Corporate Tax

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DEFINITION of 'Corporate Tax'

A levy placed on the profit of a firm, with different rates used for different levels of profits. Corporate taxes are taxes against profits earned by businesses during a given taxable period; they are generally applied to companies' operating earnings, after expenses such as COGS, SG&A and depreciation have been deducted from revenues.

BREAKING DOWN 'Corporate Tax'

Corporate taxes are usually levied by all levels of government (i.e., State and Country). Corporate tax rates and laws vary greatly around the world, as different governments and countries view corporate taxation in different ways. For example, those in favor of lower corporate tax rates point to the possibility for greater economic production if companies are taxed less. While others see higher corporate tax rates as a way to subsidize government spending and programs for the nation's citizens.

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