• Tax Highlights - February 2019
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Tax Highlights - February 2019

14 February 2019

AMENDED CORPORATE INCOME TAX RULEBOOKS HAVE BEEN PUBLISHED

The Ministry of Finance adopted amended rulebooks which will be used when determining a corporate income tax liability for the 2018 business year:

  • The Rulebook on the Classification Method of Non-current Assets by Groups and Method for Determining Tax Depreciation;

  • The Rulebook on the Contents of Tax Balance and Other Matters Relevant for Determining Corporate Income Tax;

  • The Rulebook on the Contents of Tax Return for the Calculation of Corporate Income Tax.

The Rulebook on the Classification Method of Non-current Assets by Groups and Method for Determining Tax Depreciation

An amended Rulebook on the Classification Method of Non-current Assets by Groups and Method for Determining Tax Depreciation, which is to be applied during the calculation of tax depreciation for the 2018 business year, was adopted before the other two rulebooks. Two new forms: OA/I – for the calculation of immovable property depreciation and OA/N - for the calculation of intangible assets amortisation were defined under the concerned Rulebook.

Taking into consideration the very concept of the prescribed forms (OA/I and OA/N), the Minister of Finance issued a decision on reamending the Rulebook on the Classification Method of Non-current Assets by Groups and Method for Determining Tax Depreciation, which will revoke the obligation of calculating depreciation/amortisation by using the concerned forms due to the practical application. Therefore, according to the most recent rulebook amendments, taxpayers will freely calculate the depreciation of immovable property and amortisation of intangible assets, i.e. in a manner that they deem the simplest/most practical.

The Rulebook on the Contents of Tax Balance and Other Matters Relevant for Determining Corporate Income Tax

According to the most recent amendments to the Corporate Income Tax Law, it was necessary to make certain changes to the tax balance in order for some new rules to be adequately materialised within the form itself. Moreover, it was necessary to make certain supplements to the tax balance for the purpose of clearly defining the items of the tax balance sheet, under which income (of a non-resident legal entity branch which is exempted from tax in accordance with the relevant double taxation avoidance agreement) and the related expenses would be excluded.

Relying upon the above-mentioned facts, the Minister of Finance published an amended Rulebook on the Contents of Tax Balance and Other Matters Relevant for Determining Corporate Income Tax.

Consequently, a new PB1 Form has been adopted and it includes the following amendments:

  • The item no. 2 is to be terminated – Proceeds from concession income. Instead, a new item is introduced – Income of a non-resident legal entity branch exempted from tax in accordance with the ratified international treaty; Income of a non-resident legal entity branch belonging to a jurisdiction of the preferential tax regime referred to under Article 40, paragraphs 12 and 13 of the Law;
  • Supplemented is item no. 27 – Expenses on the basis of allowance for impairment of individual receivables, if from their deadline for collection not at least 60 days have passed, as well as the write-off of the value of individual receivables carried out without prior fulfilment of the conditions referred to in Article 16 and Article 22a of the Law;
  • Supplemented is item no. 29 – Expenses the branch of a non-resident taxpayer declares in accordance with Article 20 of the Law; expenses of the branch of a non-resident legal entity in relation to income that is not taxable in accordance with a confirmed international agreement; expenses of the branch of a non-resident legal entity from a jurisdiction with a preferential tax system referred to in Article 40, paragraphs 12 and 13 of the Law;
  • Supplemented is item no. 36 – Expenses arising from impairment of assets are recognised in the taxable period for which the tax balance sheet is filed, in which such property has been disposed of, used or there has been damage to such property due to force majeure; expenses incurred on the basis of effects of changes in the accounting policy due to the first implementation of IAS, IFRS and IFRS for SMEs;
  • Supplemented is item no.  41 – All receivables written-off, provided for and other receivables recognised as expenses, which are included in taxable income in the tax period, which are not, as such, reported in the taxpayer’s books; income generated on the basis of effects of changes in the accounting policy due to the first implementation of IAS, IFRS and IFRS for SMEs;
  • Supplemented is item no. 45 -Revenues from unused long-term provisions that were not recognized as an expense in the tax period in which they were made; income derived from the acquisition of non-cash assets in the procedure for concession contract performance;
  • Supplemented is item no. 46 - Revenues incurred in connection with expenditures that have not been recognised; income derived from the reduction of liabilities to public funds beneficiaries, banks in bankruptcy and chambers of commerce, which are covered by the UPPRs (pre-packaged plans).

‚ÄčThe Rulebook on the Contents of Tax Return for the Calculation of Corporate Income Tax

Pursuant to the Rulebook on the Contents of Tax Return for the Calculation of Corporate Income Tax, certain technical adjustments have been made.

The new PDP Form has been adopted, with the following changes:

  • The method of disclosing data in case of suspension of the liquidation procedure and suspension of the bankruptcy procedure is specified;
  • Item no. 5.4.1 K – the amount for which the taxpayer is entitled to a tax exemption based on the concessional investments has been removed;
  • The items relating to SU2 or the exemption from profit tax payment for the period of 5 years based on investments in the insufficiently developed areas have been deleted.

The provisions of this Rulebook relating to filing a tax return in the event of suspension of the liquidation procedure or suspension of the bankruptcy proceedings shall apply starting from 1 April 2019.