ANALYSIS
appears to have been an oversight that, again, opens
the door to many (mis)interpretations and does not
give a clear picture of companies’ tax burden for the
year. Fortunately, this headache will only be experienced during this transition year.
Limited use of the tax credit
receivables from loans are taxable when they aren’t
collected in the same year the loan was granted.
Thus it is unclear whether the Law refers only to
those outstanding receivables that are due for payment or it covers all receivables, regardless of their
maturity period. The new Law also fails to limit this
taxation to unreasonable transactions with related
parties, which would avoid any unfair taxation of normal transactions between companies.
The ever-troublesome issue of determining the eligibility for a tax credit has been resolved to some
extent – by making
the tax credit available only for the
amount of collected
receivables, which
were already taxed.
The previous law
allowed tax credits
to be applied in the
year when taxpayers obtained either
(i) an enforceable
court decision or (ii)
confirmation from
the bankruptcy or
liquidation manager
that their receivable had been duly
reported and confirmed. In practice,
the tax authority
interpreted this to
mean that company
write-offs were tax
deductible only if
What next?
they were recorded during the same year that the
With the year-end approaching and the start of the
required decision/confirmation was obtained. The
new “tax season”, the open questions created by the
new Law makes this interpretation official, gennew CIT Law are sure to become burning issues for
erally disallowing the use of tax credits even when
all companies working here. Luckthe decision/confirmation is provided.
ily, there is still time for clarificaThus, if companies write off receivables With the year-end
in a fiscal year prior to receiving a deci- approaching and the start tion of the remaining issues, if the
Ministry of Finance keeps its promsion/confirmation, no tax credit will be
of the new “tax season”,
ise to adopt a Rulebook for impleallowed.
the open questions
mentation of the CIT Law by the
created by the new CIT
end of November 2014. This docTreatment of monetary funds
ument should shed some light on
Law are sure to become
transfers remains ambiguous
the issue ́ѡ