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Definition of Double-tax agreement
agreement between two countries that taxes paid abroad can be offset against
The ratio of net income to net sales.
Money after-tax rate of return minus the inflation rate.
A situation wherein participants in a transaction have different net tax rates.
taxes as a fraction of income; total taxes divided by total taxable income.
The ratio of net income before taxes to net sales.
A contract for privately placed debt.
The tax rate at which a party to a prospective transaction is indifferent between entering
An agreement signed by the original United Nations members in 1944 that
An agreement to invest cash in a project to the extent required to cover any cash
Net income plus depreciation.
An understanding between a company and the host government that specifies the
The argument that double (corporate and individual) taxation of equity returns makes
Rate of return required on a par bond to produce the same after-tax yield to
A non-cash expense that provides a source of free cash flow. Amount allocated during the
The value of the tax write-off on depreciation of plant and equipment.
Method of accelerated depreciation.
A cross-border lease in which the disparate rules of the lessor's and lessee's countries let
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
Equity contribution agreement
An agreement to contribute equity to a project under certain specified
Equivalent taxable yield
The yield that must be offered on a taxable bond issue to give the same after-tax
Fiscal agency agreement
An alternative to a bond trust deed. Unlike the trustee, the fiscal agent acts as an
Foreign tax credit
Home country credit against domestic income tax for foreign taxes paid on foreign
Forward rate agreement (FRA)
agreement to borrow or lend at a specified future date at an interest rate
Imputation tax system
Arrangement by which investors who receive a dividend also receive a tax credit for
Interest equalization tax
tax on foreign investment by residents of the U.S. which was abolished in 1974.
Interest rate agreement
An agreement whereby one party, for an upfront premium, agrees to compensate the
Interest tax shield
The reduction in income taxes that results from the tax-deductibility of interest payments.
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
Limited-tax general obligation bond
A general obligation bond that is limited as to revenue sources.
Marginal tax rate
The tax rate that would have to be paid on any additional dollars of taxable income earned.
A contract for privately placed debt.
Personal tax view (of capital structure)
The argument that the difference in personal tax rates between
Preferred stock agreement
A contract for preferred stock.
Progressive tax system
A tax system wherein the average tax rate increases for some increases in income but
As used in connection with project financing, an agreement to purchase a specific
Raw material supply agreement
As used in connection with project financing, an agreement to furnish a
An agreement with a commitment by the seller (dealer) to buy a security back from
Revolving credit agreement
A legal commitment wherein a bank promises to lend a customer up to a
Short-term tax exempts
Short-term securities issued by states, municipalities, local housing agencies, and
A revision to the Bretton Woods international monetary system which was signed at
Split-rate tax system
A tax system that taxes retained earnings at a higher rate than earnings that are
In a rights issue, agreement that the underwriter will purchase any stock not purchased by investors.
Contracts where the bidding firm in a takeover attempt agrees to limit its holdings
TANs (tax anticipation notes)
tax anticipation notes issued by states or municipalities to finance current
Tax anticipation bills (TABs)
Special bills that the Treasury occasionally issues that mature on corporate
Set of books kept by a firm's management for the IRS that follows IRS rules. The stockholder's
Tax clawback agreement
An agreement to contribute as equity to a project the value of all previously
Tax differential view ( of dividend policy)
The view that shareholders prefer capital gains over dividends,
The municipal bond market where state and local governments raise funds. Bonds issued
Tax free acquisition
A merger or consolidation in which 1) the acquirer's tax basis in each asset whose
A nation with a moderate level of taxation and/or liberal tax incentives for undertaking specific
Tax Reform Act of 1986
A 1986 law involving a major overhaul of the U.S. tax code.
The reduction in income taxes that results from taking an allowable deduction from taxable income.
Swapping two similar bonds to receive a tax benefit.
Tax deferral option
The feature of the U.S. Internal Revenue Code that the capital gains tax on an asset is
Tax-deferred retirement plans
Employer-sponsored and other plans that allow contributions and earnings to
The option to sell an asset and claim a loss for tax purposes or not to sell the asset and
A merger or consolidation that is not a tax-fee acquisition. The selling shareholders are
Gross income less a set of deductions.
Any transaction that is not tax-free to the parties involved, such as a taxable acquisition.
An agreement to put a specified amount of product per period through a particular
An agreement to put a specified amount of raw material per period through a particular
Two-tier tax system
A method of taxation in which the income going to shareholders is taxed twice.
Method of indirect taxation whereby a tax is levied at each stage of production on the value
A tax levied by a country of source on income paid, usually on dividends remitted to the
What the business paid to the IRS.
The system of recording business transactions in two accounts.
Earnings before interest and taxes (EBIT)
The operating profit before deducting interest and tax.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
The operating profit before deducting interest, tax, depreciation and amortization.
Profit before interest and taxes (PBIT)
Payroll tax expense
The amount of tax associated with salaries that an employer pays to governments (federal, state, and local).
Payroll taxes payable
The amount of payroll taxes owed to the various governments at the end of a period.
See accrual-basis accounting.
earnings before interest and income tax (EBIT)
A measure of profit that
on Tariffs and Trade (GATT) a treaty
North American Free Trade Agreement (NAFTA)
an agreement among Canada, Mexico, and the United States establishing the North American Free Trade Zone, with a resulting reduction in trade barriers
tax benefit (of depreciation)
the amount of depreciation deductible for tax purposes multiplied by the tax rate;
postponing taxation of an amount until a future date
a tax treatment where income is never subject to income taxation
current compensation that is taxed at a future date
current compensation that is never taxed
tax shield (of depreciation)
the amount of depreciation deductible
A government tax on the income earned by an individual or corporation.
average tax rate
Total taxes owed divided by total income.
depreciation tax shield
Reduction in taxes attributable to the depreciation allowance.
interest tax shield
tax savings resulting from deductibility of interest payments.
marginal tax rate
Additional taxes owed per dollar of additional income.
taxes paid by consumers when they buy goods and services. A sales tax is an example.
The loss in purchasing power due to inflation eroding the real value of financial assets such as cash.
Investment Tax Credit
A reduction in taxes offered to firms to induce them to increase investment spending.
Marginal Tax Rate
Percent of an increase in income paid in tax.
A tax in which the rich pay a larger percentage of income than the poor. Contrast with regressive tax.
A tax taking the same percentage of income regardless of the level of income.
A tax in which the poor pay a larger percentage of income than the rich. Contrast with progressive tax.
A tax levied as a percentage of retail sales.
Tax-Related Incomes Policy (TIP)
tax incentives for labor and business to induce them to conform to wage/price guidelines.
Current Tax Payment Act of 1943
A federal Act requiring employers to withhold income taxes from employee pay.
Electronic Federal Tax Payment Systems (EFTPS)
An electronic funds transfer system used by businesses to remit taxes to the government.
Federal Unemployment Tax Act (FUTA)
A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a
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