Below the classical program, corporate earnings taxes on taxable earnings are levied in the corporate level plus the shareholder level. Shareholders are taxed either when the corporate earnings is paid as a dividend or once they liquidate their investment. When a corporation is taxed on earnings measured ahead of dividends are paid, and shareholders are then taxed on their dividends, the shareholders’ dividend earnings is correctly taxed twice.
Nations linked with this program involve Belgium, Luxembourg, the Netherlands, and Sweden. The latest trend in most created nations has been to move away from the double taxation of dividend earnings by adopting either an integrated or an imputation program.
Below an integrated program, corporate and shareholder taxes are integrated so as to cut down or eradicate the double taxation of corporate earnings. The tax credit, or imputation, program is usually a popular variant with the integrated tax program. In this program, a tax is levied on corporate earnings, but element with the tax paid is usually treated as a credit against private earnings taxes when dividends are distributed to shareholders. This tax program is advocated by the European Union and is identified in Australia,Canada, Mexico, and lots of European nations, like France, Italy, plus the United Kingdom.
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