Corporate Income Tax is a direct tax levied on the net profits of a company by the country where it is resident or has taxable presence.
Corporate Income Tax (CIT) is the primary direct tax that companies pay on their taxable profits. The base is normally accounting profit adjusted for tax-deductible expenses, depreciation rules, loss carryforwards, and special incentives such as R&D credits or patent boxes.
Rates vary widely: Hungary applies 9%, Ireland 12.5% on trading income, the United States 21% federal CIT, Germany roughly 30% combined with trade tax, and the UAE introduced a 9% federal CIT in 2023.
Most jurisdictions start from financial-statement profit and run through a reconciliation: add back non-deductible items (entertainment, certain fines, related-party interest above thin-cap limits), subtract exempt income (qualifying dividends under participation exemption), apply loss relief, and then apply the statutory rate.
Multinationals must layer transfer-pricing adjustments, CFC inclusions, and Pillar Two top-up tax on top of the local CIT computation.
Founders often compare jurisdictions by headline CIT rate, but the effective tax rate (ETR) depends on deductions, depreciation, group relief, and treaty access.
You will encounter CIT every fiscal year when filing the corporate tax return, when projecting net profit to shareholders, and when comparing jurisdictions for a holding or operating entity. It also matters during fundraising due diligence, since investors model post-tax cash flows, and during exit planning, where deferred tax balances and unused losses affect deal value.
See what a company actually costs in year one, and how the jurisdictions compare on tax, capital and timeline.
