to not comply with tax liens and creates a situation of inequity to who handled within the law. The State must strive to eradicate it, so competition is fair, without privileges for those who evade the burdens and sustain a clean and transparent, economy subject to control by the public authorities, which must ensure the common good.


3 Concept of Formal economy

A FORMAL economy is one that is registered with the authorities and that they report their economic moves as through taxes SAT realizes revenues, costs, suppliers and customers of a company, person with business activity, and which are allowed for example the Kanaks of the municipality where they are placed and have a shop with a brand or a business name and/or name.
The informal economy does not have the above conditions as for example the tianguistas, which do not carry a record before any authority but very rarely form associations in order to establish generally in public, a very important characteristic of the informal economy is that it is exposed to money laundering or have any relationship with organized crime (not always but have this trend) since their products can buy them this type of organizations and the Government cannot control more easily and at the same time generate the FISCAL EVASION (punishable with jail in the fiscal code of the Federation), but by the problemaica of a country with a low employment generation tends to be enlarged and revert to the informal economy.

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