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Double taxation and any tax advantages to incorporating
Double taxation and any tax advantages to incorporating
Solution
ASNWER:
Double taxation occur when an individual has to pay taxes twice or more for the same asset,
income, or financial transaction in different countries. It can occur when income is taxed at both
the personal level and corporate level.
Double taxation arises because corporations are categorised as a separate legal entities from their
shareholders. As corporations, just like individuals pay taxes on their annual earnings. When
corporations pay out dividends to shareholders, such payments of dividend incur income-tax
liabilities for the shareholders who receive them, although the earnings had already taxed at the
corporate level. Many people incorporate it as fair tax structure because they are separate legal
entities. Moreover proponents of keeping the "double taxation" on dividends sees it as moving
towards equality because wealthy people could enjoy a good living off the dividends they
received from owning huge common stock, yet pay nearly zero taxes on personal income.

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Double taxation and any tax advantages to incorporating .pdf

  • 1. Double taxation and any tax advantages to incorporating Double taxation and any tax advantages to incorporating Solution ASNWER: Double taxation occur when an individual has to pay taxes twice or more for the same asset, income, or financial transaction in different countries. It can occur when income is taxed at both the personal level and corporate level. Double taxation arises because corporations are categorised as a separate legal entities from their shareholders. As corporations, just like individuals pay taxes on their annual earnings. When corporations pay out dividends to shareholders, such payments of dividend incur income-tax liabilities for the shareholders who receive them, although the earnings had already taxed at the corporate level. Many people incorporate it as fair tax structure because they are separate legal entities. Moreover proponents of keeping the "double taxation" on dividends sees it as moving towards equality because wealthy people could enjoy a good living off the dividends they received from owning huge common stock, yet pay nearly zero taxes on personal income.