The most common mistakes when declaring corporate income tax

Approaching the deadline for filing a corporate tax return, we would like to draw your attention to the most common mistakes when declaring income tax. Check that you are not making the following mistakes:

  • the exemption for the investment project is applied, but the documents justifying the application of the exemption are not collected;
  • two exemptions apply to the same asset: R&D and investment project;
  • costs, when there is a clear beneficiary and the benefit received by a subject (object of PIT, employee), are attributed to non deductible costs, and PIT is not calculated;
  • depreciation rates for fixed assets that do not correspond to those specified in Appendix 1 to the CIT law are applied;
  • employee expenses are classified as representation, although the expenses were incurred not for the benefit of customers, but rather for the benefit of employees (meetings/events with customers did not take place);
  • business trip expenses are attributed to the allowable deductions, although the business trips took place for the economic benefit of the employee, and not for the economic benefit of the company;
  • holidays are considered as business trips;
  • a corporate tax rate of 0 or 5% is applied, although the provisions of Art. 5(2) of the CIT law are not satisfied;
  • a corporate tax rate of 0% is applied, shares are sold without waiting for 3 years and income tax is not adjusted for previous tax periods;
  • withholding income tax is not withheld on royalties or rent income which are received by foreign company.

We kindly remind you that the annual income tax is declared and paid before June 15 (if the tax year coincides with the calendar one).

Virginija Guleva

Head of Tax and Legal

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