What is Income Tax?

Income Tax - Business (Definition)

Income tax is a levy levied by governments on businesses and individuals that conduct their operations inside their jurisdiction's borders. Most countries have a progressive tax system, which implies that individuals or businesses with higher incomes pay a bigger proportion of their incomes in taxes than those with lower incomes. Taxable business income is generally defined as the difference between a company's business income and its operating and capital expenses; this is referred to as the company's net profit. Most businesses are required to record and pay taxes on income produced or received within a financial year. To avoid double taxation, business partners also need to report the revenue and losses of the partnership on their individual tax returns.