Corporate Income Taxes Flashcards, test questions and answers

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What is Corporate Income Taxes?

Corporate income taxes are a type of tax that corporations must pay on their profits. This tax is imposed by the government in order to raise revenue and help fund public services. Corporate income taxes can be a significant source of revenue for governments, particularly in countries with high levels of corporate activity.Corporate income taxes are typically levied at the corporate level, but may also be applied to certain unincorporated businesses and other entities such as trusts and limited partnerships. Generally, corporations must pay taxes on their profit after deducting any allowable expenses or losses from their gross revenue. The rate of taxation varies by jurisdiction, but generally ranges from around 15 percent to 35 percent for large corporations. Smaller businesses may have lower rates depending on their size and structure.When calculating the amount due, companies may use either a graduated rate system or a flat rate system depending on their jurisdiction’s regulations and preferences. In most cases, taxable profits are determined based on the company’s accrual basis accounting method which relies primarily on when revenues were earned rather than when they were collected or paid out in cash form. Companies may also take advantage of various deductions related to business expenses such as research & development costs, pensions plans, charitable donations and more in order to reduce their taxable liability. The money raised through corporate income taxes helps fund important public services including education, healthcare, infrastructure projects and more throughout the country while providing an incentive for businesses to invest back into the community which ultimately benefits society as a whole through job creation and economic growth.