Taxable Income
4/29/2020
Taxable income
In accordance with the provisions of article 10 of CIT Law 2010, the taxable commercial and industrial profits shall be determined on the basis of the transactions and activities of all types conducted by the taxpayer during the tax year as well as the profits and revenues realized by him in the same period from different sources such as:
Main Activity Revenues
Those are the profits and revenues the taxpayer obtains through being engaged in the main activity which is characterized by frequency and periodicity.
Subsidiary or Other Revenues
The profits and revenues the taxpayer obtains from other or subsidiary resources which may not related to the main activity and whether repeated or not such as compensations of all types and resources from others, credit interest, credit commission as well as fines, donations, currency differences, banknotes delay interest, bad debits collection or gained discount, securities revenues and amounts the taxpayer obtains for liquidation and any other subsidiary revenues not related to the main activity.
Taxpayer Revenues
The revenues the taxpayer (legal person) gets through leasing the Real Estates during the tax year in accordance with paragraph (c) of article (53) of the law or leasing furnished Real Estates for the natural or legal person as per paragraph (b) of article (9) of the law.
Capital Profits
- Capital profits resulting from selling assets or securities means:
The profits that are realized either as a result of selling any of the company assets with a value greater than its book value or selling securities with a tremendous value more than its cost. In addition, whether those sold assets are in the form of fixed assets such as buildings, lands, machines, equipment, vehicles, and investments in all their forms or in the form of intangible fixed assets like franchising, the patent, and goodwill or anything resulting from selling any of the company’s assets.
- Capital profit resulting from compensations: These profits result in case of depreciation or seizure any of the company’s assets.
- Profits of Re-estimation of Assets:
The profits of assets re-estimation that involve a change in the company’s legal form as in partnerships as a result of partner joining or separation of managing partner or as a result of joining or separation of a joint partner or merging of an individual company with partnerships to form a new partnership. Those profits are realized from a real sale transaction of the previous entity’s assets to the new entity.
Liquidation Profits
- The profit resulting from the company’s assets sale or disposal at the end of its work and liquidation for any reason of terminations shall be included.
- All deductible costs shall be rebated under the provisions of this law and this Regulation.
- The net profit shall be determined based on the approved income statement in accordance with the approved accounting procedures in the Republic. However, in case those standards are not applicable, the international accounting standards shall be applied in the condition that the tax base is determined in accordance with this law and this Executive Regulation.