Corporate Tax
Category: tax
Tax on a company's profits, rates varying by country and affecting cross-border structuring.
Corporate tax is a tax on the profits of a corporation, with rates and rules varying by country. In cross-border e-commerce, corporate tax obligations arise in the seller's home country and potentially in countries where they have a permanent establishment. The US federal corporate tax rate is 21% (plus state taxes), the UK is 25%, Germany is approximately 30%, and many Asian countries range from 17%-30%.
Examples
- • A Chinese cross-border seller operating as a US LLC must file US federal corporate tax returns (Form 1120) and pay 21% federal tax on US-sourced profits.
- • A UK limited company pays 25% corporation tax on profits above £250,000 (small profits rate of 19% below £50,000).
- • Transfer pricing rules require that intercompany transactions between a seller's home entity and foreign subsidiaries be at arm's length.