Filing taxes doesn’t have to be a nightmare!
In this blog, you will find recommendations to consider this year for your corporate income tax return.
First of all...
How much do you have to pay on your tax return?
Usually, as the deadlines for corporate income tax approach, business owners and entrepreneurs start to worry more than necessary due to a lack of clarity regarding the steps to follow or the total amount they will have to pay.
Keep in mind!
To make this process clearer and simpler, it is vital to understand the tax benefits, credits, and deductions that companies are legally entitled to obtain.
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What are these benefits?
1. Audit Benefit
Allows you to accelerate the finality of tax returns in a shorter period than established by law, assuming an additional tax percentage.
2. ICA Tax Credit
Most business owners are unaware that they can deduct up to 50% of the Industry and Commerce Tax (ICA) paid within the same taxable year on their income tax return.
3. Deductions for employee education contributions
There are three specific cases where the taxpayer can claim additional deductions if properly supported:
When the taxpayer provides a partial or total study scholarship for the employee or their family nucleus.
Investments in childcare, stimulation, and early education centers for children under 7 years old, established by companies for the exclusive use of employees’ children.
Any investment in basic, technical, and higher education entities recognized by the Ministry of Education, located in the sector where the company operates.
4. Deductibility of expenses for employees, clients, or suppliers
Tax regulations allow you to deduct up to 1% of net fiscal income actually realized, which has been used by the company for client and employee entertainment. This offsets the money invested in team well-being or client relations.
5. Tax credit for payments made abroad
To avoid double taxation, a tax credit can be generated for taxes paid abroad. The value of the credit is equivalent to the maximum tax the taxpayer would have paid on those same incomes if they had been taxed in the country.
6. Super deduction for employees with disabilities
This is a 200% tax deduction on the value of salaries and social benefits paid during the year to employees with a certified disability of more than 25%. This generates double the deduction compared to hiring a worker under standard conditions.
These are the most common and applicable benefits for startups; however...
There are other benefits they may qualify for, such as tax credits for:
Environmental improvement investments.
Technological development and innovation investments.
Donations to non-profit organizations.
Tax credits for scholarships.
VAT paid on fixed assets and investment in real productive fixed assets.
This information is essential for creating a tax projection that accounts for all benefits, credits, and deductions that startups often overlook. Keeping this in mind helps to better project a tax return and mitigate the fiscal impact on your business.
Remember, income tax filing deadlines begin on April 7th!
