Corporate tax
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Reverted edits by [[Special:Contributions/78.149.169.29|78.149.169.29]] ([[User talk:78.149.169.29|talk]]) to last version by Syarak
{{Public finance}}
'''Corporate tax''' refers to a [[tax]] levied by various jurisdictions on the [[profit]]s made by [[Company (law)|companies]] or [[Voluntary association|associations]].
== Tax base ==
The measure of taxable profits varies from country to country. In some countries, for example the [[Corporate tax in the United States|United States]], the taxable profits are calculated according to a quite different set of rules from those used in the calculation of profits in the [[financial statements]]. The amounts that can be deducted for [[capital expenditure]] and for interest payments vary substantially from country to country.
In many countries, [[depreciation]] of capital assets calculated in the financial statements ("book depreciation") is not deductible, and a deduction is given for tax depreciation calculated on a different basis. In the United States, tax depreciation is generally calculated by a method known as [[MACRS]]. In the [[United Kingdom]], where the main corporate tax is called [[United Kingdom corporation tax|corporation tax]], tax depreciation, known as "capital allowances", is allowed instead of book depreciation, usually at the rate of 25% per annum on a reducing balance basis. In [[France]] depreciation is allowable, within certain rates per classes of asset set down by statute.
== Company shareholder taxation ==
{{seealso|Dividend tax}}
An issue in corporate taxation is the taxation of shareholders who receive dividends or distributions from a company out of profits which have already been taxed. This contrasts with a [[partnership]] or [[sole proprietorship]], where the owner of the business is usually taxed only on the profits of the business and not on distributions of profits. Different solutions are adopted for this problem:
* The company may not be taxed, and instead the shareholders are taxed on the profits of the business, not on distributions. This method is adopted by the United States, but only for companies owned by a small number of shareholders, so-called [[S corporation]]s.
* Under an [[Dividend imputation|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. [[Australia]] and [[New Zealand]] have imputation systems. From [[1973]] to [[1999]], the UK operated a partial imputation system, with shareholders able to claim a tax credit reflecting [[advance corporation tax]] (ACT) paid by a company when a distribution was made. A company could set off ACT against the company's annual corporation tax liability.
* Distributions such as [[dividend]]s may be fully or partially exempt from tax.
**[[Austria]] and [[Germany]] operate a "double income" system on distributions, where only half the distribution is subject to tax, or, equivalently, the tax rate is halved.
**The [[Netherlands]] operates a [[participation exemption]] under which certain distributions are exempt from tax.
**In [[Income taxes in Canada|Canada]], dividends taxable in the hands of eligible shareholders may qualify for a dividend tax credit to compensate for taxes already paid by the corporation.
**In the United States, dividend income from [[C corporations]] (companies which are not S corporations) is generally taxed at a lower rate than other income.
If none of these methods is used, a form of [[double taxation]] results.
== Tax rates ==
[[Tax rates around the world]] vary considerably both in their [[Tax rate#Statutory|statutory rates]], and in their [[Marginal tax rate#Effective|effective rates]] after all offsets are considered, preventing any straightforward comparisons of tax rates between countries. In some countries, for example, the United States, Canada and [[Switzerland]], subnational governments also collect taxes, which further complicates the calculation of the tax rate.
In the United States, the top [[Marginal tax rate#Marginal|marginal]] federal corporate rate for income over $18.3 million is 35% (it can be as low as 15% for income under $50,000). Most states also tax companies, but the state tax is a deductible expense in calculating federal tax, so the overall tax rate is not simply the sum of the two tax rates.
Detailed data is available for the world's most developed economies, i.e. those in the [[Organisation for Economic Co-operation and Development]].
==See also==
*[[Corporate welfare]]
*[[Excess profit tax]]
* [[United Kingdom corporation tax]]
** [[United Kingdom corporation tax loss relief]]
* [[Republic of Ireland corporation tax]]
* [[Corporate tax in the United States]]
* [http://www.steuerliches-info-center.de/en/003_menu_links/002_ISt/003_BestKoerp/index.php Corporate Tax in Germany]
* [[Income tax]]
==References==
* [http://www.iht.com/articles/ap/2006/10/12/business/EU_FIN_ECO_Bulgaria_Corporate_Tax.php Bulgaria, new corporate tax]
==External links==
* [http://www.oecd.org/document/60/0,2340,en_2649_37427_1942460_1_1_1_37427,00.html OECD Tax Database]
[[Category:Business taxes]]
[[Category:Business terms]]
[[Category:Corporate taxation]]
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