New corporate tax legislation

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New corporate tax legislation

The corporate income tax has received some updates in this year 2022. One of the main changes that has been made on this tax is included in the General State Budget Law of 2022, we will analyze the 5 novelties that this Law has introduced in the application of the Corporate Tax.

Minimum taxation

A minimum taxation of 15% of the taxable base of the corporate tax will be established. This change will be applied to those taxpayers whose net turnover exceeds 20 million. This figure will have to be maintained during the 12 months prior to the beginning of the tax period. Also those taxpayers who pay taxes under the tax consolidation regime. This net tax liability cannot be less than the result obtained when applying 15% to the taxable base. Non-profit entities included in Law 49/200, open-end investment companies, pension and investment funds of a financial nature, real estate investment companies and funds, and listed real estate investment companies will not be subject to this minimum corporate income tax. There are also exceptions for certain corporate income taxpayers. Those entities that are newly created will be taxed at a 10% corporate income tax rate. For hydrocarbon exploitation and storage entities, the rate will be 18%. Cooperatives will be taxed at 60% of the full amount. And to the entities of the special zones of the Canary Islands it will be 15% of the taxable base.

New definition of net tax liability

Although there is talk of a modification, the truth is that the only thing that has been done is to include the definition of net tax liability in Article 30 of the LIS, which was not regulated before. Thus, the following paragraph has been included:

“The appropriate allowances and deductions provided for in the tax regulations shall be applied to the gross tax payable, giving rise to the net tax payable which, under no circumstances, may be negative”.

Amendment of Article 41 of the Corporate Income Tax Law (hereinafter LIS), on deductions of withholdings, payments on account and installment payments 

The article states that the following will be deductible from the net tax payable, or from the minimum net tax payable:

  1. Withholdings on account.
  2. Income on account.
  3. The fractioned payments.

In those cases in which such concepts exceed the amount of the net tax liability or the minimum net tax liability, the Tax Administration will proceed to return the excess, acting ex officio.

Modification of the Regime of Entities dedicated to the leasing of housing 

In this case, the change is the modification of the amount of the allowance for this type of companies. Thus, the allowance is established at 40%, as opposed to the 85% that it was before, of the part of the integral quota corresponding to the income derived from the rental of dwellings that meet the requirements to apply this regime.

Modification of the Special Tax Consolidation Regime. Paragraph 1 of Article 71 of the LIS is worded as follows

“The gross tax liability of the tax group will be reduced by the amount of the deductions and allowances provided for in Chapters II, III and IV of Title VI of this Law, as well as any other deduction that may be applicable, giving rise to the net tax liability of the same which, in no case, may be negative.”

From Letslaw we can help you with the filing of the tax, in addition to solving all the questions that may arise.

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