Tax Implications | Vibepedia

Tax implications refer to the potential financial consequences of a business decision, including the impact on retained earnings, dividend payments, and creditor protection. Retained earnings, also known as plowback, represent the accumulated net income of a corporation that is retained by the corporation at a particular point in time. The balance of the retained earnings account can be capitalized by issuing bonus shares, and the balance is available for distribution of dividends to shareholders. However, some laws require that dividends be paid only out of the positive balance of the retained earnings account, protecting creditors from a company.