Corporate income tax and double taxation

This topic is usually somewhat complicated for many but we are going to address the issue of corporate taxes and double taxation. We will be getting into the legal part of our business and mainly taxes. Depending on the characteristics of our company will be the type of tax that we will have to pay. All countries have particularities regarding their taxes for individuals or commercial entities that operate in their territory. It may also vary according to the type of company and where its field of business is developed. If we are owners or shareholders of a corporation we must know what is double taxation to avoid paying twice the same income.

What is corporate income tax?

The corporate income tax functions as a tax registering the profits obtained by companies with legal personality with residence in a specific national territory. This type of tax is a reflection of the purchasing power of a company or enterprise. In many cases it adopts a personal character by referring to a legal person. As we know, there are companies and investment funds, non-profit companies or cooperatives for which the tax is usually differentiated to a lesser extent, but the tax rate is always standard and of a periodic nature.

How to calculate the corporate tax?

It is important for our company to know how the corporate tax is calculated because we can establish an estimate of our taxes to be paid. In order to make the correct calculation it is necessary to know what are the results of our company during a year, knowing the difference between income and expenses. It is good to know that in tax calculation matters the accounting result does not always coincide with the fiscal result. For this calculation, we deduct from the accounting result expenses that are not deductible, such as donations or fines.

Corporate tax exemptions.

Not everything is rigid in the subject of the laws, there are also exemptions from corporate taxes for all public sector entities such as: the state, the autonomous communities, social security, etc.. In all countries there are a number of non-corporate entities that are exempt from corporate taxes such as NGOs, non-profit organizations, trade unions, or professional associations. Naturally, corporate tax exemptions apply to non-profit or non-governmental organizations as their period of vitality is limited or short-lived.

What is double taxation?

Double taxation means the payment of taxes for the same taxable event twice within the same tax period. In the international sphere, double taxation applies when a taxpayer is resident for tax purposes in two countries at the same time; not all countries use the same criteria to determine tax residency. A taxpayer may be a resident of two countries in the same period of double taxation.

Double taxation applicable to income obtained always generates conflicts between the taxpayer and the tax agency.

Economic double taxation.

Double taxation manifests itself in both economic and legal terms and conditions. Economic double taxation refers to a tax that affects the same object but involves two or more different persons, a legal person for a dividend and a shareholder for the profit. A double economic taxation can represent a serious problem for our company and even more so when it is a corporation; the same income can be affected by two taxes, bringing tax demands for the shareholders and the