corporation tax: meaning, definition, pronunciation and examples
C1/C2Formal, Technical, Business, Academic
Quick answer
What does “corporation tax” mean?
A direct tax levied by a government on the annual profits of a company or corporation.
Audio
Pronunciation
Definition
Meaning and Definition
A direct tax levied by a government on the annual profits of a company or corporation.
A tax system applicable to the taxable income of incorporated entities, often with specific rules on deductions, allowances, and rates distinct from personal income tax. The term can also refer broadly to the legal and financial framework governing this taxation.
Dialectal Variation
British vs American Usage
Differences
In British English, 'corporation tax' is the standard and official term. In American English, the equivalent federal tax is almost exclusively called 'corporate income tax' or 'corporate tax'. 'Corporation tax' is understood but rarely used in official US contexts.
Connotations
In the UK, the term is neutral and technical. In the US, using 'corporation tax' may sound slightly British or refer specifically to foreign tax systems.
Frequency
High frequency in UK business/financial media. Low frequency in US English, where 'corporate tax' dominates.
Grammar
How to Use “corporation tax” in a Sentence
The company paid [AMOUNT] in corporation tax.Profits are subject to corporation tax.The government cut the main rate of corporation tax.They are liable for corporation tax on their UK income.Vocabulary
Collocations
Examples
Examples of “corporation tax” in a Sentence
verb
British English
- The new policy will effectively corporation-tax digital services.
adjective
British English
- The corporation-tax regime is under review.
- We need a corporation-tax specialist.
American English
- The corporate-tax code is complex.
- They hired a corporate-tax attorney.
Usage
Meaning in Context
Business
Primary context. Used in financial reporting, accounting, strategic planning, and investor communications (e.g., 'Our effective corporation tax rate fell to 18% this year').
Academic
Used in economics, law, and public policy papers discussing fiscal policy, investment, and corporate behaviour.
Everyday
Rare. Might appear in news discussions about government budgets or large company scandals.
Technical
Central to tax law, accounting standards, and corporate finance, with precise definitions of taxable profits, loss carry-forwards, and group relief.
Vocabulary
Synonyms of “corporation tax”
Strong
Neutral
Weak
Vocabulary
Antonyms of “corporation tax”
Watch out
Common Mistakes When Using “corporation tax”
- Using plural verb: 'Corporation tax are' (incorrect; it's singular).
- Confusing with 'VAT' (Value Added Tax) or 'business rates' (commercial property tax).
- Using 'corporate tax' in formal UK writing (acceptable but 'corporation tax' is the legal term).
- Capitalising unnecessarily unless starting a sentence or in a title.
FAQ
Frequently Asked Questions
No. Income tax is paid by individuals on their personal income. Corporation tax is paid by companies on their profits.
No. Typically, only incorporated businesses (like limited companies) pay corporation tax. Sole traders and partnerships usually pay income tax on their profits instead.
The core concept is the same, but the terms are region-specific. The legal rules, rates, deductions, and filing systems are entirely different between the two countries.
Companies can use legal tax planning (utilising deductions, allowances, and reliefs) to reduce their liability. This is tax avoidance. Illegal non-payment is tax evasion.
A direct tax levied by a government on the annual profits of a company or corporation.
Corporation tax is usually formal, technical, business, academic in register.
Corporation tax: in British English it is pronounced /ˌkɔː.pəˈreɪ.ʃən ˌtæks/, and in American English it is pronounced /ˌkɔːr.pəˈreɪ.ʃən ˌtæks/. Tap the audio buttons above to hear it.
Learning
Memory Aids
Mnemonic
Think: A CORPORATION is a big company. The TAX it pays on its profits is CORPORATION TAX. If you see 'Ltd' or 'Inc', think 'corporation tax'.
Conceptual Metaphor
TAX IS A BURDEN / TAX IS A SHARE (e.g., 'shouldering the corporation tax burden', 'the company's fair share of corporation tax').
Practice
Quiz
In which variety of English is 'corporation tax' the standard official term for the tax on company profits?