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Encyclopedia > Corporate tax

Corporate tax refers to a direct tax levied by various jurisdictions on the profits made by companies or associations. As a general principle, this varies substantially between jurisdictions. In particular allowances for capital expenditure and the amount of interest payments that can be deducted from gross profits when working out the tax liability vary substantially. Also, tax rates may vary depending on whether profits have been distributed to shareholders or not. Profits which have been reinvested may not be taxed. A direct tax a tax that is collected directly by government from the persons (legal or natural) on which it is levied. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... A company in the broadest sense is an aggregation of people who stay together for a common purpose. ... A voluntary association (also sometimes called just an association) is a group of individuals who voluntarily enter into an agreement to form a body (or organization) to accomplish a purpose. ... The term jurisdiction has more than one sense. ... Capital expenditures (CAPEX) are expenditures used by a company to acquire or upgrade physical assets such as equipment, property, industrial buildings. ... Gross profit or sales profit or gross operating profit is the difference between revenue and the cost of making a product or providing a service, before deducting overheads, payroll, taxation, and interest payments. ... A tax (also known as a duty) is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ... In the most general sense, a liability is anything that is a hindrance, or puts one at a disadvantage. ...


For example, in the United Kingdom, where the main corporate tax is called corporation tax, depreciation on many capital assets (excluding finance leases and certain intangible assets) is disallowable in computing taxable profits. Instead, capital allowances (usually at the rate of 25% per annum on a reducing balance basis) may be claimed. In France, however, depreciation is allowable, within certain rates per classes of asset set down by statute. Corporation tax is a tax levied in the United Kingdom on the profits made by UK-resident companies and associations. ... Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ...


Under an imputation tax system, some or all of the tax paid by the company may be attributed pro rata to the shareholders by way of a tax credit to reduce the income tax payable on a distribution. For many years, from 1973 to 1999, the UK operated a partial imputation system, with shareholders being able to claim a tax credit reflecting advance corporation tax (ACT) paid by a company when a distribution was made. A company could set ACT off against the annual corporation tax liability of the company. Dividend imputation in the Australian tax system allows companies to attach franking credits to dividends paid. ... Within the Australian, Canadian, United Kingdom, and United States tax systems, a tax credit is an item which is treated as a payment already made towards taxes owed. ... 1973 (MCMLXXIII) was a common year starting on Monday. ... 1999 (MCMXCIX) was a common year starting on Friday, and was designated the International Year of Old Farts by the Sometimes-United Nations. ...


Alternatively, in certain jurisdictions, distributions are be fully or partially exempt from tax—for example, certain jurisdictions, such as Austria and Germany, operate a "double income" system on distributions, with only half of the distribution is subject to tax, or, equivalently, the tax rate is halved, and the Netherlands operates a participation exemption under which certain distributions are exempt from tax.


In the United States, the federal rate is 35%. But since 1999, when Treasury annouced the "check the box" system many corporations can elect to be treated as a pass-through entity, thereby skipping the entity level 35% tax and having all income pass through to the shareholders. This is the tax treatment that the much discussed "S" corporations receive but now many more types of state-law corporation may avoid double taxation by "checking the box".


This is the second highest rate among the world's most developed economies (those in the OECD -- the Organisation for Economic Co-operation and Development). Only Japan is higher. The median is 30.0%, with notably low rates for corporations headquartered in Ireland (12.5%), Hungary (16.0%), Iceland (18.0%) and Poland (19.0%). [1] The Organisation for Economic Co-operation and Development (OECD) is an international organisation of those developed countries that accept the principles of representative democracy and a free market economy. ...


See also

Corporate welfare is a pejorative term, first coined by Ralph Nader in 1956, describing a governments bestowal of grants and/or tax breaks on corporations or other special favorable treatment from the government. ... An excess profits tax is a tax on any profit above a certain amount. ...

External links

  • Why Tax Corporations?

  Results from FactBites:
 
Tax and Duty Types - Corporation Tax (2734 words)
Corporation tax is assessed on the profits of a company's accounting period at the relevant corporation tax rate in force during the accounting period.
Where the rate of corporation tax changes during an accounting period, the profits of that period are apportioned on a time basis and taxed at the appropriate rate for the purpose.
The surcharge is 5% of the tax due (up to a maximum of €12,6987) in the case of a return lodged within 2 months of the return filing date, and 10% of the tax due (up to a maximum of €63,487) where the return is made more than 2 months after the return filing date.
Irish Taxation Institute - Irish Tax System - Corporation Tax (1238 words)
Corporation tax is assessed on the profits of a company’s accounting period at the rate of tax in force during the accounting period.
Where the rate of corporation tax changes during an accounting period, the profits of that period are apportioned on a time basis and taxed at an appropriate rate for the purpose of determining the corporation tax charge for the whole accounting period.
Full relief from corporation tax is allowed in respect of royalties derived by an Irish resident company in respect of a patent if the work leading to the grant of the patent was carried out in the State.
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