Question

"It is said that proper corporate tax planning can reduce the effective corporate
tax rates below the statutory corporate tax rates". What is your opinion?​

Answer 1

Answer:

Corporate Taxe

What Is Corporate Tax?

A corporate tax is a tax on the profits of a corporation. The taxes are paid on a company's taxable income, which includes revenue minus cost of goods sold (COGS), general and administrative (G&A) expenses, selling and marketing, research and development, depreciation, and other operating costs.

Corporate tax rates vary widely by country, with some countries considered to be tax havens due to their low rates. Corporate taxes can be lowered by various deductions, government subsidies, and tax loopholes, and so the effective corporate tax rate, the rate a corporation actually pays, is usually lower than the statutory rate; the stated rate before any deductions.

KEY TAKEAWAYS

Corporate taxes are collected by the government as a source of income.

Taxes are based on taxable income after expenses have been deducted.

The corporate tax rate in the United States is currently at a flat rate of 21%. Before the Trump tax reforms of 2017, the corporate tax rate was 35%.

A company can register as an S corporation to avoid double taxation. An S corporation does not pay corporate tax as the income passes through to business owners who are taxed through their individual tax returns.

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