Legal Definition of double taxation
: taxation by the same authority of the same property for the same period and the same purpose
Financial Definition of DOUBLE TAXATION
What It Is
How It Works
Double taxation can also occur if two or more countries assume jurisdiction over the same asset, income, or transaction. This form of double taxation is often mitigated by tax treaties between countries.
Why It Matters
Double taxation issues have prompted significant debate in the past. Some believe that the double taxation is unfair and that the government should levy taxes at either the corporate or individual level, but not both.
Those who believe that double taxation is fair often cite the fact that dividend policy is set at the corporate level, and if the company is concerned about double taxation issues, it should not make dividend payments to shareholders.
Pass-through entities like master limited partnerships (MLPs), limited liability companies (LLCs) and S corporations are popular largely because their special corporate structure circumvents the double taxation issue.
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Dictionary: Definition of double taxation
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