Corporate tax refers to direct taxes charged by various jurisdictions on the profits made by companies or associations. As a general principle, this varies substantially between jurisdictions. In particular allowances for capital expenditure and the amount of interest payments that can be deducted from gross profits when working out the tax liability vary substantially. Also, tax rates may vary depending on whether profits have been distributed to shareholders or not. Profits which have been reinvested may not be taxed. A direct tax a tax that is collected directly by government from the persons (legal or natural) on which it is levied. ... A tax is an involuntary fee paid by individuals or businesses to a state, or to functional equivalents of a state, including tribes, secessionist movements or revolutionary movements. ... Profit is defined as the residual value gained from business operations. ... A company in the broadest sense is an aggregation of people who stay together for a common purpose. ... Association is the following: A voluntary association (also sometimes called an association) is a group of individuals who voluntarily enter into an agreement, explicit or implicit, to form or act as a body (or organization) to accomplish a purpose. ... The term jurisdiction has more than one sense. ... In the most general sense, a liability is anything that is a hinderance, or puts one at a disadvantage. ...

For example, in the United Kingdom, where the main corporate tax is called corporation tax, depreciation on many capital assets (excluding finance leases and certain intangible assets) is disallowable in computing taxable profits. Instead, capital allowances (usually at the rate of 25% per annum on a reducing balance basis) may be claimed. In France, however, depreciation is allowable, within certain rates per classes of asset set down by statute. Jim Callaghan, the Chancellor of the Exchequer who introduced corporation tax in 1965. ... Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ...

A feature of a classical tax system which includes corporate taxation is double taxation, in that profits made by a company are subject to corporation tax, but further tax (usually income tax) is payable by the company's shareholders when the same profits are distributed by way of a dividend. Double taxation is a situation in which two or more taxes must be paid for the same asset or financial transaction. ... Income tax is a direct tax which is levied on the income of private individuals. ... A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. ... A dividend is the distribution of profits to a companys shareholders. ...

However, under an 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. For many years, from 1973 to 1999, the UK operated a partial imputation system, with shareholders being able to claim a tax credit reflecting advance corporation tax (ACT) paid by a company when a distribution was made. A company could set ACT off against the annual corporation tax liability of the company Within the United States tax system, a tax credit is an item which is treated as a payment already made toward taxes owed. ... 1973 was a common year starting on Monday. ... 1999 is a common year starting on Friday of the Common Era, and was designated the International Year of Older Persons by the United Nations. ...

Alternatively, in certain jurisdictions, distributions are be fully or partially exempt from tax—for example, certain jurisdictions, such as Austria and Germany, operate a "double income" system on distributions, with only half of the distribution is subject to tax, or, equivaletly, the tax rate is halved, and the Netherlands operates a participation exemption under which certain distributions are exempt from tax.

See also

• Corporate welfare