Corporate tax refers to direct taxes charged by various jurisdictions on the profits made by companies or associations. As a general principle, this varies substantially between jurisdictions. In particular allowances for capital expenditure and the amount of interest payments that can be deducted from gross profits when working out the tax liability vary substantially. Also, tax rates may vary depending on whether profits have been distributed to shareholders or not. Profits which have been reinvested may not be taxed.

For example, in the United Kingdom, where the main corporate tax is called corporation tax, depreciation on many capital assets (excluding finance leases and certain intangible assets) is disallowable in computing taxable profits. Instead, capital allowances (usually at the rate of 25% per annum on a reducing balance basis) may be claimed. In France, however, depreciation is allowable, within certain rates per classes of asset set down by statute.

A feature of a classical tax system which includes corporate taxation is double taxation, in that profits made by a company are subject to corporation tax, but further tax (usually income tax) is payable by the company's shareholders when the same profits are distributed by way of a dividend.

However, under an imputation tax system, some or all of the tax paid by the company may be attributed pro rata to the shareholders by way of a tax credit to reduce the income tax payable on a distribution. For many years, from 1973 to 1999, the UK operated a partial imputation system, with shareholders being able to claim a tax credit reflecting advance corporation tax (ACT) paid by a company when a distribution was made. A company could set ACT off against the annual corporation tax liability of the company

Alternatively, in certain jurisdictions, distributions are be fully or partially exempt from tax—for example, certain jurisdictions, such as Austria and Germany, operate a "double income" system on distributions, with only half of the distribution is subject to tax, or, equivaletly, the tax rate is halved, and the Netherlands operates a participation exemption under which certain distributions are exempt from tax.