the effect OF DOUBLE TAX IN th economy

Double taxation mean imposing tax on the same amount of income or gain twice. This mostly happens when income is earned income country and is paid to entities of another country. In such cases, both country require levy of tax on the income or profit. This occurrence is common with multinational companies, it is not fair for an individual nor corporate bear the burden on tax in both country
Considering the important of tax, one can say that, tax is a capital gain and corporate tax the individual already paid income taxes on the money, they invested in the asset that produced capital gain (except in special circumstance), and the corporation dividend (when returned to the shareholder) are taxed, as are its employees’ income
It s obvious that the nature of the tax is sympathetic, it fact that, they tax the same thing multiple times, leading to some perverse effect. There are effect lied under the economy . The double taxation may constitute a real barriers in the way of the economic-up of subsidiaries or branches aboard, of the foreign investment of capital of the external loan, of the development of economic and financial affairs
The effect of double taxes are
1. The decrease of investment : the rate of investment in the country and partners country will diminish because more is collected from the gain of the individual or corporate
2. Capita flight : the event occur because of the increase in tax of on capital or capital holder or the government of the country defaulting on its debt disturbs investors and couse them to lower their valuation of the assets in that country and lead to a disappearance of wealth and is usually accompanied by a shape dropping the exchange rate of affected country Double taxes is not healthy to the bearer and the government should put measure to make life easy and encourage better economic activities and not discouraging




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