A corporate tax on a corporation's global income. Some countries levy unitary taxes on corporations operating in their borders in order to prevent them from avoiding taxes by transferring income to another country with a low or no corporate tax. See also: Transfer pricing mechanisms, Aggressive accounting.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
unitary taxationa system of TAXATION operated by a country that taxes a foreign-owned MULTINATIONAL ENTERPRISE on a predetermined proportion of its total worldwide income, rather than on the income which the multinational actually earned within that country. This involves the use of some rule of thumb to apportion tax liability: for example, if 10% of the total world ASSETS of a multinational are located in that country, then the country may seek to tax 10% of the multinational's world income, making no allowance for any foreign taxes paid. Countries might adopt unitary taxation to increase their taxation revenues and to counter manipulative TRANSFER PRICING by multinationals, but must bear in mind that such a taxation system is likely to discourage inward INVESTMENT. Compare DOUBLE TAXATION.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
unitary taxationa system of TAXATION operated by a country that taxes a foreign-owned MULTINATIONAL COMPANY on a proportion of its total world-wide income rather than on the income that the multinational actually earned within that country. Countries might adopt unitary taxation to increase their taxation revenues and to counter manipulative TRANSFER PRICING by multinationals. See DOUBLE TAXATION.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005