What type of tax is commonly levied on corporate profits?

What type of tax is commonly levied on corporate profits?

• A. Sales tax
• B. Direct tax
• C. Indirect tax
• D. Excise tax

Answer: (B)

The tax commonly levied on corporate profits is classified as a direct tax. This is because direct taxes are imposed directly on individuals or organizations based on their income or profit levels, rather than on the transaction of goods and services, which is the case with indirect taxes. Corporate income tax falls under the category of direct taxes, as it is based on the income earned by a corporation. Companies are responsible for calculating their profits and reporting them to the government, which then assesses the tax owed based on those profits. In contrast to direct taxes, indirect taxes, such as sales taxes and excise taxes, are borne by consumers and collected by sellers during transactions. These taxes do not consider the profit level of the businesses but rather are applied to the total sales price of goods and services. Thus, direct taxation on corporate profits remains a clear distinction from the broader categories of indirect taxation.

The tax commonly levied on corporate profits is classified as a direct tax. This is because direct taxes are imposed directly on individuals or organizations based on their income or profit levels, rather than on the transaction of goods and services, which is the case with indirect taxes.

Corporate income tax falls under the category of direct taxes, as it is based on the income earned by a corporation. Companies are responsible for calculating their profits and reporting them to the government, which then assesses the tax owed based on those profits.

In contrast to direct taxes, indirect taxes, such as sales taxes and excise taxes, are borne by consumers and collected by sellers during transactions. These taxes do not consider the profit level of the businesses but rather are applied to the total sales price of goods and services. Thus, direct taxation on corporate profits remains a clear distinction from the broader categories of indirect taxation.