What is the collected earnings tax?

The accumulated earnings tax is an additional business tax that is paid by corporations that decide to maintain accumulated earnings rather than pay income in the form of dividends to investors. As an income tax to be diverted to the settlement of an outstanding debt or investing certain aspects of the company's operations, accumulated income taxes are calculated in addition to the usual income taxes. However, it is important to note that the amount of income accumulated may have an impact on the total income tax in the quarter. It should be remembered that since the accumulated earnings that are invested back in society are considered to be capital profits rather than dividends, the government would not receive so much tax income. Implementatatis collection and collecting accumulated taxes on earnings can provide a slightly more tax revenue, while still preparing the opportunity to reinvest revenue for a viable option.

In some cases, however, the accumulated tax on earnings may be sufficient to discourage the reinvesting of funds to a certain part of the operation. One of the possible scenarios is that investors are putting pressure on society to reinvest a large number of accumulated earnings in some aspects of the company, as a way to prevent investors from paying dividend taxes. For this purpose, there is a chance that the government will enter if it seems that the excessive amount of accumulated earnings is constantly redirecting to the business rather than being used for dividends on some recurring basis.

The second scenario may have to do with generating a small amount of accurate on the mulled. For companies that each financial period realize a very small amount of accumulated earnings, the lower limit dictates that the company is issued by dividends, so eliminates that it must pay an additional accumulated tax profit that would be JinAK applies to this period.

The accumulated earnings tax serves the dual purpose of encouraging companies to pay dividends and minimize the loss of taxes that the government experiences when redirected to the corporation for accumulated revenues. The result of this type of tax is that investors still receive adequate dividends, companies still sometimes have unexpected to invest back in business, and the federal government still receives fair amounts of taxes.