Corporate tax is the tax a company pays on its profits. After calculating net income (revenue minus all expenses), the business applies the applicable corporate tax rate to determine how much it owes the government.
Corporate tax rates vary widely by country. The US federal rate is 21% (since 2018 Tax Cuts and Jobs Act), while countries like Ireland charge just 12.5% — which is why many multinational companies set up headquarters there.
Companies use legal strategies like deductions, credits, and transfer pricing to minimize their tax burden. Tax planning is a major function of corporate finance teams.