To address key corporate tax questions, tax experts delivered that Corporate Tax is imposed on Taxable Income earned by a Taxable Person in a Tax Period. Further, it was hinted that the starting point for calculating Taxable Income is the Taxable Person’s accounting income (i.e. net profit or loss before tax) as per their financial statements. Hence, Taxable Persons would be required to make certain adjustments to determine their Taxable Income for the relevant Tax Period. For instance, adjustments to accounting income may need to be made for income that is exempt from Corporate Tax and for expenditure that is wholly or partially non-deductible for Corporate Tax purposes.
Subsequently, it was explained that in principle, all legitimate business expenses incurred wholly and exclusively for the purposes of deriving Taxable Income will be deductible. However, certain expenses which are deductible under general accounting rules may not be fully deductible for Corporate Tax purposes. These will need to be added back to the Accounting Income for the purposes of determining the Taxable Income.
Among the key corporate tax questions, Tax Groups were defined as Two or more Taxable Persons who meet certain conditions for forming a “Tax Group” and can be treated as a single Taxable Person for Corporate Tax purposes. Therefore, to form a Tax Group, both the parent company and its subsidiaries must be resident juridical persons, have the same Financial Year and prepare their financial statements using the same accounting standards and the parent company must meet the following:
- own at least 95% of the share capital of the subsidiary;
- hold at least 95% of the voting rights in the subsidiary; and
- is entitled to at least 95% of the subsidiary’s profits and net assets.
