Payments for taxes are classified as an Operating outflow, as they pertain to the daily business activities and are not associated with investing or financing activities.
Payments for taxes would be classified as an Operating outflow. When businesses or individuals make tax payments, these are considered part of the entity's ordinary business activities, which includes all disbursements that are not related to investing or financing activities. These operating activities are the main revenue-producing activities of the business and they include other outflows like payments to suppliers and employees as well.
In the context of the current account balance, 'income payments' represent the financial flows of money associated with investments; however, this is distinctly different from tax payments. The former details financial transactions in capital markets, such as dividends or interest from foreign investments, rather than fiscal obligations to the government.
tax payments are not related to investments in assets like stocks, bonds, or real estate, nor are they related to borrowing or lending activities. Rather, they relate to the everyday functioning of the entity and thus fall under the category of Operating outflow.