M5a2 discussion | Business & Finance homework help
1. Tax Deductions: These are expenses that businesses can take reduction from their taxable income for certain costs related to running the business, such as employee salaries or purchase of supplies. By taking deductions, corporations may reduce their tax liability by lowering their taxable income.
2. Double Taxation: This occurs when a company is taxed twice on the same income. For example, corporate profits are first subject to an entity-level tax before they’re distributed among shareholders and potentially subject to individual taxation as well.
3. Transfer Pricing: This refers to the pricing of goods and services between different divisions or subsidiaries within a multi-national corporation in order to minimize taxes paid on those transactions in countries with higher taxation rates than the parent company’s home jurisdiction. Companies use transfer pricing practices to shift profits into lower tax jurisdictions where possible, thereby reducing overall corporate taxes paid worldwide.