Corporate Tax Advisory


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Uploaded on May 4, 2020

Category Business

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Corporate Tax Advisory

Corporate Tax Advisory -By Himani Srivastava Corporate Tax A corporate tax, also called corporation tax or company tax, is a direct tax imposed by a jurisdiction on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed at state or local levels. The taxes may also be referred to as income tax or capital tax. Partnerships are generally not taxed at the entity level. A country's corporate tax may apply to: ● corporations incorporated in the country, ● corporations doing business in the country on income from that country, ● foreign corporations who have a permanent establishment in the country, or ● corporations deemed to be resident for tax purposes in the country. Who pays Corporate tax? The corporation’s customers pay. Everything would be cheaper if we didn't tax corporations because all taxes corporations pay are reflected in the prices (as a cost) of the goods & services they sell. Taxes on corporations are indirect (hidden) taxes that simply raise the Cost of Living. Who collects corporate taxes? Income taxes: IRS ( US Treasury ) and if applicable, the states in which the business has “nexus” ( business presence), and in some cases ( such as Ohio, St. Louis and Kansas City) to local authorities ( County or City) Property taxes: to the county in which the corporation has a physical presence ( property) Payroll taxes: to the IRS and the states in which the company has employees Franchise taxes / corporate charter fees: to the state in which incorporated, and to the states in which the corporation has qualified to do business Sales taxes: to the states in which sales are made Utility taxes: to the districts in which the company has utility bills Why do corporations pay less tax than individuals? First, understand that corporations are not people and at the end of the day the answer to your question should take into account which people are paying the tax. If you believe that the tax is paid out of company profit it is the owners that pay. However, this tax is added to the tax the owners pay on their personal income tax on the money they draw from the corporation after the corporate tax was paid. So there is a double tax. On the other hand, if you believe the owners don't pay the taxes out of their profits, rather they either cut salaries for their employees or raise prices for their customers, it is the employees or customers that pay the tax. The bottom line, if you believe it is paid out of profits it isn't really a lower rate because it is a double tax. If you believe it is the consumer or the employees then by advocating a higher rate you are advocating a less progressive tax. What is the difference between corporate tax and income tax? Corporation tax is levied on incorporated businesses (companies) while Income tax is levied in individuals, partnerships, clubs, and societies. What Is a Tax Advisor? A tax advisor is a financial expert with advanced training and knowledge of tax accounting and tax law. The services of a tax advisor are usually retained in order to minimize tax payable while remaining compliant with the law in complicated financial situations. Tax advisors can include Certified Public Accounts (CPAs), tax attorneys, enrolled agents, and some financial advisors. ● A tax advisor is a financial professional who provides advice on strategies to minimize taxes owed while staying within the scope of the law and regulation. ● Tax advisors may be trained as accountants, lawyers, or financial advisors, or may work as a team consisting of two or more types of professional. Thank You