For November 2022, the taxable base for the agricultural holding (ZS) was formed with corporate income tax (CIT) in the CIT declaration. Subsidies for 2022 have been received in October. The Rural Support Service awards subsidies, but by the time the declaration is submitted, a decision has not yet been received on the calculated and paid support payments. Can ZS apply relief for subsidies in the November CIT declaration without receiving a decision on support?
It is assumed that the CIT tax base is formed by dividing the profit of the reporting year into dividends.
At the beginning, it is important to familiarize yourself with the legal acts and the tax application aspects contained in them, which are applicable to the specific situation:
Corporate Income Tax Law (CIT Law); Regulations of the Cabinet of Ministers (MK) No. 677 "Regulations for the Application of the Norms of the Corporate Income Tax Law". Article 14 of the CIT Law stipulates that ZS is entitled to reduce the taxable base for the reporting year with CIT in the amount that corresponds to 50% of the amount received as state support for agriculture, but no more than the total amount of taxable objects included in the taxable base during the taxation period. It should be noted that the provisions of this article of the law apply to the entire scope of the reporting year.
According to the Regulation No. 677 of the MK, Clause 100, applying Article 14 of the CIT Law, the taxable base with CIT is reduced exactly in the reporting year in which the decision on the allocation of funds was made, regardless of the year of the accounting entry and actual payment receipt. The CIT Law and the Rules of the Council of Ministers No. 677 specifically state that the relief is applicable to the tax year, not to the tax period, which is one month.
According to paragraph 101 of Regulation No. 677 of the Cabinet of Ministers, the taxpayer is not entitled to apply the relief provided for in Article 14 of the CIT Law for the part of the support received, which has not been used in accordance with the decision on its allocation and which must be repaid in accordance with the decision of the grantor of the support.
Taking into account the regulation, the subsidy relief cannot be applied to the November CIT declaration before the decision is received. It must be applied when submitting the annual return.
In order to better understand the situation, we recommend that you look at Paragraph 6 of Appendix 5 of Regulation No. 677 of the Cabinet of Ministers "Examples of the Application of Law Norms".
Source: iFinanses