Dual-Income Taxation

Dual-Income Taxation occurs when a business is taxed both at the corporate level and again at the individual level when profits are distributed as dividends. Essentially, the company's profits are taxed first as corporate income, and then shareholders pay taxes on the dividends they receive. This can lead to double taxation of the same earnings. To mitigate this, some countries have tax mechanisms like partial dividends credits or lower tax rates on dividends, aiming to reduce the overall tax burden on business owners and investors.