Simple English definitions for legal terms
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Duplicate taxation is when someone or something is taxed twice for the same thing. This can happen when two different governments or agencies both try to tax the same person or thing. It's not fair to be taxed twice for the same thing, so it's important to make sure that taxes are only paid once.
Duplicate taxation is when a person or business is taxed twice on the same thing or income. This can happen in different ways:
Duplicate taxation can be unfair and burdensome for taxpayers. To avoid it, some countries have tax treaties that prevent double taxation for certain types of income.
An example of double taxation is when a company earns $100,000 in profits. The company pays corporate income tax on those profits, let's say 21%, which amounts to $21,000. Then, the company distributes $50,000 of those profits as dividends to its shareholders. The shareholders must pay personal income tax on those dividends, let's say 15%, which amounts to $7,500. In total, the company and its shareholders paid $28,500 in taxes on the same $100,000 of profits.
An example of juridical double taxation is when a person works in one country but lives in another. The person may be taxed on their income by both countries. To avoid this, some countries have tax treaties that allow the person to claim a tax credit in one country for the taxes paid in the other country.