Income tax is payable on the accounting net profit, based on financial statements prepared in accordance with acceptable international accounting standards, after making the necessary adjustments for tax purposes.The following sources of income are exempt from tax:
- Dividends from subsidiaries;
- Capital gains from the sale of shares or interests in companies.
The exemption requires that the taxpayer’s (parent company) shareholding in the other company meets the minimum threshold for qualifying participation. The size of this threshold has not yet been determined, but it is assumed to be from 10%.
As a general rule, income will be allowed to be deducted by expenses incurred in the ordinary course of business. However, it is forbidden to deduct personal expenses. There are also restrictions on bad debts, donations, fines, penalties, tax expenses, dividends, interest, etc.
A company that has suffered a loss in one tax period is entitled to carry it forward to the following year to reduce the tax base. In addition, in the case of groups of companies, the loss of one legal entity may be used to reduce the taxable profit of another entity.