Double taxation is a process in which two countries or a government entity, tax the same product, or income twice. For example in the case of income taxes that can be paid twice for the same source of income. How? Because the income is taxed at both the corporate and personal level.
If that wasn't absurd enough, then there is the concept of even more taxes that exceedes just the simple two taxes. There is triple taxation, quadruple taxation, quintuple and more.
Multiple taxation of the same product
Let's look at a bar of Snickers as an example. As it leaves its factory the first time it will get taxed is when it enters its country of destination. The second time the same Snickers bar get's taxed again is, when the wholesaler sells it to the retailer. And finally, the third time the same Snickers bar get's taxed is, when a customer buys it in a store.
This is just one example but it happens everywhere in business where selling products is involved.
Double taxation is basically a sort of taxation in which a person/company's income tax is paid twice from the same income source. It occurs in mainly two different circumstances, which are;
1. Double taxation of shareholders and corporations: Shareholders are expected to receive a portion of the profits from any company or better yet corporation that they invested in. These corporations pay tax at the end of the year before they send out the profits to their shareholders, these shareholders are then expected to pay tax as well on the money they received from the corporation. When such a situation arises, double taxation occured.
2. International Double Taxation: International companies are the ones that face this problem. Provided they are functioning in more than one country(well that's the point of being international), they may be taxed on the income they earn in the foreign country and also taxed on that same income when it is sent back to their home country. When this scenario occurs, it means that the company has been double taxed.
Double taxation is a process in which two countries or a government entity, tax the same product, or income twice. For example in the case of income taxes that can be paid twice for the same source of income. How? Because the income is taxed at both the corporate and personal level.
If that wasn't absurd enough, then there is the concept of even more taxes that exceedes just the simple two taxes. There is triple taxation, quadruple taxation, quintuple and more.
Multiple taxation of the same product
Let's look at a bar of Snickers as an example. As it leaves its factory the first time it will get taxed is when it enters its country of destination. The second time the same Snickers bar get's taxed again is, when the wholesaler sells it to the retailer. And finally, the third time the same Snickers bar get's taxed is, when a customer buys it in a store.
This is just one example but it happens everywhere in business where selling products is involved.
Double taxation is basically a sort of taxation in which a person/company's income tax is paid twice from the same income source. It occurs in mainly two different circumstances, which are;
1. Double taxation of shareholders and corporations: Shareholders are expected to receive a portion of the profits from any company or better yet corporation that they invested in. These corporations pay tax at the end of the year before they send out the profits to their shareholders, these shareholders are then expected to pay tax as well on the money they received from the corporation. When such a situation arises, double taxation occured.
2. International Double Taxation: International companies are the ones that face this problem. Provided they are functioning in more than one country(well that's the point of being international), they may be taxed on the income they earn in the foreign country and also taxed on that same income when it is sent back to their home country. When this scenario occurs, it means that the company has been double taxed.