Double Taxation

Discipline: Economics

Double Taxation occurs when taxes are paid twice on the same income. This may happen due to two reasons:

1) The income earner is an artificial entity, like a corporation, and thus is separately subject to taxes. Therefore, when it pays dividends to its shareholders, this payment is technically a new income.

2) The income earner is a native of one country yet operates in another, and both countries charge taxes to its profits.

Also see: corporation, dividend

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