Corporate tax law is a set of regulations that allows governments to collect fees on business operations. It mainly deals with corporate income taxation and varies across jurisdictions. Companies may be required to pay income, sales, property, and employment taxes. The US has a high corporate income tax rate, and many companies are based in other countries with more favorable tax structures. States and localities can also tax corporate income, and companies may need to file tax returns in multiple jurisdictions. Corporate tax law attempts to minimize tax obligations in all jurisdictions.
Corporate tax law is the set of statutes, regulations, judicial decisions, and administrative decisions that provide the authority for government entities to collect fees on business operations under their jurisdiction. This law is typically codified in a tax code and administered by a tax agency. Tax law is different in every jurisdiction, but there are some common ways to tax companies. The most important and consistent area of corporate tax law across jurisdictions is the subject of corporate income taxation.
Corporations may be required to pay various types of taxes, depending on the tax code of the country in which it is located. Income, sales, property and employment taxes are some of the government assessments a company may need to pay to support operations. When considering the matter of corporate tax law, it mainly deals with the taxation of corporate income and distributions to its equity and debt holders, although it also deals with other types of corporate taxation when necessary.
Most countries tax corporate profits domestically. For example, the United States requires companies to file a tax return annually with the Internal Revenue Service (IRS). The United States taxes corporate profits made by domestic companies anywhere in the world and any income made in the United States by foreign companies operating within the country. Corporate distributions to shareholders are also taxed on an individual’s tax return. The owners of a company are technically taxed both when the company files a return and at the shareholder level when the profits are distributed.
The United States has one of the highest corporate income tax rates in the world. The corporate tax law in that country is primarily concerned with minimizing a corporation’s income tax burden, contesting IRS tax assessments, and determining where to locate operations so that the tax liability is as low as possible. Many US companies are based in other countries with more favorable tax structures. Corporate tax attorneys are therefore busy challenging what should legitimately be taxed by the US government, since the company has moved its headquarters elsewhere.
States Are Also Able to Tax U.S. Corporate Income Many, though not all, states levy their own taxes on any corporation registered in the state or on any portion of the profit made in the state by a foreign corporation. Some localities, such as cities and counties, also tax corporate income. A US company may find itself required to file federal, state and local tax returns each year in addition to a tax return in every country where it has international sales and operations. Corporate tax law attempts to mitigate these obligations in all jurisdictions.
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