Worried for the exam? No time to prepare well structured notes to bring with you? No problem. These schemes are intended to provide a step-by-step approach to each and every topic covered. They will enable you to save time and answer comprehensively to all exam questions. They combine: (i) lecture ...
Economic double taxation -> “Imposition of comparable taxes by 2 (two) or more taxing jurisdictions on
different taxpayers in respect of the same income”
o Contrary to juridical double taxation (where the focus is on the taxable person – which is taxed
twice), economic double taxation is focused on the economic income (indeed it is intended to
mitigate the fact that the same item of income is taxed in the hands of different taxpayers)
Characteristics of economic double taxation:
1) Comparable taxes
- The taxes must be of comparable nature (similar) -> es VAT v Income tax (not similar)
2) Two or more jurisdictions
- Can be both at a domestic and/or international level
3) Different taxpayers
- Can be companies, individuals, ecc.
4) Same income
- Focus on the income
Temporal requirement -> do the taxes have to be imposed in the same year? NO. indeed, state can
levy the tax at different moments in time so it is immaterial when they actually do so for economic
double taxation to arise.
Classical system of taxation
o Taxing corporate profits first and then taxing the profits distributed to shareholders
- STEP 1: calculate the tax burden at the company level -> gross income x CIT
- STEP 2: calculate the post-tax profits -> gross income – tax due
- STEP 3: calculate the tax paid by the shareholders -> post-tax profits x PIT
- STEP 4: calculate TTB -> CIT due + PIT due
- STEP 5: calculate ATR -> TTB/gross income x 100
METHODS TO AVOID ECONOMIC DOUBLE TAXATION
UNILATERAL MEASURES:
1) Exemption
A. Corporate level
o Income derived by the company is exempt from taxation at the corporate level but is
subject to tax when it passes through to the shareholder level
- STEP 1: calculate the tax burden at the company level -> EXEMPT
- STEP 2: calculate tax burden at the shareholder level -> gross income x PIT
- STEP 3: calculate post-tax profits -> gross income – tax due
- STEP 4: calculate TTB and ATR
B. Shareholder level
o Income derived by the company is taxed at the corporate level and exempted from tax at
the shareholder’s level.
- STEP 1: calculate the tax burden at the company level -> gross income x CIT
- STEP 2: calculate tax burden at the SH level -> EXEMPT (company profits)
- STEP 3: calculate post-tax profits -> gross income – tax due
- STEP 4: calculate TTB and ATR
2) Full integration of corporate and shareholder income
o Full integration of corporate profits and shareholder income involves attributing corporate
income to shareholders -> Attribution of the corporate income to shareholders, income
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller matteobarchi97. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.88. You're not tied to anything after your purchase.
