Double Taxing

AAA

DEFINITION of 'Double Taxing'

A tax law that causes the same earnings to be subjected to taxation twice. A company's income is taxed initially at the corporate level and then the shareholders and investors are taxed on the distributions they receive from the company. Double taxation is argued by many to be an unfair and inefficient method of taxation in many countries and jurisdictions.

INVESTOPEDIA EXPLAINS 'Double Taxing'

While in most cases double taxation relates to company profits and shareholder gains, it can also be the case for dividends. Double taxation can also occur in situations where a company has subsidiaries operating in different countries, where that country may tax the subsidiary and the parent firm is then taxed on the remaining profits in its domestic country. This can then be followed by the taxation of shareholders on any capital gains they experience from holding the stock.

RELATED TERMS
  1. IRS Publication 542

    A document published by the Internal Revenue Service (IRS) that ...
  2. Tax Treaty

    A bilateral agreement made by two countries to resolve issues ...
  3. Dividends Received Deduction - ...

    A tax deduction received by a corporation on the dividends paid ...
  4. Double Taxation

    A taxation principle referring to income taxes that are paid ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Income Tax

    A tax that governments impose on financial income generated by ...
Related Articles
  1. Taxes

    Tax-Saving Advice For IRA Holders

  2. Taxes

    Using Tax Lots: A Way To Minimize Taxes

  3. Taxes

    Dividend Tax Rates: What Investors Need ...

  4. Mutual Funds & ETFs

    What's the safest way to invest in high-yielding ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center