# Taxes

### Why tax?

To sustain the protocol, we need to implement taxes. Taxes will provide the following:

1.  Liquidity
2. Reserve Fund
3. Deflationary Measures
4. Investment Treasury

### What are you taxed on?

* **4% buy/transfer taxes**
* **4% sell tax** 

### Where do the taxes go?

For buying & selling:

* **2% from buys & 2% from sells will go towards the Investment Treasury which will be used to generate profits by investing for our protocol.**
* **1% from buys & sells will go to the Liquidity Pool.**
* **1% from buys & sells will go to the Reserve Fund, which will hedge against volatility in the market.**

***

## Dynamic Tax Tiers

Much as we have to pay homage to our counterpart for this implementation, most countries around the world have tax brackets or tiers. *(though some favor the rich, we're not like those)* 

With Dynamic tax tiers, the whole point is to minimize price manipulation by taxing sells based on how big of a share the holder has in correlation to the Liquidity Pool of **AFX**. We don't want the whales and big bag holders to dump on the market without consequence. With DTT, it will hopefully deter whales from dumping.  

The quantity of **AFX** tokens you hold is taken into account when calculating how big of a share of the LP you hold. For every 1% that you hold, the tax is increased by 2% until there's a total sell tax of 30%.

A simple calculation:

* 1% of LP - 2% tax
* 2% of LP - 4% tax
* 3% of LP - 6% tax
* 4% of LP - 8% tax
* and so forth till we hit 30% in total tax.

We would also accept OTC deals. Just contact us on discord. :)

### Tax Reduction

We will be looking to reduce both buy and sell taxes when our protocol's financial health hits certain milestones. (more to be announced as our protocol grows)

####


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