What You Need to Know about Corporate Tax

What is Corporate Tax?

Corporate tax refers to capital, property, income, net work or other taxation levies imposed on corporations. All corporations operating in the United States are required, for use of the country’s resources, to pay taxes to the Federal and state government, in which it resides.

Similar to all adult or working citizens of the nation, this levy is compulsory and is crucial to fund the nation’s public services (for example, social security, the building of roads and parks, the educational system and law enforcement agencies) and finances. If a corporation refuses or fails to pay its particular corporate tax rate, it will be punished as any citizen would. That being said, the corporate tax rate and the taxable base applied to corporations will differ from individual citizens or other taxable persons.

The majority of countries impose corporate taxes on the income or capital of business entities—with the exclusion of partnerships that are not taxed at the corporate level. A company’s taxable income is subject to tax much in the same way as an individual’s income; generally the corporate income tax is imposed only on the net profits of the company. That being said, rules defining the corporate tax rate will differ based on location; some jurisdictions apply a significantly different taxation model than what is traditionally used for individuals. In addition to the income tax, the majority of corporations are required subject to payroll tax, withholding tax, excise taxes, property tax, a value added tax, customs duties and other common taxes.

What are Corporate Tax Rates?

The corporate tax rate refers to the percentage amount a company is required to pay to the United States Government for net profits earned. In essence, the corporate tax rate, in the United States, is the same as the individual tax brackets, where higher earners possess a greater tax obligation. In regards to abroad, the corporate tax rate is generally the same for different types of income; however, many systems utilize a graduated tax rate system where corporations with lower levels of income pay a lower corporate tax rate. Although this is the most common form of corporate tax rate, some systems will impose tax at different rates for different types of corporations. In addition, some locations may have sub-country level jurisdictions that will impose an additional corporate income tax.

Examples of the Corporate Tax Rate:

• The corporate tax rate in Australia is typically 30%, however, some specially-classified entities will be taxed at a lower rate

• In Canada, the corporate tax rate is 11% at the Federal level or 16.5% plus an additional 1% to 16% at the provincial level

• The corporate tax rate in Hong Kong is 16.5%

• The corporate tax rate in the united Kingdom will fluctuate between 21% and 28% depending on the amount of income earned by the company

• In the United States, at the Federal Level, the corporate tax rate is between 15% and 35% depending on the corporation’s net profits. States will charge an additional amount between 0 and 10%, while some cities will further charge an additional amount between 0 and 9%.