double taxation

Double taxation occurs when the same income is taxed twice by different authorities or at different stages. For example, a corporation pays taxes on its profits. When it distributes dividends to shareholders, those dividends are taxed again as personal income. This results in the income being taxed multiple times as it moves through different levels, which can lead to a higher overall tax burden. Double taxation is common in corporate structures and international transactions, and various measures, such as credits or treaties, often help reduce its impact.