What is double taxation in corporate income tax?

Double taxation in corporate income tax refers to the situation where corporate profits are taxed at two different levels. First, the corporation itself is subject to taxation on its profits at the corporate tax rate. Then, when the corporation distributes those profits to its shareholders in the form of dividends, the shareholders are also taxed on the income they receive, leading to taxation at the individual level. This dual layer of taxation on the same income—first at the corporate level and then again at the individual level—creates the phenomenon known as double taxation.

The other options do not accurately capture the essence of double taxation. Taxing dividends only would not encompass the taxation of the profits already subjected to corporate tax. Additionally, focusing only on individual shareholders ignores the corporate level of taxation that is intrinsic to the concept of double taxation. Finally, the idea of a tax applied twice for the same income could imply other contexts beyond the specific framework of corporate income taxation and does not clearly convey the distinction between corporate and individual taxation.