Definition of Double taxation:
Tax on tax. Sales tax (unlike a value added tax) is imposed on the gross price (sellers net cost price + sale tax paid on net price + sellers profit) of an item as it moves from one seller to the next purchaser.
Double taxation is a tax principle referring to income taxes paid twice on the same source of income. It can occur when income is taxed at both the corporate level and personal level. Double taxation also occurs in international trade or investment when the same income is taxed in two different countries. It can happen with 401k loans.
Double taxation often occurs because corporations are considered separate legal entities from their shareholders. As such, corporations pay taxes on their annual earnings, just like individuals. When corporations pay out dividends to shareholders, those dividend payments incur income-tax liabilities for the shareholders who receive them, even though the earnings that provided the cash to pay the dividends were already taxed at the corporate level.
Situation where a country levies tax on an income that has already been taxed in the same or another country. For example, corporate profits are taxed when they are earned, and then taxed again as personal income when distributed to stockholders (shareholders) as dividend or (in case of an owner-manager) as salary.
How to use Double taxation in a sentence?
- I was against double taxation , because I thought it was too much and it made me think that it was just due to government greed.
- Double taxation refers to income tax being paid twice on the same source of income.
- Double taxation also refers to the same income being taxed by two different countries.
- The double taxation was a huge problem for company as they had yet to fully understand their optimal accounting operations.
- While critics argue that dividend double taxation is unfair, advocates say that without it, wealthy stockholders could virtually avoid paying any income tax.
- Double taxation occurs income is taxed at both the corporate level and personal level, as in the case of stock dividends.
- Double taxation can have a strongly negative impact on the economy if care is not taken to ensure that all taxes are fairly and equally taken.
Meaning of Double taxation & Double taxation Definition